PM Says CGT Won’t Change

Posted on 20/02/2017  
PM Says CGT Won’t Change

Prime Minister Malcolm Turnbull says that there will be no changes to the capital gains tax (CGT) on housing, a move welcomed by the Housing Industry Association.

The HIA says, correctly, that new housing is already one of the most highly-taxed commodities in the Australian economy - a factor that is central to the housing affordability issue, with 40% of the cost of new dwellings made up of governments taxes, fees and charges.

HIA deputy managing director Graham Wolfe says the housing industry needs certainty regarding tax on residential properties.

"In the lead-up to last year’s Federal Election there was a range of proposals, from reducing CGT on investment properties to applying the tax on the family home,” Wolfe says. “The categorical statement by the Prime Minister provides continued certainty to the industry.”

Wolfe says the housing industry has opposed changes to the way capital gains are treated on investment properties.

“It would mean investors pay even more tax,” he says. “Right now, around $2 out of every $5 that an individual pays for a new home is tax.

“Buyers pay those taxes. And then they pay taxes on the taxes. They pay stamp duty on top of taxes, including the GST. And when they eventually sell the property, if they make any money, they pay tax on that.”

Wolfe says the focus in improving housing affordability should be on increasing supply – and this won’t happen if the incentives to build new homes are removed.

Turnbull and Treasurer Scott Morrison have both repeatedly dismissed the idea of changing housing tax measures such as negative gearing and CGT.

Turnbull says the issue is complex, but the key is ensuring there are enough homes available. "It is essentially a supply and demand problem," he told reporters in Darwin at the weekend.

But a Federal Government backbencher has told Sky News CGT reform is still on the table, despite the Prime Minister ruling it out. Liberal MP John Alexander claims the idea has been discussed within the Government.

Liberal frontbencher Michael Sukkar, who is responsible for housing affordability, refused to tell Sky News whether or not there would be a change to the taxation law.

“There are literally dozens of different ideas ... but I haven't commissioned work on CGT,” he said.

 

 

 

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