In short: Sweet FA.

In a little more detail; the review flagged a number of potential changes, most of which the government has chosen to disregard. The cynic in me suggests that this is largely because of the upcoming election, but for whatever reason, the government has chosen just a handful of these (four, from a total of 138) to include in the budget (due in just a couple of weeks now).

For investors, there is not a lot of direct influence. The additional taxes on large mining companies may affect property in WA, but that remains to be seen.

Amongst the ignored recommendations from Henry were ideas such as seeing net income (positive or negative) on rental properties carry a 40% differential, encouraging loans to be paid down and removing part of the negative gearing benefit. Capital gains tax for long term assets would increase (by adjusting the 50% discount) and land tax would become a flat 1% regardless of the location and would include the family home.

However, these are all things to be vaguely aware of as future possibilities and don’t yet form the basis of any likely change. We’ll see what happens come November, I guess.

So, the four key changes that the government does want to implement, include;

  • eventually reducing company tax rates to 28%  (by 2014/15)
  • eventually super contributions rising from 9% to 12% (by 2020)
  • eventually increasing taxes on highly profitable mining companies of up to 40% (by 2012)
  • low income earners may get an additional $500 in super from the government

In addition, small businesses will get the reduced company tax rate a little earlier, and the depreciation thresholds for small businesses are also increasing to encourage business spending. For most property investors, though, there is not a lot to think about here.

That said, there is also speculation of further announcements, particularly in the federal budget and then again as election policies. So, watch this space…