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Election 2019: SEA Tax Calculator

How much extra tax will you personally pay under Shorten compared to Morrison?

Version date:  2 May 2019

This calculator assesses the tax you will pay under a Shorten Labor government compared with a Morrison Coalition government. The tax policy assumptions used in the calculator are explained underneath the calculator. These are based on policies announced by both Labor and the Coalition.

Labor leader Bill Shorten has been honest in stating that, under a government he leads, taxes will be higher. This calculator shows that normally once you earn more than around $38,000 a year, you will pay more tax under Labor.

You can find out how much extra tax you will pay by entering the following information in the green boxes:

  1. Your income
  2. What % you think your income might increase over the years
  3. How much, if any, cash rebate you might receive for fully-franked share dividends. That is, only enter the cash amount you receive or might receive from the government on fully franked dividends. Don’t enter the total amount of your dividends.
  4. How much your accountant costs each year
  5. The value of an investment property if you have one

The calculator will generate a figure on the extra tax under Labor and show this in the red boxes.

The calculator relates only to your individual, personal tax.

You can play with the calculator. For example

  • What income do you think you might earn?
  • Is it worth buying fully-franked shares?
  • What would happen if you decided to buy an investment property?

And then discover the tax take. Enter your information in the green boxes.

 

Tax policy information underpinning the calculator

The tax information underpinning the calculator is sourced from publicly available statements from Labor, the Coalition, government sources and the media. We have provided an advanced copy of the calculator to both Labor and the Coalition asking for their feedback, if any, on whether our tax policy assumptions are correct or not. We are happy to change the calculator if there are provable errors.

Current taxable income

This calculates your personal income tax over the budget forward estimates as detailed by

  • Labor in its policies
  • Coalition in its policies
  • Budget papers

The source references are:

https://www.ato.gov.au/general/new-legislation/in-detail/direct-taxes/income-tax-for-individuals/personal-income-tax-plan/

https://www.budget.gov.au/2019-20/content/tax.htm

https://alp.org.au/policies/fairer-tax-cuts-for-working-australians/

https://www.afr.com/personal-finance/superannuation-and-smsfs/labor-is-right-to-hike-super-taxes-at-incomes-of-200k-research-20190101-h19lgl

https://www.ato.gov.au/Individuals/Income-and-deductions/In-detail/Temporary-budget-repair-levy/

Anticipated Income growth

This factors in tax over the forward budget estimates and how your income growth will or might put you into higher income tax brackets.

Dividends

Labor has announced that it will deny you cash rebates in lieu of tax credits from financial year 2020 on dividends from fully-franked shares you own. Franking credits allow you to reduce your taxable income because any company you own shares in has already paid tax on the company profits. Franking credits stop you being taxed twice on the on the same dividend income. That is, once when the company pay tax and again second when you pay tax on the dividend. Where persons, such as retired persons, do not earn a taxable income the government currently provides a cash rebate in place of the tax credit. The policy of the Shorten Labor Party is to abolish cash rebates for fully-franked shares. Source reference is https://www.afr.com/personal-finance/everything-you-wanted-to-know-about-labors-proposed-franking-credit-changes-20190305-h1bzt5

Negative Gearing

Labor has made it clear that if you buy a rental property after 1 January 2020 and you make a loss on the rental property, that you will not be able to offset that loss against your usual income.

Superannuation Surcharge

Currently, if you earn more than $250,000 a year, there is an additional tax on any superannuation contributions you make. Labor has said that it will reduce that threshold to $200,000.



Election comment authorised by Ken Phillips, Melbourne.

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