Federal Labor has made a move on negative gearing, saying they will restrict it to new homes and will also slash the concession on capital gains tax if they win power at the next election.
The Turnbull Government is under pressure to undertake tax reform and Labor is jumping right in there, proposing the biggest changes to negative gearing for over 30 years.
Under Bill Shorten’s plan, only newly built homes would qualify for negative gearing from July 1 next year.
The change would only apply to housing and all existing properties being negatively geared would be quarantined, allowing landlords to continue claiming the tax concession.
Across the country there are 1.2 million Australians who use negative gearing to reduce their taxable income.
Also under Bill Shorten’s proposal, the concession on capital gains tax would be slashed from 50 to 25 per cent and would apply to all assets, not just property.
According to Labor, the changes would mean the Budget saves $565 million over four years and over $32 billion over the next decade.
Mr Shorten claims the changes would be a structural improvement that protects existing investors while boosting spending on new rental properties.
Tax reform is on the top of the new Turnbull Government’s agenda, as they are under increasing criticism from the business community after ditching plans to lift the GST and use the money to cut personal income taxes.
The Government’s research on the changes ascertained they would produce no meaningful economic benefit.
Treasurer Scott Morrison said the Government was taking a very unrushed and practical approach to tax reform.
“In times past, other people have chosen not to do it,” he said.
“But we looked carefully at whether you could do it and the analysis did not bear that out.”