What tax changes Treasurer Scott Morrison is likely to target

SUPERANNUATION and some other tax changes are to be announced by government soon. Here’s what financial commentators believe you can expect.

Treasurer Scott Morrison at the National Press Club in Canberra earlier this week. Picture: Kym Smith

SUPERANNUATION and some other tax changes are likely to be announced soon, a fact reinforced by Treasurer Scott Morrison during a brief visit to Adelaide on Thursday afternoon.

Mr Morrison did not reveal specific measures but said “current deliberations are drawing quickly to a conclusion”. Here’s the latest thinking from the financial community about what you can expect.

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• SUPER TAX TWEAK

• CONTRIBUTION CAPS

Wealthy people can pump an extra $180,000 into their super each year through non-concessional contributions, allowing them to build huge nest eggs in a low-tax environment. These could be on the chopping block.

• RETIREES SAFE

The Howard Government’s super changes in the mid-2000s made super income and withdrawals completely tax-free for retirees aged over 60. Labor wants a new tax on super earnings above $75,000 a year in the retirement phase, but Mr Morrison says these rules should not be changed.

• STRATEGY HIT

Pre-retirees can save thousands of dollars a year in tax by using a complex but popular transition-to-retirement strategy that combines salary sacrifice with super fund withdrawals from their late 50s. Expect this to be scrapped, possibly as soon as Budget night in May.

• NEGATIVE GEARING

Labor’s plan to limit negative gearing tax deductions to only new investment properties has been rejected by the Government, but it is keeping its options open about putting a limit on the amount of tax deductions or properties. Stay tuned.

• GST

The idea of increasing the GST from 10 to 15 per cent, or widening its reach to include things such as fresh food and education, appears dead in the water after a big political backlash and Treasury modelling that showed the end economic result might not be worth the political pain.

• BRACKET CREEP

Rising wages are pushing hundreds of thousands of workers into higher tax brackets, so there may be some tinkering with marginal tax rates. But don’t expect too many cuts in a shaky Federal Budget that already spends a lot more than it earns.