Speaking to Accountants Daily sister publication Smart Property Investment, Institute of Public Accountants general manager of technical policy, Tony Greco said clients need to be educated and informed on Labor’s proposed restrictions on negative gearing and how it transcends beyond property.
The opposition will limit negative gearing to new housing from a yet-to-be-determined date, with all investments made prior to the date to be fully grandfathered.
The proposal will go beyond property investments and apply across all investments, including shares, as confirmed by the Tax Institute.
“I think there’s going to be a little bit of complexity going forward if we do have a change in policy,” said Mr Greco.
“Most people are aware of the [negative gearing] strategy. It’s a feature of our tax system and has been for some time. It’s a basic taxpayer right to offset a loss from one activity across another and for property investors it is a big deal, losing that, and potentially that is one of the policies that is creating a little bit of uncertainty amongst property investors.
“[Because this will be applied on a global basis] it will be different amongst different property investors if they have a mix of positive and negative investments.”
While there are a number of uncertainties around the start date, Mr Greco believes clients who are contemplating acquiring property in the immediate future should be briefed and made aware of possible ramifications.
“As you're aware the market is already moving downwards and whether this has been factored fully in or some people have already acknowledged that these changes are going to happen, [no one knows],” said Mr Greco.
“There is a lot of uncertainty in relation to what might happen but again people should assess their own portfolio and their future desires in relation to their portfolio and take into account some of those impacts on their own personal circumstances, and our members are well versed to help those clients understand those implications.”
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Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.