It’s time to level the playing field. Since 1999, for far too long, the capital gains tax (CGT) regime – and in particular the CGT discount – has been unfairly advantaging residential property investors and established homeowners at the expense of prospective first home buyers and people who rent their home.
The inquiry into the operation of the CGT discount provides an opportunity for National Shelter – and the Shelter network – to be heard, on the record, about this issue impacting housing affordability, wealth inequality, and intergenerational fairness. National Shelter has made a submission which is available online.
Read National Shelter full submission online
National Shelter contended that the 50% flat rate capital gains tax discount, in interaction with negative gearing:
- Is overly generous compared to other methods to account for inflation in the taxation of capital gains.
- Overwhelmingly flows to high income and/or high wealth and/or older households, creating significant wealth and intergenerational equity issues.
- Is artificially inflating residential property prices at the expense of investment in productive asset classes, negatively impacting productivity and household health and wellbeing.
National Shelter submitted to the Australian Parliament that the CGT discount and related housing taxation policies should be reformed to level the playing field between established homeowners, property investors and prospective first home buyers by:
- Adjusting the CGT discount downwards to 25%, phased in over five years.
- Restricting tax deductions (quarantining losses) on investment expenses to income from the same asset class and/or restricting the use of negative gearing to newly built residential property.
- Reviewing the CGT and imputed rent exemptions for PPORs.
- Redirecting the revenue currently foregone to investment in social and affordable housing and a fair, affordable, secure private rental housing system in line with National Shelter policy priorities.
National Shelter would be honoured to provide additional evidence to the CGT discount inquiry committee at a parliamentary hearing and will continue to engage with members of federal parliament and other stakeholders about the need to reform housing taxation settings to level the playing field. Stay tuned as the inquiry progresses!