Tax is a key battleground for both major parties at the upcoming federal election.

ABC News examines what both major political parties are proposing and their estimated dollar impact on the federal budget.

Here are the main tax changes affecting individuals.

Personal tax cuts

Coalition:

Low and middle income tax offset

From 2018-19 more than four million taxpayers earning between $48,000 and $90,000 will receive the full amount of $530 a year or $10.19 a week.

When the low and middle income tax offset concludes in 2021-22, the benefits will be locked in by increasing the top threshold of the 19 per cent tax bracket from $37,000 to $41,000 and increasing the low income tax offset from $445 to $645 from July 1, 2022.

Staged tax cuts

Stage 1: From July 1, 2018, the Government gave a tax cut of up to $135 per year to about three million people by increasing the top threshold of the 32.5 per cent tax bracket from $87,000 to $90,000.

Stage 1: From July 1, 2018, the Government gave a tax cut of up to $135 per year to about three million people by increasing the top threshold of the 32.5 per cent tax bracket from $87,000 to $90,000. Stage 2: From July 1, 2022 the top threshold of the 32.5 per cent tax bracket will be increased from $90,000 to $120,000, providing a tax cut of up to $1,350 per year for taxpayers in this income bracket and above.

Stage 2: From July 1, 2022 the top threshold of the 32.5 per cent tax bracket will be increased from $90,000 to $120,000, providing a tax cut of up to $1,350 per year for taxpayers in this income bracket and above. Stage 3: From July 1, 2024, the Government will increase the top threshold of the 32.5 per cent tax bracket from $120,000 to $200,000, removing the 37 per cent tax bracket completely.

Labor:

Labor has said that if elected, it would roll back stages two and three of the Coalition's tax cuts because they favoured higher income earners.

Labor would seek to cap the amount individuals could deduct for the management of their tax affairs at $3,000 from July 1, 2019, based on a concern that a small number of high-wealth taxpayers appeared to have reduced their taxable income below the tax-free threshold with such deductions.

The cap would also affect individuals, trusts and partnerships. But a carve-out would be provided for individual small businesses with positive business income and annual turnover up to $2 million.

Budget impact:

According to the Parliamentary Budget Office (PBO) figures obtained by the Greens, the long-term cost to the federal budget of tax cuts would be as follows:

Increase the upper threshold for the 32.5 per cent marginal tax rate from $87,000 to $90,000 from 1 July 2018: $6.5 billion.

Increase the upper threshold for the 32.5 per cent marginal tax rate from $87,000 to $90,000 from 1 July 2018: $6.5 billion. Low and middle income tax offset of up to $530 for individuals with taxable income up to $125,333 for the 2018-19, 2019-20, 2020-21 and 2021-22 financial years: $15.9 billion.

Low and middle income tax offset of up to $530 for individuals with taxable income up to $125,333 for the 2018-19, 2019-20, 2020-21 and 2021-22 financial years: $15.9 billion. Increase the upper threshold for the 32.5 per cent marginal tax rate from $90,000 to $120,000 from 1 July 2022: $36.5 billion.

Increase the upper threshold for the 32.5 per cent marginal tax rate from $90,000 to $120,000 from 1 July 2022: $36.5 billion. Increase the upper threshold for the 19 per cent marginal tax rate from $37,000 to $41,000 from 1 July 2022: $40.8 billion.

Increase the upper threshold for the 19 per cent marginal tax rate from $37,000 to $41,000 from 1 July 2022: $40.8 billion. Increase the low income tax offset to up to $645 for taxable incomes up to $66,667 from 1 July 2022: $2.8 billion.

Increase the low income tax offset to up to $645 for taxable incomes up to $66,667 from 1 July 2022: $2.8 billion. Increase the lower threshold for the 45 per cent marginal tax rate from $180,001 to $200,001 from 1 July 2024: $9.1 billion.

