With a federal election on the horizon, uncertainty surrounding several announced but unenacted tax measures continues to grow. The Tax Institute’s chief executive, Scott Treatt, has highlighted how these uncertainties are impacting taxpayers and advisors alike.
In an election year, the government entering caretaker mode often stalls the progress of legislative measures. This adds to the list of tax initiatives that have been announced but not yet enacted, including significant measures such as the Division 296 tax on earnings for super balances exceeding $3 million and changes to the instant asset write-off for the 2024–25 financial year.
Treatt explained that calling an election could further delay decisions on key tax measures. “We’ve already seen certain things from a Senate perspective get kicked down the road to clear the decks for other bills. Calling an election will potentially throw more doubt and uncertainty around some of the key issues within our system,” he said.
One particularly contentious measure is the Division 296 tax, which has sparked debate due to its inclusion of unrealised gains as taxable income. Treatt noted that discussions on this measure are unlikely to take place before the election, leaving its future in doubt. “What if there’s a change in power? Where does it sit?” he asked.
The instant asset write-off measure is another area clouded by uncertainty. In the 2024 federal budget, the government proposed a $20,000 cap for the 2024–25 financial year. However, this follows a turbulent period during which the cap was proposed to increase to $30,000 and even become a permanent measure—a move supported by The Tax Institute. Despite these proposals, the final schedule to extend the measure to 30 June 2025 was removed before the enabling bill was enacted in December 2024.
Treatt pointed out that the 2024–25 financial year is already halfway over, and with the Senate not due to sit until next month, there is limited time to implement any changes. “At best, the law will go through then, leaving only four months left of the year to make decisions,” he explained. However, an early election could result in further delays, potentially leaving the measure unresolved until after the financial year ends. This would lead to retrospective legislation, creating challenges for both taxpayers and advisors.
Delays like these create frustration for many Australians, who are left uncertain about how to plan their financial decisions amidst legislative uncertainty. “Clients want to understand and, at times, get frustrated because they’re asking what to do, but the answers aren’t always clear as decisions keep getting deferred,” Treatt said.
These ongoing uncertainties underscore broader issues within the legislative process, where politics often interfere with the development and implementation of sound tax policy. A more transparent and streamlined approach to tax reform is needed to support better decision-making for businesses and individuals alike.
If you’re unsure how these potential changes could impact you or your business, our team is here to help. Reach out to us today to discuss your concerns and ensure you’re prepared for whatever changes may arise.
