Your 2016 federal election cheat sheet
Voters will take to the polls on Saturday to decide which political party will take the top spot for the next three years. Money's cheat sheet details the key election promises of the two major political parties.
The ALP has proposed changes to negative gearing and capital gains tax (CGT). Opposition Leader Bill Shorten has proposed restricting the negative gearing to new properties from July 1 next year, along with halving the CGT discount for all assets held longer than 12 months to 25%. The ALP claims its tax reforms will create $32.1 billion in savings over ten years. The Liberal Party has said it will not be making any changes to negative gearing or CGT rules.
The Liberal Party's biggest changes in the May budget were around superannuation. Treasurer Scott Morrison proposed a lifetime cap on non-concessional contributions of $500,000 and a $1.6 million transfer cap on the amount that can be moved into the tax-free retirement phase. The cap on annual concessional contributions will be reduced to $25,000. These changes are proposed to take place from July 1, 2017.
The ALP has shown support for many of the proposed super changes, but is expected to tweak policies that are retrospective. It has also proposed taxing the traditionally tax-free earnings in the pension phase at 15% for income earned above $75,000.
There has been speculation that the Liberal Party plans to privatise the Medicare system - something the government has denied.
In the May budget, the Coalition announced it would extend its freeze on the Medicare Levy Surcharge and Private Health Insurance Rebate thresholds for a further three years from July 2018.
The ALP is planning to end the freeze on the Medicare benefits schedule if elected, and will restore the indexation of the rebate scheme from January 1, 2017.
Labor's key election promises will lead to a $101 billion deficit over four years, which is $16.5 billion more than the projected deficit of the government ($84.5 billion). The ALP argues that the Liberal Party's "zombie" measures (policies still stuck in the Senate) should not be included in its deficit projections, which ALP's finance spokesman Tony Burke claims would increase the Coalition's deficit by $9.1 billion in 2019-2020.
One of the ALP's key election promises is more funding for public education. The opposition is committed to the full plan of Gonski funding reforms which will cost Labor $37.3 billion over ten years. The government will not fund the final two years of the Gonski plan, but will commit to an additional $1.2 billion from 2018 to 2020. This falls $3 billion short of ALP's commitment over four years.
The May budget revealed an array of tax cuts for middle income earners and businesses big and small. The tax rate for companies is set to be gradually lowered over time. From July 2016, small businesses will have a company rate of 27.5%. By 2023-24 the rate will be introduced to all companies, and by 2026-2027 it will be further reduced to 25%. Middle income earners will also see a tax cut, as the middle income tax bracket will be pushed up from $80,000pa to $87,000pa.
While Labor has shown support for reducing taxes for small business and middle income earners, it does not support the cuts being rolled out to big businesses.
Both parties are targeting the tax avoidance of multinational corporations.