Accounting industry awaits federal election outcome

Tax measures have formed a major part of the campaigns for both Labor and the Coalition this election as parties attempt to win over voters struggling with the rising cost of living and small businesses.

The result of the Federal Election tomorrow will determine the outcome of many of these tax incentives along with other tax reforms that are yet to be enacted.

Labor's policies

Last month the Prime Minister announced that Labor would introduce a $1,000 instant tax deduction for work-related expenses.

Prime Minister Anthonty Albanese said the reform would enable taxpayers to claim $1,000 instant tax deduction instead of claiming individual expenses. Taxpayers would not be required to collect receipts for deductions totalling less than $1,000 under the proposed measure.

The measure has drawn a mixed response from the accounting industry so far. Many accountants have welcomed the announcement, stating that it will simplify individual tax returns and provide accountants with more time to focus on productive work.

“Your average accountant these days does not want to take on new individual tax return clients, as the compliance makes it hard to make money on them," Two Sides Accounting founder Natalie Lennon told Accountants Daily previously.

However, others have raised concerns that the measure could see taxpayers miss out on important conversations with their accountant as greater numbers of taxpayers will self-prepare their returns.

Labor has also confirmed that a re-elected Albanese government would extend the $20,000 instant asset-write off threshold for a further 12 months.

The will enable small businesses with a turnover of less than $10 million to be able to deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2026.

The party has also promised a crackdown on financial abuse involving tax debts, announcing plans last month to close the loopholes that allow financial abuse to occur in the tax system. Labor also plans to make changes to the rules so that perpetrators are required to pay back the debts.

The Coalition has made similar commitments, announcing a $90 million package that included a suite of measures to combat domestic violence, including financial abuse perpetrated through the tax system.

Accounting bodies including Chartered Accountants ANZ and CPA Australia welcomed the announcements by both major parties.

"Tackling financial abuse is important to both sides of politics and we’ll work with whoever is in government to ensure that any changes that are rolled out deliver the promises being made to victim-survivors and their families,” Ainslie van Onselen, chief executive of CA ANZ, said.

Labor is yet to rule out one of its more controversial tax measures, the Division 296 tax which would apply to super balances above $3 million.

The party has struggled to pass the bill containing the measure through the Senate, which seeks to impose an additional 15 per cent on earnings on balances above $3 million. The bill lapsed when the election was called, meaning Labor will have to restart the process if re-elected.

The party also announced tax cuts for all taxpayers in the Federal Budget for 2025-26, which would be delivered over a two year period.

From 1 July 2026, the 16 per cent tax rate, which applies to taxable income between $18,201 and $45,000, would be reduced to 15 per cent. From 1 July 2027, this tax rate would be reduced further to 14 per cent

Coalition's policies

The Coalition's campaign has sought to appeal to the small business community with a range of tax incentives including its tapered tax offset for new businesses, $20,000 meal and entertainment deduction, a permanent IAWO and its tech booster deduction.

The Coalition's promise to make the instant asset write-off permanent has been welcomed by small business advocates who say this would provide certainty for small business owners looking to make investments in their business.

The $20,000 capped tax deduction for business-related meal and entertainment expenses would apply to small businesses with a turnover of up to $10 million and would be exempt from fringe benefits tax. Alcohol would be excluded under the policy.

While tax experts have said the measure would be a potential win for small businesses, it may create complexities depending on how the deduction intersects with the GST and FBT laws.

More recently, opposition leader Peter Dutton announced its 'Entrepreneurship Accelerator' measure, which would operate as a tapered tax offset, starting at 75 per cent of the business's first $100,000 of taxable income, and 50 per cent of their second $100,000 of income in their first year of operation.

Dutton said the measure "would support more Australians to take the risk and back themselves to start a business, and support businesses through their early years".

The Coalition also plans to provide a tax deduction of $2,000 for tech upgrades for small businesses under its ‘Tech Booster’ measure. This would apply to eligible technology investments of $4,000 or more, it said, and would help small businesses to invest in the digital tools needed to grow.

Eligible investments under the measure would include digitally enabling tech, digital media and marketing, e-commerce tools and cyber security.

If elected, the party also plans to introduce a temporary 'Cost of Living Tax Offset' which would provide Australians earning up to $1,200 in tax relief when they lodge their return for the upcoming year.

It has also announced a 25 cent per litre cut to the fuel excise and a 'First Homes Buyer Mortgage Deductibility Scheme' which would enable first home buyers to claim a tax deduction on interest payments for the first five years of their mortgage.

The deduction for first home buyers would apply to interest paid on up to $650,000 of their mortgage from their assessable income.

The measure will be available to individuals earning up to $175,000 and joint applicants earning up to $250,000.

The Coalition has also focused its attention on accountants during its campaign, promising to repeal the ‘Tax Agent Services (Code of Professional Conduct) Determination 2024’ which introduced new obligations for registered agents.

Shadow financial services minister Luke Howarth also stated that he would support making it easier for accountants to provide advice, particularly SMSF advice, if the Coalition is elected to government.

"The limited licensing regime established in 2016 for accountants has not been successful, with few currently using this pathway," said Howarth.

"The Coalition will consult on options to make it easier for accountants, as trusted professionals, to provide more financial advice, particularly in relation to setting up an SMSF."