CANBERRA – May Budget speculation has just begun, but the Turnbull Government is determined to keep it at the speculation level by refusing to confirm reports it has found a way to ease housing affordability and plug a Budget hole through raising taxes.
Both Prime Minister Malcolm Turnbull and Finance Minister Mathias Cormann have left wriggle room in their rejections of a report in the Financial Review on Thursday of plans to crack down on capital gains tax concessions for property investors.
It would be an interesting policy for the Government to pursue as it would be following Labor policy that the government had demonised as an assault on badly needed investment.
The Opposition wants capital gains tax reform, in particular halving the 50 per cent discount on capital gains tax to 25 per cent, as well as applying negative gearing only to new properties.
The Government had been saying, "Labor wants to punish mum and dad investors", but it is under a lot of pressure, including from its own backbench, to do something significant about housing affordability.
Capital gains tax
There is no actual rate of capital gains tax
Capital gains tax is tax on the profit made on the sale of any capital item (investments, shares, businesses and property)
It forms part of your income tax and is not considered a separate tax – though it's referred to as capital gains tax (CGT).
If you make a capital loss, you can't claim it against income but you can use it to reduce a capital gain in the same income year.
Source: Australian Taxation Office
So what's the word?
Cormann said the report was "wrong," but he then said, "There is no such proposal before the government". Being February, such a proposal could be in the earlier stages of formulation and may go to Government soon.
The Prime Minister also had a fair whack at ruling out the reported plans, saying, "We do not support the Labor Party's plans to increase capital gains tax or indeed their plans to outlaw negative gearing". The key there is the mention of Labor. This does not address a government capital gains concession attack.
This tax speculation comes as the Turnbull Government threatens the Opposition and Senate crossbench with tax increases and spending cuts in a bid to pass up to $13 billion in budget cuts.
Many of the welfare cuts have been bundled in an omnibus bill, but the Turnbull Government is now appearing to head towards splitting it up into smaller, more palatable bills for the Senate crossbench.