If you sold your investment property just before the election in fear of the negative gearing changes, you might be kicking yourself, but investors who held on will undoubtedly be relieved that an already slowing property market will not be further affected by such changes. AMP Capital and Domain.com.au both expect to see the bottom of the property slump being reached earlier and be less significant.
First home buyers will be expecting Scott Morrison to come good on his promise of a deposit guarantee. What will this look like? It’s intended to be a loan scheme designed to subsidise up to 15% of the deposit for first home buyers, such that they will only need 5% in order to avoid lender’s mortgage insurance (LMI). However, it is only available to singles with an income of $125k or less and couples with an income of $200k or less, and it will be capped at 10,000 loans per year. Consequently, its impact is expected to be marginal and experts warn that this could push buyers who are not ready to borrow into loans, which will cost them far more over time. Experts would like to see this scheme turned into a grant which could provide more of a stimulus for first home buyers and the property market.
Superannuation and Tax
The Coalition will be implementing superannuation related policy promises made prior to the election which included:
- Removing the requirement for the ‘work test’ for Australians aged between 65 and 66 to make voluntary superannuation contributions;
- Extending the bring-forward rule to Australians aged between 65 and 66;
- Spouse contributions allowed up to age 74;
- The tax relief for merging super funds expiring 1 July 2020 to be made permanent; and
- SMSFs permitted to have up to 6 members.
In the area of income tax, the Coalition’s policies include:
- Increase of the low to middle-income tax offset to a maximum of $1080 (from $530) starting this financial year (2018-2019).
- Low-income tax offset threshold to increase from $645 to $700 starting July 2022.
- Top threshold of the 19% tax bracket to increase to $45,000 from July 2022.
- Reduction of the 32.5% tax bracket to 30% from July 2024.
If you have been watching the share market, you would have loved seeing the ASX200 index up 1.7% (its highest level since 2007) at market close on Monday following the election. Investors seemingly cheering as the ‘Bill Australia can’t afford’ wasn’t billed and Labor’s disputed repeal of franking credit refunds will not be coming into effect.
What happened to climate change being the reportedly most critical issue of the election? It is no news that the Coalition had a much more conservative climate change policy than Labor, with an emissions reduction target of 26-28% on 2005 levels by 2030 and a renewable energy target at 23.5% by 2020. The small-scale renewable energy scheme (SRES), commonly known as the ‘solar rebate’ will continue until 2030, although it has received some criticism, and a proposal has been put forward to develop a national electric vehicle strategy and an energy efficiency package for households and businesses.
Despite the more conservative approach of the Coalition Government, experts predict the renewable energy sector to remain healthy and continue to grow.
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