Call us: (08) 6267 2200
reception@optimapartners.com.au
  • PAY MY INVOICE
Optima PartnersOptima PartnersOptima PartnersOptima Partners
  • Home
  • About Us
    • Meet The Team
    • Testimonials
  • Our Services
    • Business Advisory
    • Taxation Services
    • Self Managed Superannuation
    • Bookkeeping Services
    • Corporate Secretarial Services
  • Latest News
  • Contact Us

NEGATIVE GEARING ESCAPES BUDGET AXE

    Home Blog NEGATIVE GEARING ESCAPES BUDGET AXE
    NextPrevious

    NEGATIVE GEARING ESCAPES BUDGET AXE

    By admin | Blog, Federal Budget | 0 comment | 21 May, 2015 |

    Negative gearing escapes budget axenegative gearing escapes the budget axe

    Negative gearing – the ability to reduce your taxable income by losses incurred by investments (particularly rental investment properties), will remain available to Australian investors beyond this budget despite recently becoming a hugely controversial issue in recent times.

    It is no surprise that this tax benefit hasn’t been removed. The 226 politicians that make up the Australian Senate and House of Representatives own, on average, about 2.5 rental properties each1. It would take a large number of politicians to be altruistic and act against their own best interest for it to change.

    The argument against keeping negative gearing is fairly simple: over half of geared housing investors are in the top 10 per cent of personal taxpayers and 30 per cent earn more than $500,0002.

    There are estimates that tax revenue would increase by up to $4 billion per year if it were scrapped3, but the reasons for keeping negative gearing are debated much more vigorously and usually revolve around the potential effect on the taxpayer and the housing & rental markets: if the benefit of negative gearing is lost to taxpayers, they won’t be able to afford to keep their investment properties and will either be forced to sell, flooding the real estate market & causing a fall in value, or will need a higher return on investment, meaning that rents will rise.

    Negative gearing was removed in Australia from 1985 to 1987. Treasurer Joe Hockey has stated on numerous occasions that it caused a huge surge in rents, while critics of negative gearing argue that rents only rose in Sydney and Perth and was caused by other factors, such as vacancies being at extremely low levels.

    The cynic in me can’t help but wonder why this wasn’t such an issue during the Global Financial Crisis (when the Labor Party was in power). The fact remains that about 1.2m Australians take advantage of negative gearing3 and that is a large portion of the electorate to annoy (again, I’m cynical). The fact also remains that interest rates are at record lows so, if you are able to, why wouldn’t you make use of this great tax benefit? Better to make use of a benefit than it is to complain about others who do while you watch. Just keep in mind that there are plenty of people that want that tax benefit removed, and who knows what will be on the chopping block in the future.

    dan

     

     

     

     

    Daniel Causerano

    Accountant – OPTIMA PARTNERS

     

     

     

    1 http://www.smh.com.au/business/the-many-houses-of-parliament-propertyrich-pollies-have-vested-interest-in-high-prices-20140806-10110y.html

     

    2http://www.tradescareer.com.au/news/study-slams-housing-help-at-high-end

     

    3http://grattan.edu.au/news/negative-gearing-the-economic-reasons-why-government-must-kill-this-sacred-cow

    No tags.

    Leave a Comment

    Cancel reply

    Your email address will not be published. Required fields are marked *

    NextPrevious

    Optima Partners is an energetic and innovative accounting, taxation and business advisory firm with offices in Osborne Park, Guildford and Fremantle.

    To discover how we help businesses across Perth please drop us a line today.

    Tel: (08) 6267 2200

    Email: reception@optimapartners.com.au

    Osborne Park Office

    Suite 3, 128 Main Street,
    Osborne Park,
    WA 6017

    Office Hours:
    Weekdays 8:00am – 5:00pm

    Postal Address

    Locked Bag 5000,
    Osborne Park,
    WA 6917

    Guildford Office

    143 James Street,
    Guildford,
    WA 6055

    Office Hours:
    Weekdays 8:30am – 5:00pm

    Fremantle Office

    Level 1, 72 Marine Terrace,
    Fremantle,
    WA 6160

    Please call for appointment

    Copyright 2021 The Small Business Lounge | All Rights Reserved
    • Home
    • About Us
      • Meet The Team
      • Testimonials
    • Our Services
      • Business Advisory
      • Taxation Services
      • Self Managed Superannuation
      • Bookkeeping Services
      • Corporate Secretarial Services
    • Latest News
    • Contact Us
    Optima Partners