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Labor has announced that it will implement its plan to restrict negative gearing to new investment properties and halve the capital gains tax discount from 1 January 2020.
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Labor confirms 1 January start date for negative gearing and CGT proposal
29 March 2019
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The date, announced by shadow treasurer Chris Bowen, will limit negative gearing to new housing, with all investments made prior to the date to be fully grandfathered.
Likewise, the CGT discount will be halved to 25 per cent for investments entered into after 1 January 2020.
The announcement will bring greater certainty to investors who were waiting on Labor to provide more details around its proposal.
The Parliamentary Budget Office has costed the two measures to raise $2.9 billion over the forward estimates period to 2022-23, and $35.1 billion over the next decade.
Mr Bowen has also announced that Labor will revamp the Build-to-Rent scheme, giving institutional investors a tax concession to encourage the building of new rental properties.
If elected, the opposition will cut the managed investment trust withholding rate in half, from 30 per cent to 15 per cent, on tax distributions attributable to investments in build-to-rent housing.
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“Federal Labor’s reforms to negative gearing enjoy the support of many independent economists and think tanks like the Grattan Institute and Saul Eslake as well as international economic agencies like the International Monetary Fund,” said Mr Bowen.
“The fact is, the benefits of both negative gearing and the capital gains tax discount are skewed towards the wealthy, with the Grattan Institute estimating almost 70 per cent of the benefit of the CGT discount accrues to the top 10 per cent of income earners.”
Just this week, the Institute of Public Accountants general manager of technical policy Tony Greco had called on accountants to advise their clients on the proposed changes ahead of the May federal election.
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