Is Labor going to tinker with personal income taxes?

Adrian 'Mr Taxman' Raftery told Savings.com.au it was the first federal election campaign in a long time that the opposition (ALP) didn’t have any tax policies to put forward. 

"In past campaigns there has been chats around super, negative gearing, CGT [capital gains tax] but this year absolutely nothing other than a throwaway line that Labor will 'reduce taxes'," Mr Raftery said. 

"That said, there are a number of legislated tax cuts along in the offering including stage-three cuts. 

"The low to middle income tax offset of $1,500 finishes this 2022 year so unless it gets reinstated at the next Federal Budget then this will be the last big refund for a while to the majority of taxpayers.

"The next Federal Budget by the new Treasurer will certainly make for interesting viewing."

Labor and its taxation policy

In March 2021, the Australian Labor Party's National Platform announced the guiding principles for its tax approach. 

The policy supports tax cuts for individual income earners over $45,000 already legislated and the increase to the 2021-22 Low and Middle Income Tax Offset (LMITO) of $420.

It is not committed to extending either the LMITO or the fuel excise cut past September 2022.

Labor will also commit to the legislated Superannuation Guarantee of 12%, and once that has been achieved, set out a pathway to increasing it to 15%.

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Mark Chapman, Director of Tax Communications H&R Block, (pictured below) outlined what Saturday night's election result means for your taxes. 

Also read: What's on the ATO's hitlist this end-of-financial-year?

Tax Cuts

"The so-called 'stage three' tax cuts have already been legislated under the previous government and will happen barring some undeclared change in the Labor party’s position," Mr Chapman said.

"As a reminder, the tax cuts will see the 32.5% marginal tax rate cut to 30% to make one big tax bracket between $45,000 and $200,000 (the 37% tax bracket will be entirely 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 (it wasn’t extended in Josh Frydenberg’s last Federal Budget), those who currently receive it will notice what’s effectively a tax increase when they submit their 2023 tax returns (the LMITO is still in place for the 2022 returns)," he said.

"This could be a rise of up to $1,500 for those entitled to the full LMITO. There are no announced proposals for the Labor party to reverse Frydenberg’s decision."

Taxes on property

"There are no changes to 'negative gearing' or any other taxes on investment property," he said.

"The general 50% discount for Capital Gains Tax is also safe."

Image by StellrWeb via unsplash