Need to get valuation for all assets is ‘overkill’ in CGT reform

UDIA said the rules are “problematic” and as such, should be simplified to include values from available data and/or a de-minimus rule for assets under $50,000. This echoes other submissions that also called for a de minimis rule.

“The requirement to get a valuation for all assets is expensive, overkill, and almost impossible to implement given the number of assets and available valuers,” the submission said.

“The alternative apportionment rule offered is too limited, too complex, and technically flawed because for example it is based only on the first element of the cost base. There is ample scope for simpler rules.”

The body suggested that an individual homeowner should be able to bank on the readily available data from an internet search of the relevant property, which provides a value and examples of recent, comparable sales.

“At the very least, there should be a de-minimus rule, which allows owners of assets below a threshold (say $50,000) to rely on readily available evidence, including third-party internet websites and other data,” the submission read.

UDIA has also recommended that the government implement a comprehensive and workable rollover regime and restructure options, rather than a “piecemeal” fix. It said restructure options are vital given the scale of changes in tax status on taxpayers who have complied and operated legitimately within the current law.

“There is open acknowledgement that the impact of these changes goes far beyond the compliance concerns arising out of income splitting arrangements,” the submission read.

“These changes materially impact the position of anyone whose aim is wealth creation through the ownership of property and reinvestment of income.”

It noted that using a corporate beneficiary (the chief reinvestment vehicle) is no longer viable. Depending on where the final rules land and the family circumstances, investment income could be taxed at the highest marginal tax rate, which means only 50 per cent of the income can be reinvested. UDIA compared this to a corporate outcome where the tax rate is 30 per cent, and there is no need to distribute, and said around 70 per cent can be reinvested.

“There needs to be a comprehensive, workable rollover regime which allows for a corporate equivalent outcome, not a piecemeal fix. This includes all state tax issues (stamp duty, land tax, and trust law),” the submission read.

UDIA has insisted that the government should not commence the regime until all material issues are settled, particularly given the interactions between the negative gearing and CGT changes and the proposed 30 per cent minimum tax for trusts.

“The government needs to commit to a commencement only after all material issues are settled, people have a decent runway to assess the impact, implement any commercial changes, and deal with the new compliance paradigm,” the body said.

“All material interactions with the CGT regime should be legislated, consulted on, and operational well before the 1 July 2027 start date. If that is not achievable, the commencement should be deferred.”