Pledge to fix ‘widow’s tax’ on investment properties
Finance Minister Jim Chalmers has vowed to fix laws imposing a so-called “widow tax” on investment properties, without providing details on how he would close the loophole.
Dr Chalmers said the issue of investors with jointly owned properties potentially losing privileges if one of the owners dies or several of them divorce will be addressed in future legislation before the changes come into force.
Asked multiple times on Sunday how the government would deal with the gap highlighted before Labor’s controversial tax changes were passed on Thursday, the treasurer said he planned to address the issue.
“We will fix this and we will explain the way to fix this in subsequent legislation,” he told ABC’s Insiders programme.
Existing investments are exempt from the federal government’s changes to negative gearing and capital gains tax breaks, but there are concerns about how the rules will apply if property ownership changes.
If a couple divorces or one spouse dies, the grandfathering arrangement may be eliminated, resulting in less favorable tax treatment.
Shadow treasurer Tim Wilson said in a statement: He said Chalmers’ comments amounted to a “housekeeping job”.
“At breakfast on Thursday ministers were defending the widow’s tax, but by lunchtime the government had backed down and by Sunday morning coffee they were safe from the risk of betraying Australians again,” he said.
Pre-auction approval rates remained below 50 percent for the second week in a row, according to data from real estate research firm Cotality.
The weak result suggests national house prices are falling as the dominant Sydney and Melbourne markets reverse further.
Labor acknowledges that investment changes are affecting the property market, but says recent interest rate rises and wider economic factors are playing a more significant role.
NSW Premier Chris Minns says all governments should focus on improving Australia’s economic prosperity through tax changes rather than simply trying to raise more revenue.
Asked whether the capital gains tax overhaul, which affects all types of investment, would prevent businesses from attracting capital, Mr Minns gave a straightforward answer.
“I hope not,” the Labor leader told Sky News.
“There are a lot of entrepreneurs, especially in western Sydney, who want to start their own business.
“We need to make sure we have the conditions to do that.”
However, Dr. Chalmers defended wholesale tax changes, saying such policy changes are always hotly debated.
“There are all kinds of predictions that the sky is going to collapse, and every other prediction turns out to be wrong,” he said.
“We expect this to happen again.”
