The Federal Government has all but extinguished the proposal for a capital gains tax on the sale of luxury homes.
While Treasurer Scott Morrison had seemed open to discuss the proposal, frontbencher Steve Ciobo has come out and said that penalising the property industry would penalise the one industry in the economy that is actually providing strong growth.
“There is no magic formula – if you impose more tax, then those extra taxes simply get passed on to consumers,” Mr Ciobo told Sky News.
Labor says it will keep family homes of all sizes exempt from capital gains tax if it wins office at the next election.
The exemption on capital gains tax for family homes costs $46 billion a year, and to put that in perspective, it’s more money than the yearly expense of Medicare and the national defence bill combined.
Currently, it’s only rented residential properties that are subject to capital gains tax and family homes can make as much profit as they want tax free.
The Australia Institute says the proposal to limit the capital gains tax exemption on family homes to those worth less than $2 million would raise $12 billion over four years and would raise most revenue from the top 10 per cent of income earners.
The vast majority of family homes would remain exempt under the proposal, as only 1 per cent of family homes in the property market currently sell for more than $2 million.
Treasurer Scott Morrison said in The Age that the Government wants better taxes, rather than a bigger tax burden.
“[We want] to create a better tax system that removes the impediments that are holding Australians back,” Mr Morrison said.