Login
iscover
Labor’s proposed 1 January 2020 start date for its plan to restrict negative gearing and halve the capital gains tax discount has raised questions around its transition policy, with investors being warned against taking action immediately.
Newsletter
‘No action warranted’ until Labor provides CGT and negative gearing clarity, says Tax Institute
01 April 2019
•
11 minute read
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
Last Friday, shadow treasurer Chris Bowen announced that Labor, if elected, would set a 1 January 2020 start date to begin limiting negative gearing to new properties, 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.
Speaking to Accountants Daily, the Tax Institute’s senior tax counsel Professor Robert Deutsch said that the short time frame between the federal election in May and the proposed start date would be a “challenge” for Labor.
“The 1 January start date will be a challenge as, if elected, they will need seven months to negotiate with the cross-benchers who are likely to be quite difficult especially regarding negative gearing,” said Professor Deutsch.
Professor Deutsch also believes more details around the intricacies of the policy change will need to be clarified before investors make arrangements to deal with the changes.
“The interesting question will be exactly how the transition will be defined. Does refinancing after 1 January 2020 of an asset purchased before then bring you into the new rules or does everything work off purchase date?,” he said.
==
==
“The time frame may cause some activity in the property and share markets as people rearrange their affairs to deal with the new realities.
“I would advise no action until it is clear what Labor is proposing and that they will get it through the Senate. At this stage there is insufficient clarity to warrant doing anything.”
You are not authorised to post comments.
Comments will undergo moderation before they get published.