We saw a change of government when Labor won the election on election night, but what does this mean for your taxes?

Tax Cuts

The so-called “stage three” tax cuts have already been legislated under the previous government and will still happen barring some undeclared change in the Labor party’s position.

As a reminder, the tax cuts will see the 32.5% marginal tax rate cut to 30% to make on big tax bracket between $45,000 and $200,000 (meaning the 37% tax bracket will be completely abolished), from 1 July 2024. This will be particularly effective for higher income earners, with gains of $1,125 per year for an individual on $90,000, rising to %9,075 per year for a person on $200,000 or more.

Tax Rises

With the abolition of the Low and Middle Income Tax Offset also locked in, those who currently receive it will notice what’s effectively a tax increase when they submit their 2023 tax returns. This could be a rise of up to $1,500 for those entitle to the full LMITO. There are no announced proposals for the Labor party to reverse this decision.

Taxes on Property

There are no changes to “negative gearing” or any other taxes on investment property. The general 50% discount for Capital Gains Tax is also safe.

First Home Buyers

The new government announced the introduction of an equity contribution scheme to help first home owners get a foot on the property ladder.

Eligible home buyers will need a minimum deposit of 2%, with an equity contribution from the Federal Government of up to a maximum of 40% of the purchase price of a new home and up to a maximum of 30% of the purchase price for an existing home.

You will be eligible if you:

• Are an Australian citizen of at least 18 years of age
• Earn $90,000 or less per annum for individuals, or $120,000 or less per annum for couple
• Lives in the purchased home as your principal place of residence
• Don’t own any other land or property – either in Australia or overseas
• Have saved the required minimum 2% deposit of the home price and qualify (and can finance) the remainder of the purchase through a standard home loan with a participating lender
• Pay for any associated purchase costs like stamp duty, legal and bank fees. Homebuyers will also be responsible for ongoing property costs like rates, strata and any other bills.

During the loan period, the homebuyer can buy an additional stake in the home when they are able to do so. The minimum stake that a homebuyer can opt to purchase at any one time is 5%.

If the homebuyer’s income exceeds the Help to Buy annual income threshold for two consecutive years, they will be required to repay the Government’s financial contribution in part of whole as their circumstances permit.