Chalmers puckers up for fight over investor tax stings
Labor is preparing for a grinding battle with property investors and wealthier Australians as it begins to make the case for major tax reforms, including a crackdown on property investment.
Jim Chalmers’ fifth federal budget as treasurer seeks to rebalance the nation’s tax system by reducing investment property tax concessions and giving all workers a $250 annual sweetener starting in 2027.
The opposition announced that it would not support the amendment package, accusing the government of failing to fulfill its election promise of not touching negative gears and offering a capital gains tax cut.
Dr Chalmers acknowledged the property tax changes would be controversial but argued they were valuable as they would help around 75,000 people enter the housing market.
“I expect a big campaign. It will be the usual scare campaign,” he told AAP.
“When a government like ours tries to improve the tax system, strong opinions emerge from people who would rather see the status quo continue.”
As part of the budget, the negative provision under which a landlord can deduct losses on a rental property from their wages at tax time will be limited to new-build homes from July 2027, with an exemption for properties bought before the announcement.
The 50 per cent reduction in capital gains tax will also be overhauled, with the measure on existing properties tied to the current inflation rate from July 2027 and a minimum tax rate of 30 per cent applying.
Gains from properties built before 1985, which were previously exempt from CGT, will also start to be taxed at an inflation-adjusted rate from July 2027.
A 30 percent minimum tax would also be imposed on discretionary trusts, which are often used by wealthy families to divide income among family members and minimize tax.
The changes to investment taxes would free up an extra $8 billion to spend on new offsets for all workers and more relief for businesses and startups.
Master Builders Australia accused the government of “sleight of hand” and warned the changes would reduce housing supply and cause the government to miss new housing targets.
“Although they’ve done sleight of hand to say the focus is on new homes, the reality is you’re creating a tax increase, which means people are draining the property investment market,” chief executive Denita Wawn told AAP.
“We know from our modeling that we will see a reduction in supply.”
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