Post Election Impact !
Hi, I’m Hayden Lewis and I’m one of the Financial Advisers here at HMH.
Well…we can all breathe a sigh of relief – the election is over and with that; the bombardment of election advertising is over… for now…
Whilst counting is still underway, the result of the election has defied opinion polls with Scott Morrison and the Coalition being re-elected.
Now, whether you are happy or disappointed with the result, the real question becomes: How does this result impact me?
From a tax perspective, the majority of the Coalition’s policies were included in the May Federal Budget, with only a couple of small amendments made during the election campaign.
The Coalition’s policies focus on supporting a number of areas, including:-
- Low to middle income earners. Which will see rolling tax cuts across the wage spectrum which will start in July of this year and filter through to July 2024;
- Small to medium sized businesses. Via increased thresholds for the instant asset write-off deduction;
- The overall economy. With infrastructure spending totalling $100 billion over the course of the next 10 years;
- First home buyers. Via the first home buyers loan deposit scheme which will support the funding of a 20% deposit; and,
- Many more policies that covered other areas such as superannuation, climate change, childcare, aged care, etc.
Some of the imminent changes affecting you include:_
- Businesses with revenue of up to $50 million can instantly write-off assets valued up to $30,000. This limit was previously $25,000.
- Tax cuts resulting in a benefit of between $255, for those with taxable income of $25,000 or less, and up to $1,080 for those with taxable income of $90,000. Above $90,000, the benefit gradually reduces to zero when the individual’s taxable income reaches $126,000. But these tax cuts need to be approved by Parliament.
- Other positive news associated with Labor losing the election, is that you can forget about immediate changes to your franking credit refunds, your ability to negatively gear, increased capital gains tax, the tax deductibility of your accounting fees, increased taxes on trust distributions, etc.
From a market perspective, share markets have reacted positively to the election outcome. Shares of the major banks and health insurance companies rallied on the back of the removal of Labor policy risk. Because of the pro-business policies of a Coalition government, it is expected that business confidence will also experience a jump on the back of the election result. Which should be positive for the overall economy.
But there are still a number of matters that will impact markets and which you should keep an eye on after the initial elation of the election result subsides.
These include the upcoming Reserve Bank of Australia meeting, in which market pundits are expecting to see an interest rate cut. But will the election result impact this decision? Possibly, but this is still to play out.
On the international front, the ongoing trade tussle between the US and China continues and this will impact confidence on share markets.
If you’re wondering about the impacts specific to your personal situation, please either call your usual HMH contact or give myself, Hayden Lewis a call. I’ll be more than happy to help.