It is not hard to imagine that one of the many members of the House of Reps will find they have fallen foul oft section 44 of the Constitution, the section that stops dual citizens from sitting in the House.
This will lead to a by-election and could potentially could lead to a change in Government.
If this happens, by 1 July 2018 there could be a massive number of changes to the tax system as the Opposition has already released its tax policies. So it is worth remembering what these policies are. We have discussed these all before but lets put them all in one place.
The Discretionary Tax Distribution Minimum Tax of 30% on any distributions from discretionary trusts to individuals who have an effective tax rate of less than 30%. But this does not apply to charitable trusts, testamentary trusts, special disability trusts and farming trusts.
The removal of negative gearing deductions for anything other than losses made on new residential property. That means no deductions if you borrow to buy shares and the shares pay no dividends that year.
Reducing the CGT discount rate to 25%.
Limit the 27.5% company tax rate to either companies with turnovers less than $2 million or $10 million. It is unclear if the amount is $2 million if they will reduce the small business threshold back to $2 million.
Decrease the threshold at which the Division 293 tax applies to $250,000. Currently, if your adjusted income is greater than $300,000 you pay an additional 15% contributions tax on super contributions. This threshold will be reduced.
Changes to large business taxation like removing the safe harbour rule from thin capitalisation so that businesses can only use the worldwide gearing ratio, change the MEC rules for consolidated groups, reduce the public reporting rules for private companies from $200 million to $100 million, and make the country by country transfer pricing documentation publicly available.
Limited the tax deduction that individuals can claim for managing their tax affairs to $3,000. This will just mean after $3,000 any fee will now be described as accounting advice???
Increase the highest marginal tax rate to 49% by effectively reintroducing the temporary budget levy. And by 1 July 2019 with the increase in the medicare levy this rate will become 49.5%.
Limit the 0.5% increase in the medicare levy that is going to happen on 1 July 2019 to pay for the NDIS to taxpayers earning more than $87,000.