TaxAAM Post Covid-19, will the Treasurer give you a Fair Go?

Post Covid-19, will the Treasurer give you a fair go?

While fighting the Covid-19 Pandemic, the Australian Government has committed to spending an enormous amount of money supporting the economy and fighting the disease.

It should not come as a shock that taxes may have to rise to pay back the huge levels of debt the Government has taken on, amounting to A$320bn.

Whilst we will have to wait until October and maybe beyond to find out, many believe that among the options the Treasurer could consider are:

  1. Reform of negative gearing and the CGT Discount – Negative gearing and CGT discount distort behaviour to encourage borrowing rather than saving.
  2. Possible GST increase – this has the extra benefit of taxing people’s accumulated wealth as they spend it.
  3. Changes to the taxation of Superannuation income payments.
  4. Higher land tax – a switch from stamp duty to land tax to better capture the value of increased asset prices and make it easier for people to buy and sell houses.
  5. Possible Medicare Levy increase – much of the additional interest cost of the new borrowing could be paid by raising the Medicare levy from 2% to 2.14%.

With the spectre of increasing taxation, it is increasingly important that we structure our savings to maximise tax efficiency and protect against the worst of tax rises.

Source: https://www.theguardian.com/business/2020/apr/14/australia-will-need-to-raise-gst-to-pay-coronavirus-debt-tax-expert-says
https://www.abc.net.au/news/2020-05-11/economic-cure-post-coronavirus-is-tax-reform/12227760

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