TAXATION REFORM POLICY

INTRODUCTION

The People First Party’s new tax policy is designed to empower Australian workers, increase business productivity, ensures fairness, and will stem the leakage of profits offshore. It is the most comprehensive plan of any political party in Australia.

The policy comprises of seven core components where reform is needed:

Reducing Income Tax for Low and Middle-Income Earners
Simplifying Superannuation
Preventing the Erosion of Profits Offshore
Streamlining Corporate Tax
Capital Gains Tax Reform
Abolishing Inefficient Taxes
Strengthening Australia’s Tax Base by Closing Loopholes
Lift the GST reporting threshold

At the heart of this policy is a commitment to low and middle-income earners, the backbone of our economy, who will receive significant tax relief. By addressing key issues such as capital outflows, simplify compliance, and housing affordability, the policy aims to restore equity in Australia’s tax system while ensuring that wealth generated within our borders benefits Australians first. This comprehensive reform plan sets out a vision for improving Australia’s economic sustainability, ensuring that Australia’s wealth will stay in the hands of future generations.

1. Reducing Income Tax for Low and Middle-Income Earners

Raising the Tax-Free Threshold

We are committed to supporting everyday Australians. Our first priority is raising the tax-free threshold from $18,200 to $40,000.
This reform will allow low and middle-income earners to keep more of their income—an additional $3,500—to cover increases in cost-of-living expenses.

2. Simplifying Superannuation

Tax-Free Superannuation Earnings

Superannuation will be simplified to make it easier for Australians to save for their future. The first $25,000 earned in a superannuation account will be tax-free. This generous tax concession encourages both individuals and couples to split income. There will be no restrictions on contributions or withdrawals, enabling young people to save for a house and retirees to combine two tax-free income streams for a total of up to $65,000 per year tax-free. This should help preserve capital throughout the duration of retirement.

3. Preventing the Erosion of Profits Offshore

Higher Withholding Taxes on Offshore Profits
We will raise the withholding tax rate on profits transferred to treaty countries to 20% and on interest income paid to all countries to 30%. This will prevent capital from leaving Australia and ensure that profits generated domestically contribute to our economy, rather than being funnelled offshore. Additionally, an operating profit ratio test will be introduced to further strengthen transfer pricing rules and prevent the leakage of profits abroad.

4. Corporate Tax Reform

Reducing Corporate Tax and Replacing Franking Credits
Australia’s corporate tax system will be simplified. The corporate tax rate will be lowered to 25%. In place of franking credits*, we will introduce a non-refundable
rebate of 15% for all taxpayers, or a refundable rebate of up to $10,000 for low-income earners.

While this may appear to be a tax cut, it is expected to be revenue neutral, as the decision by Peter Costello to refund imputation tax credits has resulted in significant tax erosion. Estimates vary, but Australia’s net company tax rate is closer to 15 per cent and is expected to decrease further. This is because when the decision was made to refund franking credits, superannuation had $500 billion in funds under management. Today it has $3.5 trillion in funds under management and is expected to reach $10 trillion before 2050. Paying 30 cents at the company level, only to refund half of that, creates unnecessary paperwork for the company and shareholders and is eroding the company tax base.

Remove the Fringe Benefits Tax (FBT) on Entertainment Expenses Provided to Staff
This will allow businesses to offer benefits such as meals, events, and recreational activities to their staff, without incurring additional tax liabilities. This change aims to enhance workplace morale and employee engagement, providing businesses with greater flexibility to reward and retain staff while reducing administrative burdens associated with FBT compliance. By eliminating this tax on entertainment expenses, the policy encourages companies to invest in the well-being of their employees, fostering a more positive and productive work environment.

5. Capital Gains Tax Reform

Indexation of Capital Gains
The current 50% discount on capital gains tax (CGT) will be replaced by an indexation of cost base method. The capital gain will be averaged over the life of holding and taxed at the rate applicable to the average gain per year. Higher tax rates on active income have become a disincentive for people to work longer. This discount on capital gains tax has helped contribute to asset prices increases much higher than the increase in wages and has resulted in more Australians being unable to own their own home, imposing a social tax on the entire economy.

This change to an indexation of cost base method will ensure greater equity between passive and active income and will help fund a reduction in the income tax rate from 30% to 20% for incomes up to $65,000.

This reform will also discourage speculative investment in assets and help stabilise property prices, making homeownership more attainable for Australians.

