With the budget running a large deficit this won’t be easy. The conversation has to be about higher taxes and government spending cuts. And this is an election year. 

The new Prime Minister’s honeymoon period has ended. 

The time for talking niceties to everyone is over. Unpopular decisions have to be made and implemented. 

The budget must be announced in May, only three months away. 

The financial press is full of speculation about proposals that might be implemented. 

Some are guesswork by journalists and some are deliberate leaks by politicians to test public reactions before decisions are made. 

The GST is under review. The rate may be increased. 

The range of goods and services it applies to may be broadened as GST currently only applies to about 60 per cent of consumer spending due to the exemptions for fresh food, healthcare, education and so on. 

Superannuation concessions are also under review. 

Analysts have worked out how much tax is foregone across the whole super system and it’s a big number. Some want to cut it back. 

They forget that if the super tax concessions are reduced people won’t use super nearly as much, so the extra tax collected will be much less than they expect. 

Many possible changes to super rules have been floated. For example the salary sacrifice contribution limits may be reduced. 

The tax on contributions may be raised from the current 15 per cent. 

One proposal is for workers’ contributions to be taxed at their margin tax rate minus 15 per cent. That would mean nearly everyone paying more tax, especially those in higher tax brackets.  

There is a real likelihood that the ability to put large non tax-deductible lump sums into super may be reduced. 

The limit is currently $180,000 per year, with the ability to bring forward two years contributions, for a once-off total of $540,000.  

Super balances are usually converted to “account based pensions” at retirement. 

Whereas tax of 15 per cent applies to income earned by super accumulation accounts there is no tax on pension account earnings. That could change. 

The regular income payments from pension accounts to retirees over age 60 are entirely tax free. 

This seems less likely to change as forcing large numbers of retirees who currently pay no tax to start doing so would be a big challenge for any politician. 

However the current ability to start pension plans at any time after age 55 even if still working is quite likely to be curtailed. 

The strategy known as “transition to retirement” is being reviewed and may be banned or limited only to workers over 60 or 65. 

There have also been questions as to why lump sum withdrawals from super by people over age 60 are tax free. 

Some politicians suggest tax should be applied on larger amounts.  

All this means that anyone who might be affected by any of these possible changes should speak to their tax and financial advisers and discuss whether they need to take steps to maximise their position before the May budget. 

Retirees whose pension plans are already set up probably don’t need to act. 

However those in their pre-retirement years should get advice.

There is a well established principle that tax changes usually do not have a retrospective impact. 

People who act before the budget may be in a better position than if they delay. 

It is also the case that tax increases that will apply to particular groups of people usually apply from budget night rather than starting on July 1. 

This is to stop any last minute rush to use a tax concession. 

Those who act before the budget should be unaffected.