The outcome of this year’s Federal election could have differing impacts for financial planners on superannuation and tax, with the main parties taking ‘ideological’ different approaches to finance.
If there was a victory for the Australian Labor Party (ALP), they had announced policies to strengthen SG coverage and roll back amendments that introduced catch-up concessional contributions and made personal deductible contributions widely available.
On the other hand, if the Coalition won, they had historically tended to focus on expanding the availability of superannuation’s tax concessions. Coalition-led governments had introduced multiple increases in the maximum age of contribution, reduction in work tests and increases in contribution caps. In this year’s election, they promised reduced work-test requirements and an increase to the maximum age for spouse contributions.
Looking at tax, the ALP was focused on removing tax minimisation strategies for those with investable assets and collecting more tax from those with greater assets while the Coalition wanted to flatten current progressive tax rates.
According to Rob Lavery, technical manager at online advice portal wealthdigital, there was an ‘ideological divide’ between the two parties when it comes to finances.
“From the Coalition’s larger suite of future tax cuts, to the ALP’s policies that tax those with investable assets, Australian voters are having two very distinct taxation ideologies presented to them,” Lavery said.
“The ALP has shown the values it would champion should it lead the next government. Its policies promote the interests of those on lower incomes at the expense of the wealthier. By contrast, the Coalition’s policies in these areas seem to follow the status quo and will increase the utility of super incrementally.”