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With the election just a few days away, everyone in Australia is talking about it. One of the hottest topics this year is tax, and how the changes will affect the country. The Tax Institute represents tax practitioners (i.e. your best friends during tax season, which is coming up soon). Their main message about this election and the proposed tax changes is that “many of the concerns are overblown”.
The institute’s senior tax counsel, Professor Bob Deutsch, said that “the capital gains tax change will affect all assets, but it is simple to implement,” although 50 per cent discount for capital gains tax is too big in his opinion.
He went on to say that he rejects the idea that introducing the negative gearing changes is a major threat to the Australian property market. Given the weakening property market, he said it is a better time to introduce the change.
“Obviously when interest rates are higher you get more negative gearing,” Professor Deutsch explained. “When interest rates are as low as they are at the moment, people positively gear and many of them do because the rent exceeds the interest. Fewer people will be impacted in the current market”.
He does point out that there are concerns about the commencement date (1 January 2020) due to how many details about Labor’s changes to the negative gearing policy still have to be considered and thought out.
All in all though, Professor Deutsch highlights that whilst the proposed changes to negative gearing will make the market less attractive, it won’t cause the world to collapse, because people will just have to think differently and be more careful about their investments.
You can read more about The Tax Institute’s views on the election and its impact on tax policy here.