Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
Subscribe to our newsletter SIGN UP
Labor start date draws industry flak

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Labor start date draws industry flak

Labor’s announced start date for its negative gearing and CGT changes have received fresh criticism, with the industry warning of further compliance headaches and its potential to artificially impact market forces ahead of drafted legislation.

Tax&Compliance Jotham Lian 02 April 2019
— 1 minute read

If elected, Labor will commence limiting negative gearing to new properties from 1 January 2020, with all investments made prior to the date to be fully grandfathered.

Advertisement
Advertisement

Likewise, the CGT discount will be halved to 25 per cent for investments entered into after 1 January 2020.

Speaking to Accountants Daily, Pitcher Partners partner Ashley Davidson said that with just eight months away from the start date, there was little time left for consultation and for draft legislation to pass, potentially “artificially impacting market forces in an uncertain property environment”.

“Pegging grandfathering to a calendar year-end rather than financial year end makes little sense,” said Mr Davidson.

“This adds yet another date that must be managed regarding CGT, along with 19 September 1985 for pre-CGT assets and 21 September 1999 for assets which could still be subject to indexation.

“The reforms have not just targeted residential property, but all passive asset classes. Consequently, if the tax treatment remains the same for all asset classes, why would investors move away from the property market?  It also appears unclear as to how an investment into a company or trust running a trading business would be treated.”

Further, partner Chris Ardagna said it was unclear whether the start date would be based on the settlement of purchases or merely when contracts have been exchanged, and how they interact where a unit trust is involved.

“Investors will be eligible for the 50 per cent CGT discount on the investment in the unit trust bought before 1 January 2020, but investments by the unit trust in new assets will only be eligible for a 25 per cent CGT discount,” he said.  

“The mismatch will cause complications and compliance difficulties,” he continued.

“The reasoning behind the lead time to the commencement date is unclear, and may result in artificially high sales activity in the lead-up.”

The Tax Institute had earlier called for Labor to reveal more details before investors make arrangements to deal with the changes.

This email address is being protected from spambots. You need JavaScript enabled to view it. 

Labor start date draws industry flak
image intro
accountantsdaily logo
Jotham Lian

Jotham Lian

Jotham Lian is the news 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.

You can email Jotham at: This email address is being protected from spambots. You need JavaScript enabled to view it. 

Tax&Compliance
FROM THE WEB