Take Caution with Legislative Changes: Why Waiting Might Be Your Best Move
As accountants, we often field queries from clients who, like us, hear about policy changes through various news outlets and social chatter. These announcements frequently spark knee-jerk reactions and strong opinions—both for and against our political leaders. But before making any brash financial decisions, here are some key considerations to keep in mind.
Understanding the Legislative Process
Governments need to make headlines to stay relevant, which is why we end up with heated water-cooler debates and dinner party disputes after consuming the latest political news. However, the reality is that when legislative changes are announced, it can still take years for them to pass through Parliament and become law. Once a proposal grabs public attention, it undergoes several rounds of consultation with industry leaders and the general public. It is then revised, debated, and voted on before final implementation—if it ever gets that far.
Impact on Business Decision-Making
Many businesses react prematurely to political announcements, assuming immediate impact. While it’s wise to stay informed, acting too soon can be risky. Policies can be abandoned, significantly altered, or delayed due to public opposition, parliamentary deadlock, or simple political manoeuvring. Making structural, operational, or financial changes based on speculation can expose businesses to unnecessary risk.
Examples of Delayed or Abandoned Legislation
Tax reform is a prime example of how proposed changes can remain in limbo for years. The corporate tax rate has long been debated, with ongoing discussions about making it more competitive globally. Meanwhile, the GST rate—unchanged since its introduction in 2000—remains a frequent topic of speculation. More recently, the proposed Division 296 tax—which would impose additional taxes on earnings for individuals with superannuation balances above $3 million—has now been shelved until at least after the 2025 election. First announced in February 2023, it was initially set to take effect by July 2025, yet remains uncertain.
Additionally, you may have noticed the accounting world in an uproar over the Bendel case. If you have a trust with a corporate beneficiary structure, there is considerable debate surrounding the historical taxation treatment of financial interactions between these entities. The ATO and the courts are currently wrestling with these issues. The transactions in question date back to the 2013–2017 financial years, and the case has been contested in court in both 2023 and 2025—still with no clear outcome of the ATOs treatment going forward.
Balancing Preparedness with Caution
Your tax and financial professionals monitor these changes closely and will keep you updated on any necessary adjustments to your financial strategy. It’s not advisable to commit to major changes before a law is officially enacted, as some financial decisions—particularly regarding superannuation—can be irreversible. Additionally, reviewing your contractual obligations with investments, customers, and suppliers is crucial, as many legislative changes don’t apply retrospectively. A well-structured financial plan should prioritise liquidity and flexibility to adapt to unforeseen legal shifts.
Final Thoughts
Take caution when hearing about potential legislative changes, and discuss any concerns with your accountant or financial advisor. Having the right professional guidance is essential for navigating complex policy changes. It also doesn’t hurt to conduct scenario planning before any new laws take effect—because when it comes to government promises, a healthy dose of scepticism can be your best financial strategy.