Ahead of the Federal Election on Saturday 18 May 2019, the FSC has prepared a summary of the major parties' policy positions relevant to financial services.

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LIBERAL-NATIONAL PARTY

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Key relevant policies to the Liberal-National Party are taking to the election to date include the following: 

• Protecting Your Superannuation Bill passed in March and has now received Royal Assent, which introduced the banning of exit fees in superannuation and capping of fees at 3 per cent for low balances. The definition of “inactive low-balance account” was also tweaked. The insurance in superannuation provisions in Schedule 2 remained, but they were amended to: 

• Remove the under 25 exemption from opt-out insurance coverage. 
• Remove the low balance exemption from opt-out insurance coverage. 
• Increase the period in relation to which an account will be treated as “inactive” – now 16 months (changed from the 13 months in the original Bill). 

The amendments above are now reflected in a new Bill the Government introduced in the House of Representatives on 20 February 2019, Putting Members’ Interest First but lapsed at dissolution. 

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Superannuation

• Several superannuation measures introduced to the parliament in the last term were not passed before the election, and to our knowledge remain Liberal-National Party policy, including: 
  • Ensuring all employees have choice of super fund for compulsory contributions. 
  • Closing a salary sacrifice loophole to ensure salary sacrifice contributions cannot. be used to reduce an employer’s SG contributions. 
  • An amnesty for employers who have underpaid superannuation guarantee. 
  • Increasing the maximum number of SMSF members from four to six. 
  • The objective of superannuation. 
• Requiring one third independent directors on RSE Boards 
• Removal of superannuation work test for individuals aged 65 and 66 years. Meaning individuals will be able to make voluntary contributions without needing to work a minimum amount, this was previously only available to individuals below 65. 
• Extending access to the bring forward arrangements (the ability to make three years' worth of post-tax contributions in a single year) to an individual aged 65. 
• Increasing the age threshold for spouse contribution from 69 to 74. 
• Streamlining processes for how SMSFs claim tax deductions for earnings on assets supporting superannuation pensions. 
• Implementation of greater usability measures to support SuperStream electronic rollovers for SMSFs and superannuation funds) until March 2021. 

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Taxation

• From 2018-19 taxpayers earning between $48,000 and $90,000 will receive $1,080 as part of a low- and middle-income tax offset. Individuals earning below $37,000 will receive a base amount of $255 with the offset increasing at a rate of 7.5 cents per dollar for those earning between $37,000-$48,000 to a maximum offset of $1,080. 
• Stage 1 tax cuts: from 1 July 2018, increasing the top threshold of the 32.5 per cent tax bracket from $87,000 to $90,000. 
• Stage 2 tax cuts: from 1 July 2022, the top threshold of the 19 per cent personal income tax bracket from $41,000 to $45,000. 
• Stage 3 tax cuts: From 1 July 2024, reducing the 32.5 per cent marginal tax rate to 30 per cent which applies to incomes between $120,000 to $200,000. The 37 per cent tax bracket will also be abolished. 
• The Liberal-National Party has pledged to introduce a $500 million First-Home Buyer Deposit Scheme. These changes would start on 1 January 2020. The scheme would be available for single income earners up to $125,000 and couples earning a combined income of $200,000. The scheme would mean that first-home buyers who meet the criteria would only need a 5 per cent deposit, rather than the current requirement of 20 per cent – the remaining amount would be underwritten by the Government. 

The FSC Budget 2019 Summary has further detail on recent Government policy proposal. 

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A full list of the Liberal-National Party’s policies can be found here. 

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AUSTRALIAN LABOR PARTY

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The Australian Labor Party (ALP) has announced a range of super and tax policy positions for the 2019 election. Some of these proposals were ALP responses to the Liberal-National Party’s ‘Fair and Sustainable’ super reforms introduced in 2017, other proposals are newer and have been developed in the lead up to the 2019 election. 

The ALP’s policy positions include: 

