The federal budget is just around the corner. While cost of living will no doubt be high on the agenda, its contents is still anyone’s guess. On the weekend, the Australian Financial Review ran a great article exploring several potential reforms being considered, that could impact investors, business owners and households.
Once the budget is released, we’ll provide a clear update on what’s changing and how it may affect your strategy.
Below is a summary of five potential changes. Find the full article here (note this is a subscriber only link).
One key area is capital gains tax (CGT), where the current 50% discount on investment assets may be reduced, particularly for property. This could increase tax on future investment gains.
Negative gearing is also under review, with possible limits on how many properties investors can claim losses against. However, broader changes to how investment income is taxed may be more likely.
The government is also looking at trust structures, with proposals to introduce a minimum tax rate on distributions. This could reduce the tax advantages currently available through income splitting.
In the energy sector, changes to the petroleum resource rent tax (PRRT) are being explored to ensure the government receives a greater share of profits from oil and gas producers.
Finally, electric vehicle incentives may be scaled back or adjusted, particularly generous tax concessions that have proven more costly than expected.
Of course, at this stage, these are proposals not confirmed changes.