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Edition 339 – Maybe, Just Maybe!

You know when your favourite sports team is being smacked around in the media? They’re not performing as they should and questions start getting asked about the performance of the coach, or even the star players? What starts out as a rumour, builds to a crescendo until the only focus is on when they’re going, not if.

Based on my assessment of what’s happening in Canberra following the election of the new Government in May this year, I can’t help but wonder if we’re in for some changes on the policy front and that, maybe, the knife will be wielded in the upcoming mini-Budget due to be handed down on Tuesday 25th October, 2022.

I don’t have a crystal ball, but from what I’m reading and hearing, the financial commentary is building to a crescendo.  It’s had me wondering for a little while now:

  1. Whether the current 100% Tax Deduction for certain businesses on the purchase of new and second hand assets might get the chop in October? It’s due to run out in June 2023. However,  if 500 000 businesses that would otherwise spend $50K on an item of equipment have the kybosh put on their plans early, that saves the Budget bottom line $6.25 billion.
  2. That maybe, superannuation is in for another tax hit. The easiest thing for the Government to do would be to assess all self-funded retirees for income tax, as was the case prior to the superannuation changes announced by the Howard Government in 2007.
  3. If the third tranche of the personal income tax cuts, due to commence on 1st July, 2024, might be deferred, or even binned completely. Whilst Labor supported the legislation when it went through the last Federal Parliament, the budget bottom line looks sick and if they carve out what middle and high income earners would otherwise receive as part of that legislation, it will assist in improving those numbers.

As a generalisation, each of these three groups are not the core constituency of Labor. That’s not just my take on things, they’re the facts when you look at any opinion polls, pre or post election and either what people’s voting intentions are, or how they’ve actually voted. In my opinion, they are easy decisions for the new Government to take as they’re not going to wear the political backlash from their own constituency (by and large) by making any such decisions.

Now, I could be completely wrong about all of this. My crystal ball may well need a refurbishment come 25th October, 2022 once Jim Chalmers stands up in Parliament and delivers his speech. However, I’ve seen this too often in the past to know that something is up, and some of us are in for a bit of a shock. Just like the noise, all year, around Daniel Ricciardo’s performance in and longevity with the McLaren F1 team, eventually, a decision is made that doesn’t surprise anyone.

This Week’s Tip

“From the 100% Tax Deduction perspective, I’ve been advising my clients for two months now,
make sure things are in place by October if you want to avail yourself of the programme.”