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There may be a “tax difference” at the next election

After announcing Labor:

  1. would not reduce the CGT discount to 25% as they proposed to do in the 2017 election,
  2. would not limit negative gearing to new housing as they proposed to do in the 2017 election,
  3. would not stop SMSFs claiming refundable imputation credits as they proposed to do in the 2017 election, and
  4. would not touch the proposed individual tax rate reductions starting on 1 July 2024

There was only two tax announcements from 2017 we were waiting to see if Labor would dump or keep for the upcoming election.

The first was limiting deductions for managing you tax affairs to $1,500 (which was easily avoided by a bill for $8,500 for preparing the accounts and $1,500 for preparing the tax return).

The second was the Discretionary Trust Minimum Tax. Labor went to the last election proposing to introduce a standard minimum tax rate of 30% for distributions to beneficiaries. If a beneficiary received a trust distribution and the distribution was taxed at less than 30%, the trust (or the beneficiary) would have to pay top up tax to get the total tax paid by both the beneficiary and the trust on the distribution to 30%.

Well, it looks like the idea is still being considered by the Labor party.

First if they are considering it, the rate should now be 25%, being the tax rate for base rate entity companies.

Secondly, I have a 10yo and a 14yo son who will almost certainly spend way to much time studying at University (they take after their mum and not their dad) and I am just waiting till the day I can distribute $18,400 to each of them each year while they study to avoid a bit of tax… If you can’t use your kids for tax avoidance, then what are they for…

By Ken Mansell

As a stay at home Dad most of the week this is my way of pretending I am still the tax counsel of ASX and SEC listed companies, working at big 4 firms, working at the Federal Treasury, on the Henry Review and at Parliament House for the previous government.

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