Investors won’t have to worry about changing their investment strategies, with the return of the Coalition to Government. They biggest change they can look forward to is a restructure of personal income tax, and that is a few years away.
Personal income tax. From 1 July 2022, the Government proposes to increase the top threshold of the 19 per cent personal income tax bracket from $41,000 to $45,000. At the same time, it will increase the low income tax offset from $645 to $700.
From 2024/25 the Government plans to reduce the 32.5 per cent marginal tax rate to 30 per cent. At the same time, an entire tax bracket – the 37 per cent rate – will be removed.
This would mean there would be three personal income tax rates: 19 per cent for income between $18,201 and $45,000; 30 per cent for income between $45,001 and $200,000; and 45 per cent for income above $200,000.
The Government has estimated that, as a result of these changes, 94 per cent of Australian taxpayers would be a marginal tax rate of 30 per cent or less. It projects that in 2024/25 around 60 per cent of all personal income tax will be paid by the highest earning 20 per cent of taxpayers.
Help for first home buyers. The Government will introduce a First Home Loan Deposit Scheme. To start on 1 January next year, the scheme will be available to buyers who have been able to save a deposit of at least 5 per cent and who earn up to $125,000 ($200,000 for a couple).
Prime Minister Scott Morrison said the scheme would mean first home buyers won’t need to save the full 20 per cent deposit for a home purchase. The value of homes that can be purchased under the scheme will be determined on a regional basis, reflecting the different property markets across Australia.
The Government will invest $25 million in the National Housing Finance and Investment Corporation to establish the scheme, which would take the form of a guarantee. The government expects to provide about $500 million of guarantees.
The scheme would be capped at 10,000 loans a year – estimated to be about 10 per cent of the first home buyer market. The support would stay in place for the life of the loan.
The government said the scheme would give preference to working with smaller banks and non-bank lenders.
Superannuation. The work test will no longer apply to those aged 65 and 66. The work test requires that people aged over 65 work for a minimum of 40 hours over a 30 day period in the financial year before they can make voluntary contributions to their superannuation account. The work test will continue to apply to people over age 66.
The age limit for spouse contributions will be increased to 74.