Increase the lower threshold for the 45 per cent marginal tax rate from $180,001 to $200,001 from 1 July 2024: $9.1 billion. Remove the 37 per cent marginal tax rate, so that all income from $41,001 to $200,000 is taxed at a marginal rate of 32.5 per cent from July 1, 2024: $32.6 billion.

Labor's cap on deductions for managing tax affairs is stated to affect less than 1 per cent of taxpayers and is expected to save over $1.3 billion in the medium term.

Update: 2019 Budget announcement of further tax cuts

Coalition:

The Government on April 2 announced $158 billion in tax relief as the centrepiece of its 2019 Budget.

The first part of the plan includes a doubling of the tax offset announced in last year's budget.

If the changes are passed in the Senate, taxpayers earning up to $126,000 per year would get $1,080 back at tax time.

The Coalition also announced it would flatten tax brackets by 2024, cutting the 32.5 per cent tax bracket to 30 per cent.

That means all taxpayers earning between $45,000 and $200,000 could have their tax rate reduced to 30 per cent.

Labor:

On April 4, Labor leader Bill Shorten promised to match the Coalition's $1080 tax cut for 4.5 million middle income earners.

The party went further for people earning below $45,000 a year, pledging the lowest income workers will get a $350 a year cut compared to the Coalition's $255 cut.

But Labor said it would not go ahead with the Coalition's planned July 2022 tax cuts or the July 2024 changes - which make 94 per cent of workers pay no more than 30 cents in the dollar.

Labor said its policy had been costed by the Parliamentary Budget Office and is expected to reduce revenue by $1.05 billion over the forward estimates.

Franking credits:

Labor:

Australia's dividend imputation system was introduced by Paul Keating in 1987 to eliminate double taxation on dividends from company profits. Shareholders can use imputation credits to reduce their overall income tax liability.

But in 2001, under the Howard government, a further concession was created allowing individuals and superannuation funds to receive a cash refund from the Australian Taxation Office (ATO) if their imputation credits exceeded the tax they owed.

Currently, if an individual pays no tax because they have a taxable income below the $18,200 threshold, they are entitled to a refund for all of their imputation credits.

Labor says Australia is the only OECD country with such a system, and that it is an unfair concession that costs the budget more than $5 billion a year and rising.

Labor proposes returning to the arrangement first introduced by the Hawke government, that imputation credits can be used to reduce tax but shareholders will not receive cash refunds from the government. The policy change would apply from July 1, 2019.

Two weeks after it announced that policy, Labor also proposed a "pensioner guarantee" to exclude pensioners from its proposed changes to dividend imputation. Estimates by the PBO suggest about 320,000 pensioners will be affected.

The Government argues Labor's policy targets people on low incomes. It uses taxable income data to make this argument.

But, as analysed by RMIT ABC Factcheck, this data excludes income from retirement phase superannuation.

People over 60 pay no tax on income from super. Therefore, while some Australians have low taxable income they may still have high disposable income or be relatively wealthy.

PBO analysis shows that for self-managed super funds, more than half of all cash refunds accrue to people with super balances over $2.4 million.

Coalition:

No policy to take away franking credits. Cash refunds would remain. The Government says Labor's policy will hit self-funded retirees and is a cash grab.

Budget impact:

Labor has estimated that closing the concession, taking the pensioner guarantee exemption into account, will save the budget about $10.7 billion over the four-year forward estimates from 2018-19.

Discretionary trusts:

Labor:

Labor would introduce a standard minimum 30 per cent tax rate for discretionary trust distributions to mature beneficiaries (people over the age of 18). There are already very high tax rates on distributions to under-18s.

It said in its policy announcement the aim was to reduce the use of "income splitting" to minimise tax.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 28 seconds 28 s Business reporter Michael Janda explains how trusts minimise tax

That is, it would reduce the benefit from distributions being artificially split between different people in lower tax brackets so that the overall tax paid is less than it would otherwise be.

