A WORD FROM JAMES
Welcome to our summer newsletter and an update from the team prior to breaking for Christmas. We’ve run some great functions over the last month with a first home owners seminar over pizza and beer at the Super Kawaii Studio in Warrnambool, and an afternoon tea at Heytesbury House in Cobden. Once again thanks to Courtney Guy for being our guest speaker at the Cobden event. We are looking forward to running more functions in 2019, with a lot of requests from younger people new to the workforce and wanting to better understand superannuation, budgeting and investing.
Prime Minister Scott Morrison has announced the 2019 budget will be delivered in April, with the election looking likely to be the following month in May. Recent political events are making it increasingly likely the Labor party will form government at the next Federal election. While a lot can happen in five months of politics the main investment and tax policies proposed by Labor are outlined below.
Franking credit refunds. Franking credits can still be used to reduce tax payable, but excess franking credits cannot result in a tax refund. An important exception to this is the ‘pensioner guarantee’, which will exempt people receiving full or part aged pension. This policy is estimated to make $10.7bn in the first two years.
Negative gearing of investment properties. Negative gearing will no longer apply for people who purchase investment properties. The two exceptions are newly built properties and properties purchased before the legislation passes. This was originally pitched by Labor as a policy to reduce house prices and make them more affordable. Arguably this is not such an issue with house prices having fallen sharply in the past few months.
Capital gains tax reduction. The CGT discount will be halved from 50% to 25% for assets held longer than 12 months. Exceptions to this policy include investments purchased before the legislation passes, investments made by superannuation funds and the assets of small business owners.
We will continue to monitor policy updates from both major parties as we get closer to the election. As with any changes, strategies will emerge to minimise financial loss and take advantage of the changes wherever possible. Have a safe and happy Christmas and we look forward to seeing you in the New Year.
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