iscover Labor strikes deal with Greens to enable passage of tax changes
TaxThe government has agreed to amendments put forward by the Greens to ban limited recourse borrowing arrangements for SMSFs for residential property in order to secure the passage of its tax changes.
The Greens have agreed to support the government's first tranche of tax changes in the Senate on the condition that Labor agrees to remove the ability for SMSFs to borrow to buy residential properties and also remove the Treasurer’s ability to add any additional classes of assets that can become eligible for the 50 per cent CGT discount.
Australian Greens Leader Senator Larissa Waters said the amendments secured by the Greens would close the SMSF exemption from the prohibition on being able to borrow to fund investments. SMSFs have been able to use limited recourse borrowing arrangements (LRBA) to purchase property from 2007.
Under the amendment, the change would be prospective, protecting contracts signed before the date of commencement and provide time to finalise arrangements currently in train – by taking effect 45 days after royal assent.
Waters said the amendments would also remove the ability to add any additional classes of assets that can become eligible for the 50 per cent CGT discount and rein in his power to prescribe any type of property investment that can be eligible for deducting losses against salary and wage income.
"This prevents a Minister undoing these changes at the stroke of a pen by extending the discount to other assets," she said.
Treasurer Jim Chalmers said the change to SMSF borrowing was a major change in their own right but reflected the "realities of the Senate where nobody has the numbers on their own".
"That's why we are willing to support these changes today," he said.
Senator Katy Gallagher said Labor would move a motion this afternoon that facilitates the passage of a range of legislation, including the tax reform bills, and we will have those bills finalised by the end of this sitting week.
"We appreciate the negotiations we've had right across the chamber. As you all know, nothing gets done in the Senate without deep negotiations," she said.
"We appreciate the engagement we've had with all, but in particular with the Greens for securing this important motion that will pass the senate after 12 o'clock today."
More to come.
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Miranda Brownlee
Miranda Brownlee is the editor of Accountants Daily and Accounting Times, the leading sources of news, insight, and educational content for professionals in the accounting sector.
Miranda has over a decade of experience reporting on the financial services and accounting sectors, working on a range of publications including SMSF Adviser, Investor Daily and ifa.