Are you better off under the Labor or the Liberals tax policy? As a whole, a $158 billion income-tax relief package is the center of the Coalition’s campaign, so Labor has rebutted with proposing to raise taxes or scrap concessions to fund commitments of education and health. So with one party promising to be prudential and fiscally restrained and the other being clear in raising taxes to spend more, you can see there is a stark difference between the two parties. Whether you are a taxpayer, retiree or property investor, you are likely to be impacted by whichever party wins the election this month.
When it comes to the lowest paid workers of our country, Labor has promised up to a 30% higher tax offset than the Coalition for taxpayers earning less than $40,000. To put this into perspective, a worker earning $35,000 would get a tax offset of $255 under the Coalition’s package, or $350 under Labor.
Under both parties, anyone earning between $48,000 and $90,000 will receive a $1,080 tax offset for the 2019 financial year. The difference between the two parties here is their approach further down the track. The Coalition want to flatten tax brackets and reduce the marginal tax rate by 2024. This means anyone earning between $50,000 – $200,000 would pay the same rate of tax. The tax rate for earners in this bracket will be reduced from 32.5% to 30%. Labor does not support these later phases of tax cut amendments.
They missed out on any tax cut in this year’s budget, but high-income earners will see some changes in the future under Coalition. This includes completely removing the top tax bracket, meaning a tax cut for anyone earning between $120,000 – $200,000 from 37% to 30%. Under Labor, such tax cuts do not exist.
With these changes projected 10 years in the future, it is hard to imagine that these policies would not change within that time frame.
Labor is proposing to scrap negative gearing on investment properties, meaning buyers cannot deduct rental losses from their taxable income (existing negatively-geared properties and newly built properties will be exempt). The Coalition is opposed to this amid fears that it will push house prices further down and could potentially increase rent.
The Liberals plan to maintain the dividend imputation system that is designed to stop shareholders from paying double tax on company profits. Labor plans to scrap this concession. They argue that it’s led to individuals and superannuation funds receiving a cash refund from the Australian Taxation Office (ATO) even if they pay no tax.
The information contained on this website and in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. Taxation, legal and other matters referred to on this website and in this article are of a general nature only and are based on our interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.