Should Tax Planning come early this year?

The Federal Government has recently indicated that all tax policy will be reviewed to rein in the budget deficit. This has us and many others wondering, should tax planning come early this year, before changes are announced?
Items such as superannuation contributions and related concessions, capital gains tax (“CGT”) concessions, negative gearing and even a potential lift in the Goods & Services Tax (“GST”) rate, have all been touted as potential reforms.
With the public mood, and that of the cross benches, firmly opposed to any changes to the GST, it appears highly unlikely this particular item will be impacted.
This means speculation is (seemingly increasing daily) that the Government may be forced to make changes to the other areas of taxation mentioned and if this occurs these will directly affect the wealth building strategies of the majority of our Clients.
Specifically in relation to superannuation, areas that may be targeted include:

• Contribution Caps and/or increased taxes on Concessional Contributions (though Non Concessional Contributions may also be targeted),
• A Restructure of the Lump Sum Tax regime, which may affect the taxes on Lump Sums for retirees,
• Changes to the rules around Limited Recourse Borrowing Arrangements (including potentially the ability to use them at all),
• Taxation of assets supporting Pensions when the level of member benefits, or the income derived on those benefits, exceed a certain threshold,
• Taxation of Pensions for those over the age of 60,
• Removal or reduction of the CGT Discount within Superannuation,
• Removal or reduction of the Small Business CGT Concessions including the Retirement Exemption and its tax free status when contributed to super.

Outside of super, areas that may be impacted include:

• Removal of negative gearing on properties (and perhaps other assets),
• Removal of the CGT Discount,
• Removal or changes to Small Business CGT Concessions and other CGT Rollovers and Reliefs.

Of course other areas (both in relation to super and non-super matters) could come under fire that we have not highlighted here, or even yet contemplated!
Some if not many of the above changes are seen by many commentators as “likely” as they can be said (at least by politicians) to target mainly the “rich” and those “well off” enough to be able to afford to go without these concessions.
If these changes are to be made they will most likely be announced on Budget night (now being on May 3rd having been brought forward this week by Prime Minister Turnbull from the 10th as you can see below) or in the weeks leading up to the Budget.  They will also likely take effect immediately upon announcement (ie. there may well be no window to plan for upcoming changes once they are announced).
https://www.youtube.com/watch?v=R0OqLYx9Q1c

Generally we meet with our best Clients regarding their tax planning during late May and throughout June, however we feel it is important we ensure you are all aware that, given the budget deficit crisis, and given the level of “buzz” around the issue, it appears there is a good chance performing tax planning at that time could be too late for some!
It may therefore be wise to start the tax planning process now, especially where that strategy involves using your SMSF, restructuring and utilising CGT Concessions or the crystalisation of a large capital gain.  Planning for some of these changes could include:

• Making Concessional and Non Concessional Super Contributions earlier than may have been planned,
• Actioning planned Super draw-downs (possibly including re-contribution strategies) earlier,
• Payment of annual pension entitlements earlier,
• Implementing Limited Recourse Borrowing Arrangements (ie. borrowing within your SMSF) for the acquisition of new assets, on a more urgent basis,
• Bring forward the purchasing of properties that are to be negatively geared,
• Bringing forward realisation of significant capital gains including potential restructuring utilising existing concessions and roll-overs.

By taking these steps prior to the May Budget you will reduce the risk that you will lose the benefits of these concessions should touted changes be announced on budget night or in its lead up.
Of course please bear in mind until announcements are made, no one knows for sure what changes are coming (or even if they will become law once announced)!  Some, even all, of the changes may not actually occur, so the risk versus the reward needs to be considered.  However given the “chatter” occurring in the media as we speak, we feel it is our duty to at the very least forewarn our loyal Clients!