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Tax Office figures paint different negative gearing picture

Tax Office figures on occupations that use negative gearing come at odds with Treasurer Josh Frydenberg’s claims that the concession is mainly used by teachers, nurses and emergency service personnel.

Tax&Compliance Jotham Lian 29 April 2019
— 1 minute read

The ATO’s 2016–17 taxation statistics, released late last month, showed that those with the occupation category of chief executive or managing director, general  manager or director were more inclined to negatively gear, with 70,985 doing so.

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In comparison, 53,250 teachers claimed rental losses, including teachers for pre-school, primary school, middle school, secondary school, special needs, plus unspecified school teachers and other unspecified teachers.

35,910 registered nurses also accounted for using negative gearing, with 13,204 police officers using the tax break.

Some 32,510 accountants were also users of the property tax concession.

The figures come after Treasurer Josh Frydenberg claimed that Labor’s plan to restrict negative gearing to new properties would impact middle-income earners the most.

“Labor’s ‘rich’ negative gearers include 58,000 teachers, 41,000 nurses, 19,000 police and emergency service personnel,” Mr Frydenberg said last year.

“Two-thirds of those who negative gear have a taxable income of less than $80,000 and over 70 per cent of those who negatively gear have only one property.”

Housing market will not collapse

The Tax Institute’s senior tax counsel, Professor Robert Deutsch, believes that while Labor’s policy will have an impact on the property market, it will not cause a collapse.

“Certainly, the housing market will be dented by Labor’s proposals to restrict negative gearing benefits to newly constructed housing and to halve the CGT discount,” Professor Deutsch said.

“The housing market will survive even if Labor manages to get both measures through the Senate, which is questionable.”

While Labor has confirmed that the proposal will go beyond property investments and apply across all investments, Professor Deutsch still believes the proposal raises several questions, including whether it will apply on an asset-by-asset basis or on a global-per-taxpayer basis.

“If a taxpayer has an excess of interest over rent, what will he/she/it be able to do with the excess? Carry forward to later years to offset against future positive investment income (a fair result) versus bury the excess in the cost base for CGT proposes (an unfair result)?” he added.

Tax Office figures paint different negative gearing picture
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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. 

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