6. Abolishing Inefficient Taxes

Removing Payroll Tax
We will work with state governments to abolish payroll tax, ensuring no state is financially disadvantaged. In its place, a 1.5% stamp duty will be introduced on share purchases, share lending, and unhedged derivatives, including short selling. This change will reduce the tax burden on businesses while discouraging unnecessary speculation.

7. Strengthening Australia’s Tax Base and Closing Loopholes

To ensure the sustainability of Australia’s tax system and prevent tax avoidance, the People First Party is implementing comprehensive reforms to close existing loopholes and ensure fair tax contributions. The following measures will be enacted:

1. Eliminate Withholding Tax Exemption on Foreign Bondholders: We will abolish the withholding tax exemption on interest paid to foreign bondholders purchased by public offer (S128F 1936 ITAA). This change will ensure that interest payments to foreign investors are subject to withholding tax, preventing the erosion of Australia’s tax base and ensuring that foreign bondholders contribute their fair share.

2. Abolish Corporate Interest Deductions on Untaxed Foreign Income: The current provision allowing Australian corporations to deduct interest incurred against foreign income that is not assessed in Australia (S25-90 1997 ITAA) will be abolished. This loophole has enabled companies to reduce their tax liabilities on earnings that are not taxed domestically. By closing this loophole, we aim to ensure that all income, whether domestic or foreign, is taxed appropriately, enhancing the fairness of our tax system.

3. Levy on Foreign Student Fees or Visas: A new constitutional levy will be introduced on university fees or visas paid by foreign students. This levy will ensure
that foreign students contribute fairly to Australia’s education system, reflecting their use of local resources and services while studying in Australia.

4. Remove Tax Exemption on Native Title Payments: The tax exemption on mining and native title payments to Indigenous holding entities (S59-50 and S59-15 1997 ITAA) will be abolished. This measure will ensure that all entities, including Indigenous holding entities, are subject to tax on these payments, ensuring equity and fairness within the tax system.

5. Abolish Capital Gains Tax (CGT) Exemptions for Foreign Investors: The CGT exemption for foreign investors holding portfolio interests in non-real assets (S855 1997 ITAA) will be removed. This change will ensure that foreign investors are subject to capital gains tax on their investments, contributing fairly to Australia’s tax base and helping to address the imbalance between domestic and foreign tax contributions.

With over $3 trillion in superannuation, Australia does not need to provide tax exemptions to foreign interests to “attract capital.” The most sustainable form of capital is the type derived from Australian earnings. The words of our National Anthem reflect our values: “wealth for toil,” not “wealth for foreign capital.”

8. Streamlining business compliance and costs

People First will lift the GST reporting threshold from $75,000 to $250,000 so that small businesses with a turnover less than this are not burdened with cumbersome red tape such as lodging quarterly BAS.

SUMMARY

The People First Party’s taxation policy is the most comprehensive reform plan of any political party in Australia.

We propose to:

The TGA to be split into two departments – 1) Testing medical products and drugs and 2) Reviewing the safety of medical products and drugs. Funding for these departments will come from Treasury, not from the pharmaceutical companies who are being regulated. They will pay regulation fees to Treasury.
The introduction of a No fault Injury Claim scheme.
Liability for the safety of all medical products and drugs will lie with the companies that make them. i.e. drug companies will be liable for negligent and misleading behaviour.
The Immunisation handbook principle that no one can be coerced into taking a vaccine will be enforced. This will mean that ‘No jab, No Play’ and ‘No jab, No Pay’ conditions are abolished. People First still encourage immunisation where the vaccines are PROVEN to be safe and effective. People First does not support the rollout of new medical procedures and drugs that are not adequately tested for safety and effectiveness.
Abolish AHPRA and devolve responsibility for medical oversight back to State Medical Boards, whilst encouraging State Governments to strengthen oversight powers of the Medical Board.
Review the PBS scheme for drugs that are not significantly different to off label drugs in terms of effectiveness in order to save costs that can be redirected to front line services.
Negotiate with State Governments the roles and responsibilities between Federal and State Health Departments with a view to eliminating bureaucratic waste and improving front line services.
Review the management of the Covid “pandemic” with a view to holding Health authorities who failed to uphold their ethical responsibilities to account.
The withdrawal of Australia from the World Health Organisation.

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Notes:

Foreign donations are prohibited under Australian Law.
For donations over $1,000, you must sign a declaration that you are not a foreign donor.
For the 2024–2025 financial year, the donation threshold is $16,900. This means that if an individual or entity donates $16,900 or more to a political party during a financial year, the donation must be disclosed to the Australian Electoral Commission (AEC).