Tax was left alone in the financial services royal commission’s final report, but future changes loom large in the minds of millions of Australians.
The upcoming federal election has already become a tax battleground, with Labor’s plans to scrap excess franking credit cash refunds for hundreds of thousands of self-funded retirees sparking the most anger in recent weeks.
It also wants to stop negative gearing tax deductions for all but new properties, and reduce the capital gains tax discounts for future investments.
MORE: Make more money by asking these questions
MORE: The fiery tax row causing retirees fury
H & R Block director of tax communications Mark Chapman said the Federal Government fired fresh shots in late January with its announcement to increase the instant asset write off for small business owners from $20,000 to $25,000.
This allows them to instantly claim full tax deductions for any business items costing less than $25,000 and would benefit more than two million small business owners, he said.
“No doubt we will get a lot more of that as we head closer to the election.”
Mr Chapman said taxpayers should keep an eye on the tax debate and try to work out whether they would be winners or losers.
“As it’s an election year there will be some pretty significant tax announcements but I expect most will be good news rather than bad news,” he said.
Labor’s controversial tax policies were announced well in advance, some of them years ago, Mr Chapman said. “That gives them space before the election to announce more good news.”
Chartered Accountants Australia and New Zealand tax leader Michael Croker said taxpayers should not wait until tax time to start thinking about their tax return.
“Think about the tax policies of the major parties and the impact on your finances,” he said.
“There may have been tax breaks you have taken advantage of in the past that are no longer applicable.”
The Coalition government axed property investors’ tax deductions for travel and some depreciation deductions, and landlords only felt those changes in last year’s tax returns.
“Don’t make financial decisions based solely on potential tax breaks,” Mr Croker said. “If you’re spending cash just to get a tax break you may end up worse off.”