NEW PRIME MINISTER: NEW TAXES ?

Welcome Mr. Turnbull to the leadership position in Australia

-He happens to be our 5^th Prime Minister in 5 years resulting from yet another leadership spill. Whether you actually welcome Malcolm Turnbull or not is for your own political agenda – but what are his current thoughts and ideas surrounding tax during this slump in the Australian Economy?  Will there be new taxes?

Mr. Turnbull recently delayed the release of a significant tax reform paper which was believed to be rethinking Australia’s current tax system commissioned by Joe Hockey with newly appointed treasurer Scott Morrison – who should now be making their own touches to the paper.

The new Prime Minister recently called participants in last month’s national reform summit to discuss a consensus on a lower company tax rate, changes to high-end superannuation tax concessions, and replacement of “inefficient” taxes such as stamp duties with more efficient and nationally consistent land taxes. Mr. Turnbull has previously been known to push for lower marginal tax rates for high-end income earners, where in 2005 he made suggestions of either a 35-40 cent-in-the-dollar top marginal tax rate for individuals.

There continues to be discussion surrounding GST and whether an increase from the current rate of 10% will be of overall benefit to Australia. Big 4 firm KPMG recently provided a report to CPA Australia showing that an increase in the rate from 10% to 15% would lead to additional GST revenue of $20 billion a year – but consideration of how this will affect the low income earners of Australia will need to be taken in stride with Mr. Turnbull and his team.

With the exit of Tony Abbott there was a ‘re-opening’ of discussions surrounding capital gains breaks for investors, changes to negative gearing, and superannuation tax concessions which were previously thrown out by Abbott.

The coming months will hopefully provide a clearer picture of what our new Prime Minister plans to achieve and how far he actually takes any tax reforms in a tough time for the Australian economy.

RICK FILOCAMO

Accountant  – OPTIMA PARTNERS