It might not be as emotive an issue as housing or immigration, but tax changes often end up being among the most tangible impacts a government has during its tenure.
Since taking office in 2022, the Albanese Government restructured the stage three tax cuts, reducing the marginal tax rate for lower income earners, while leaving higher earners in the lurch, and increased the Medicare Levy Surcharge income threshold.
This time around, Albanese and Labor are planning on introducing a standard $1,000 tax deduction for work expenses that any worker can claim without substantiation - up from the current $300.
As we learned in the Federal Budget, Labor also intends to once again reduce the marginal tax rate for the lowest bracket ($18,201-$45,000) from 16% to 15% in 2026 and then to 14% in 2027.
If elected, Peter Dutton and the Coalition say they will throw this change out - their answer is a one off tax offset of up to $1,200.
This can be seen as a reiteration of the Low and Middle Income Tax Offset, otherwise known as the lamington, which was a bulwark of the Scott Morrison era.
Other flagship policies include allowing first home buyers buying a newly built property to claim interest paid on up to $650,000 as a tax deduction, and halving the fuel excise.
The fuel excise is currently 50.8c per litre of petrol, and is indexed twice a year; halving it would bring down a litre of petrol in Sydney to around $1.52 at current prices.
This is also a reiteration of a Morrison-era decision to temporarily reduce the excise.
Mark Chapman, Director of Tax Communications at H&R Block, said the major distinction is that the Coalition's proposals will benefit a slightly higher earning demographic than Labor's.
"The vast bulk of the benefit [from Labor's standard tax deduction] will fall on those lower and middle taxpayers," he told the Savings Tip Jar podcast.
"With the Coalition however, it's aimed at a slightly higher earning demographic - this new [$1,200] tax offset won't kick in until you earn at least $48,000 and will apply through to [a salary of] $144,000".
What are Labor's tax policies?
As it stands, if your total work related expenses in a tax year comes to less than $300, you can deduct the total amount without receipts.
Labor intends to raise this to $1,000, which would effectively mean everyone earning a salary can claim $1,000 without evidence.
If you're claiming more than this amount already, Mr Chapman says this policy change "isn't significant at all".
"You'll continue to claim deductions in the existing way... keep your receipts, your invoices, your bank statements," he told the podcast.
If you're claiming less than $1,000 though, he called the proposal "quite attractive."
"It potentially works as an effective tax cut for you," he said.
Say you're spending $500 each year on work expenses - this means you'll be able to claim an additional $500 deduction.
Remember, this is just a deduction, not a refund - so if your top tax bracket is 30c you'd get $300 back as opposed to $90.
Mr Chapman said it also could save "time and money" but said taxpayers should still keep track of their work related expenses just in case.
"In practice, many taxpayers will still need to keep full substantiation as they won't necessarily know whether their work-related expenses are going to be more or less than $1,000 until they get to the end of the tax year."
As for the cuts to the lowest marginal tax rate, he echoed Mr Dutton, saying the impact would be "fairly minimal".
"It's worth $5, $10 to every taxpayer, basically a cup of coffee each week," he said.
What are the Coalition's tax policy proposals?
The Coalition intends to introduce a one off 'Cost of Living Tax Offset' for the forthcoming financial year, which will automatically be applied at tax time.
Here's the planned offset amount for taxpayers on different incomes:
| Taxable income | Benefit |
|---|---|
| $37,000 or less | Up to $265 |
| $37,001 to $48,000 | $265 plus 8.5 cents for every dollar above $37,000 |
| $48,001 to $104,000 | $1,200 |
| $104,001 to $144,000 | $1,200 minus 3 cents for every dollar above $104,000 |
Announced in early April, Peter Dutton also raised eyebrows when he announced the Coalition plan to introduce the first home buyer mortgage deduction scheme.
First home buyers buying a newly built property would be able to claim the interest paid on the first $650,000 of their home loan repayments as a tax deduction for the first five years of the mortgage.
There are income caps, but generous ones - $175,000 for individuals and $250,000 per couple.
On a $620,000 mortgage Mr Chapman said it could leave homebuyers better off by about $12,000 a year.
It's a bit of a 'two birds one stone' policy in that it could also improve sluggish residential construction levels - although Mr Chapman did flag the possibility that it could also increase property prices.
"You've really got to look at the flow-through effects of this policy... although you're getting a $12,000 a year tax benefit, ultimately you might well end up paying at least that much in the cost of buying an additional house because this is a measure to boost demand," he said.
No shot at real reform?
Whether it's Labor or the Coalition that ends up elected on 3 May, following through on these pledges should mean a few extra dollars in the pockets' of everyday Aussies in the 25/26 financial year.
However, a growing number of Australians want more expansive tax reform like indexing tax brackets to inflation, which prevents 'bracket creep' - as wages rise with inflation, more people are pushed into higher tax brackets despite their real incomes not increasing.
Indexation, flagged by Peter Dutton as an 'aspiration" would be a "sensible and wise policy" according to Mr Chapman.
"It would be good to see one of the two parties actually committing to indexation as a policy, not just an aspiration," he said.
Picture by Markus Winkler on Unsplash
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