Save
Tax experts break down their concerns for negative gearing changes
Labor’s proposed changes to negative gearing will create tax complications to the tax practices of investors, experts have confirmed.
Tax experts break down their concerns for negative gearing changes
Labor’s proposed changes to negative gearing will create tax complications to the tax practices of investors, experts have confirmed.
Earlier this month, the Tax Institute confirmed that Labor’s proposal to introduce restrictions on negative gearing would apply across the board to all investments acquired after a yet-to-be announced commencement date.
While previously thought to only apply to property investment, the update will see the proposal applicable to both property and shares alike.
“As a broad principle, there is little doubt that it will add a considerable degree of complexity to the system,” the Tax Institute’s senior tax counsel, Professor Robert Deustch told Accountants Daily.
“In addition, you are attempting to enshrine in the legislation a number of carve outs, most noticeable a grandfathering provision for all pre-commencement date acquired property and a carve out for new property.
“Once you do those things, the level of complexity will increase but, in addition, here we are going to have a situation here where taxpayers will need to keep track of their carried forward investment losses which will be available for offset in future years and that I assume is going to be an indefinite carry forward – that is, still not a 100 per cent clear but Labor is hinting at an indefinite carry forward.”
RSM senior manager Tracey Dunn said the policy would result in the addition of a new category of tax loss – the investment loss.
“This will result in a whole new layer of complexity when preparing individual tax returns with taxpayers impacted having to appropriately calculate, apply and carry forward investment losses in addition to dealing with capital losses,” said Ms Dunn.
In Ms Dunn’s analysis, the policy seems to favour high-wealth taxpayers with an investment mix of negatively and positively geared investments acquired prior to the proposed changes, with those with a single negative geared property set to feel the pinch.
“The typical mum-and-dad investor trying to build wealth by borrowing against the equity in their home to fund a single investment asset will be the biggest losers as they will no longer be able to help fund the purchase of the asset with the use of tax losses offset against salary and wage income,” said Ms Dunn.
Professor Deutsch said individual taxpayers will need to consider the totality of their investments.
“If you’ve got one or two and you’ve got them negatively geared, the mathematics will tell you very quickly that you will have a problem for some period of time until those properties turn positive and that may not happen even before you sell them,” said Professor Deutsch.
“It is not necessarily high-wealth versus low-wealth; it is more about limited negatively geared investments versus a portfolio of investments which are both negatively and positively geared.
“It is not just your real estate investments, it will include share investments so you might buy shares without gearing – they will count as positively geared investments and that will be a positive to your overall gearing ratio so that’s quite an important consideration.”
Tax saving
ATO warns businesses of JobKeeper scam
The ATO is warning the community about a JobKeeper scam which is asking members to enter personal information. ...Read more
Tax saving
Why fast-tracking tax cuts won’t stimulate the economy
Treasurer Josh Frydenberg has flagged that previously legislated tax cuts could be moved forward in a bid to help stimulate the Australian economy. ...Read more
Tax saving
Last-minute items to check off before 30 June
With the end of the financial year almost here, an accounting firm has outlined key changes with tax returns this year and flagged some last-minute tax strategies to consider before 30 June. ...Read more
Tax saving
Australia’s richest owe the Tax Office $772m
Australia’s elites and private companies fell $772 million in taxes due to miscalculations and deliberate tax avoidance, the Australian Taxation Office has revealed. ...Read more
Tax saving
Do you have to pay taxes on a trust?
Trusts are usually set up for business, estate planning and investment purposes to separate the legal and beneficial ownership of assets held within the structure. ...Read more
Tax saving
Government rebuffs regional allowance and tax concession reform
A review’s findings into the viability of area tax concessions and payments for regional and remote Australians has had its recommendations shut down by the same government who requested the report...Read more
Tax saving
Penalties for tax fraud in Australia
Public taxes are used to fund government projects in relation to health, defence, infrastructure and many other national and local projects that require public funding. ...Read more
Tax saving
Disaster relief payments receive tax-exempt status
The Australian government has made disaster relief payments to bushfire-affected individuals and businesses tax-exempt while extending tax-free financial support to NSW Rural Fire Service volunteers. ...Read more
Tax saving
ATO warns businesses of JobKeeper scam
The ATO is warning the community about a JobKeeper scam which is asking members to enter personal information. ...Read more
Tax saving
Why fast-tracking tax cuts won’t stimulate the economy
Treasurer Josh Frydenberg has flagged that previously legislated tax cuts could be moved forward in a bid to help stimulate the Australian economy. ...Read more
Tax saving
Last-minute items to check off before 30 June
With the end of the financial year almost here, an accounting firm has outlined key changes with tax returns this year and flagged some last-minute tax strategies to consider before 30 June. ...Read more
Tax saving
Australia’s richest owe the Tax Office $772m
Australia’s elites and private companies fell $772 million in taxes due to miscalculations and deliberate tax avoidance, the Australian Taxation Office has revealed. ...Read more
Tax saving
Do you have to pay taxes on a trust?
Trusts are usually set up for business, estate planning and investment purposes to separate the legal and beneficial ownership of assets held within the structure. ...Read more
Tax saving
Government rebuffs regional allowance and tax concession reform
A review’s findings into the viability of area tax concessions and payments for regional and remote Australians has had its recommendations shut down by the same government who requested the report...Read more
Tax saving
Penalties for tax fraud in Australia
Public taxes are used to fund government projects in relation to health, defence, infrastructure and many other national and local projects that require public funding. ...Read more
Tax saving
Disaster relief payments receive tax-exempt status
The Australian government has made disaster relief payments to bushfire-affected individuals and businesses tax-exempt while extending tax-free financial support to NSW Rural Fire Service volunteers. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
EXPLORE MORE RESOURCES
RELATED EVENTS AND SUMMITS
- Australian Law Awards
- Corporate Counsel Summit & Awards
- Boutique Law Summit
- Lawyers Weekly 30 Under 30 Awards
- Partner of the Year Awards
- Women in Law Awards
- Better Business Summit & Awards
- Australian Broking Awards
- Business Accelerator Program
- New Broker Academy
- SME Broker Bootcamp
- Australian Accounting Awards
- Accountants Daily Business Strategy Day
- Accountants Daily 30 Under 30 Awards
- SMSF Summit
- ifa Business Strategy Day
- ifa Client Experience Workshop
STAY CONNECTED
Make your nest egg grow. Register now for nestegg updates.
USEFUL LINKS
Copyright © 2020 nestegg