December 2, 2023

According to, “The Australian Government is building a personal tax system that encourages aspirational Australians to get ahead while being fiscally responsible. The first step will provide tax relief to low and middle-income earners, the second step will help tackle bracket creep, and the third step will simplify and flatten the system.”

The Government also reports, “94 percent of Australian taxpayers will pay no more than 32.5 cents in the dollar, compared to 63 percent if the current system is left unchanged.”

In this blog, we can see the fundamental changes from the 2018-19 budget as listed by Perth tax lawyer that may affect the tax deductions and concessions.

Tax Deductions on Vacant Land

Did you know taxpayers will not be able to claim to hold cost deductions on vacant land until a property has been constructed and is available for rent unless that land is being used in a business conducted by the taxpayer? This policy will be in effect from July 1, 2019.

A person buying a vacant land to be used as an investment property could not be able to claim interest, rates and land tax as deductions until the construction has been finalised.

Partnerships and Assignment of Income

Generally, a partner in a business relationship has the right to assign future income to a related entity. This assignment of income doesn’t include the ownership of the partnership interest. So, the partner assigned to income will not be able to apply capital gains tax concessions concerning those rights.

Contributions to Testamentary Trusts

One of the most significant benefits of testamentary trusts is that income of the trust that is distributed to minors will usually be taxed as though that minor were an adult. The assets that were not part of the estate are gifted to the testamentary trust to obtain concessional tax treatment of income from these assets to minors.

The 2018-19 budget has made changes to ensure that income distributed from a testamentary trust will only be taxed at adult marginal rates.This income distribution will be from assets placed in the trust by the deceased and not from assets that are later gifted to the testamentary trust.

SMSF Auditing

A tax lawyer in Perth reports that your annual audit requirements will go back to once every three years from July 1, 2019, if you were a trustee. This provision is available to SMSF trustees that have three consecutive years of clear audit reports.

There is no doubt that 2018-19 budget has brought some changes that may affect how your structure your assets. Contact your superannuation lawyer in Perth today if it sounds like you may be affected by the changes incorporated by the Government to the 2018-19 budget.