Labor's policy announcement also argued that wealthy individuals are much more likely to benefit from a trust than low and middle-income earners and "in some cases, trusts are used solely for tax minimisation".

Labor has announced some carve outs. Its policy will not apply to non-discretionary trusts, such as special disability trusts, deceased estates and fixed trusts. It also won't apply to farm or charitable trusts.

Coalition:

No plan to tax discretionary trusts. The Federal Government says Labor's policy is a tax hike on small business operators across Australia who use trust structures as a legitimate way of managing their financial affairs.

Budget impact:

Labor's policy has been costed by the independent PBO. It is estimated to raise $4.1 billion over the four-year forward estimates to 2021-22.

Labor has said it will also provide an additional $55 million per year to the ATO to boost its current trust anti-avoidance activities.

Labor is proposing to cut back negative gearing and capital gains tax breaks for housing. ( ABC News: Alistair Kroie )

Negative gearing

Labor:

Will limit negative gearing to newly built housing from January 1, 2020.

All investments made before this date will not be affected by this change and will be fully grandfathered, meaning those who already own investment properties will still be able to claim deductions on those properties against their other income.

The housing industry has warned against curbing negative gearing, with mortgage company boss 'Aussie John' Symond saying "it could tip Australia into recession".

Louis Christopher from property analysis firm SQM Research cautioned that it could lower property prices by up to 12 per cent and also push rents higher.

When negative gearing was briefly abolished on rental properties by the Hawke government in 1985, rents did rise in Sydney and Perth, but not across Australia as the property industry had been warning would happen.

The Commonwealth Treasury declined to back arguments that removing negative gearing tax concessions would significantly lower home prices, saying in the long term "they were unlikely to have much impact".

The Federal Government has argued that Labor's tax policy will hurt people on modest incomes — people on taxable incomes lower than $80,000.

Of the 12.78 million Australians who filed a tax return, 1.26 million were negatively geared residential property investors, meaning their rental income did not cover all their costs, such as interest payments, maintenance and agent fees.

However, RMIT ABC Fact Check found that higher income earners were much more likely to negatively gear.

The Federal Government's financial system inquiry, led by former Commonwealth Bank chief executive David Murray, called for the examination of a raft of tax breaks that he said distort borrowing, including negative gearing and capital gains tax concessions.

The 2010 Henry Tax Review also called for negative gearing to be wound back. But it cautioned any changes to negative gearing or the capital gains tax "may in the short term reduce residential property investment".

Coalition:

No policy change proposed.

Budget impact:

Labor policy yet to be fully costed because the proposed start date of January 1, 2020 was only announced on March 29, 2019. Estimates are that this change, and its change to capital gains tax concessions, together could raise $2.9 billion over four years.

Capital gains tax

Labor:

Will halve the capital gains discount for all assets purchased from January 1, 2020.

This will reduce the capital gains tax discount for assets that are held longer than 12 months from the current 50 per cent to 25 per cent.

All investments made before this date will not be affected by this change and will be fully grandfathered.

This policy change will also not affect investments made by superannuation funds. The CGT discount will not change for small business assets.

Labor argues the CGT discount is skewed towards high-income earners and investors at the expense of aspiring home buyers and is also unaffordable.

The Federal Government says it will hurt taxpayers on low to middle incomes.

Treasurer Josh Frydenberg argued that 60 per cent of taxpayers who declared a capital gain had taxable incomes of less than $80,000.

However, RMIT ABC Fact Check found that those on higher incomes are overwhelmingly the biggest beneficiaries in both dollar terms and as a proportion of the total.

Coalition:

In the 2017-2018 budget the Government announced a number of changes affecting capital gains.

This included that foreign residents will no longer be entitled to claim the main residence exemption when they sell property in Australia. The proposed changes have been put on hold.

Budget impact:

Labor policy yet to be fully costed because the proposed start date of January 1, 2020 was only announced on March 29, 2019. Estimates are that this change, and its change to negative gearing concessions, together could raise $2.9 billion over four years.