The polls suggest Labor’s tax changes are coming _ housing benefit for single mum

Distributions from a discretionary trust will incur a minimum rate of 30 per cent, instead of the current arrangements where tax can be paid at a much lower rate (or no tax at all if below the tax-free threshold) if income is split amongst beneficiaries in low tax brackets, the labor policy says. In circumstances where the minimum tax rate on discretionary trust distributions is lower than what would be paid under the normal marginal tax scales, the higher rate would apply. Beneficiaries liable

As KPMG partner nathan fenner explains in a note to clients, rather than imposing income tax directly on a trust estate, which would be the outcome if trusts were taxed as companies, the liability would instead fall on the trust beneficiaries in the form of a supplementary income tax.

Shadow treasurer chris bowen said individual beneficiaries would still be eligible for franking credits and the capital gains tax discount, but the tax-free threshold would not apply.Housing benefit for single mum the minimum rate of tax is targeting the use of trusts to minimise the tax paid by distributing beneficiaries who might be students, for example, a spokesman for bowen says.

As has been well canvassed in these pages, super policy has undergone some serious change in recent years and shorten has not indicated a further wind-back of tax concessions for retirement savings. That said, a labor government would place a ban on self-managed super funds using limited recourse borrowing arrangements (lrbas).

Aaron fuda, a mortgage broker with omniwealth, is advising investors who are intending to borrow in their SMSF to bring those plans forward. The next federal election is due to be held in late 2018 or early 2019, and if labor wins it has plans to introduce legislation to stop SMSF lending, he says. This is a significant change, and places uncertainty around SMSF lending until the next election.Housing benefit for single mum something you hear a lot when a major change occurs is, ‘oh darn, I was planning to do that’.

Fuda says the key uncertainty is when any legislation would take hold, and subsequently what happens to people who might have exchanged contracts but not settled. While some are vehemently opposed to lrbas, fuda says the strategy can work with the right accounting, legal and other advice, and if the SMSF is prepared to hang on to the investment for a long period of time.

It’s obviously a long hold, generally 10 years and usually more, so you’re through several property cycles before you look at selling, he says. I’ve got clients in their mid-30s who are buying property inside super. By the time they are 65, they are going to have an appreciated asset they can sell without any tax. You don’t know where property prices are going, but you’d assume upwards in the next 25 to 30 years.Housing benefit for single mum

Which brings us to another of labor’s policies: limit negative gearing to new property and halve the capital gains tax discount. Cortis says he is urging more caution about investing in real estate than he has for many years. This is the result of a combination of likely interest rate rises and the prospect of a labor government. The general consensus is that interest rates will rise by another half a per cent next year, he says. Food for thought

As the australian prudential regulation authority keeps tightening the screws and banks have been getting more cautious about lending, that might mean interest rates will go up by maybe 0.8 per cent in the next year.