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Superannuation

• Ceasing refunds of excess franking credits from 1 July 2019, this would mean SMSF members and some retail super members in pension phase no longer receive refunds for the franking credits they receive for their Australian share investments. 
• Prevent SMSFs from using non-recourse borrowing. 
• Reducing the annual non-concessional contribution limit to $75,000 per year, down from $100,000. 
• Removing tax deductibility for personal superannuation tax contributions, unless less than 10 per cent of an individual’s income is from salary. 
• Ceasing the catch-up concessional contribution policy for unused cap amounts in the previous five years. 
• Reducing further the higher income superannuation contribution threshold of 30 per cent to $200,000 from $250,000. 
• The ALP also still has a formal policy of imposing a tax of 15 per cent for retirement phase incomes above $75,000. However, it is unlikely this proposal will proceed as it has been largely superseded by the Liberal-National Party’s $1.6m cap on assets transferred into the retirement phase. 
• Establishing a Council of Superannuation Custodians to guide changes to the superannuation system. 
• Increasing superannuation intervention powers of the Fair Work Commission and seek to overhaul the process of Tribunal appointments. 
• Extending compulsory Superannuation Guarantee to parental leave payments. 
• Removing the $450 per month threshold for the Superannuation Guarantee so that SG payments will be mandated for all employees. 
• Increasing penalties for employers who underpay Superannuation Guarantee amounts. 
• Including superannuation in the National Employment Standards, which permits employees to recoup unpaid or underpaid superannuation from employers through the Fair Work Commission or the Federal Court. 
• Develop guidelines for tax haven investment by super funds. 
• Phase out the First Home Super Saver Scheme. 

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Taxation

• Ending of franking credit refunds (see superannuation section above) which will affect managed funds that distribute franked income. 
• Quarantining investment losses, except for newly built housing, from 1 January 2020. Losses from any new investments made after this date can only be offset against current or future gains from investments. Existing investments are grandfathered. 
  • While this is commonly discussed as ending negative gearing for housing, this policy in fact applies to all investments, including shares, property and managed funds. 
  • Reducing the capital gains tax (CGT) discount from 50 per cent to 25 per cent for assets purchased after 1 January 2020 that are held for longer than 12 months. (Existing investments are grandfathered under the current law) 
• ALP supports the Liberal-National Party's stage 1 tax cuts and will match the $1,080 low- and middle-income tax offset. From 1 July 2018, individuals earning below $37,000, will receive a $350 a year tax offset, with this amount increasing for those earners between $37,000 and $48,000 to the maximum $1,080 offset. 
• Limiting the deductions for the cost of managing tax affairs to $3,000. 
• Applying a minimum 30 per cent tax on discretionary family trust distributions to people over the age of 18. This measure should not affect Managed Investment Trusts. 
• Reducing the withholding tax rate from 30 per cent to 15 per cent on distributions to non-residents relating to Build-to-Rent properties. 
• Tightening of debt and royalty deductions for multinationals. 
• Deny tax deductions for travel to tax havens (which could include some funds management locations such as the Cayman Islands). 
• Mandate public reporting of high-level information from country-by-country tax reports 
• Payment of bounties to tax whistleblowers where the whistleblowing results in more tax being paid. 
• A public registry of the beneficial ownership of listed companies and trusts. 
• Mandatory reporting of tax haven exposure by companies. 
• Immediate write-off of 20 per cent of eligible investment spending (Australian Investment Guarantee). 
• ALP has committed to adopting the Liberal-National Party’s $500 million First-Home buyer Deposit Scheme. 

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A full list of ALP’s policies can be found here.

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ALP Budget Plan

The ALP released its Budget plan on Friday 10 May 2019, including the full budget impact of all its policies announced to date. 

In summary: 

• The Budget surpluses to 2022–23 will add to $57.9bn, which is $17.2bn more than under the Liberal-National Party. Over the medium term, surpluses under ALP are forecast to be $87bn higher than under the Liberal-National Party. 
• The total tax burden is forecast to increase to 24 per cent of GDP. The Liberal-National Party has capped the tax burden at 23.9 per cent of GDP – so the tax burden will be 0.4 per cent higher under the ALP (this is about $8bn in today’s money). 
• Over the next decade, the tax changes have this effect:
  • Ending franking credit refunds increases tax revenue by $58.1bn. 
  • Ending of negative gearing and the halving of the CGT discount increases tax revenue by $32.7bn. 
  • The superannuation tax changes increase tax revenue by $29.7bn. 
  • These three measures put together increase tax revenue by $120.5bn.

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Click here to view the full document. 

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ABC Australia Votes website

For members wanting to follow live results on Election night, the Australia Votes website provides a comprehensive breakdown of the electorates and expert commentary on the Federal Election. 

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Policy Positions of Minor Parties on ALP Policies and Royal Commission Response Comparison of Both Major Parties

The FSC has developed two documents, an aggregation of policy positions of minor parties on ALP policies and a Royal Commission response comparison of both Major Parties. The Royal Commission comparison document will allow members to compare the responses of both major parties and will provide up-to-date tracking on reforms relating to specific Royal Commission recommendations. 

  pdf   Click here to view the Policy Positions of Minor Parties on ALP Policies.

  pdf Click here to view the Royal Commission Response Comparison of Both Major Parties.