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Category: Business, Economics and Finance / Federal Government / Turnbull, Malcolm

High-income earners benefitting from tax concessions irrelevant: PM

Tuesday, 26 Apr 2016 15:04:59 | Dan Conifer

Malcolm Turnbull says Labor's plan to curtail negative gearing is unjust and ill-thought out. (ABC News: Nick Haggarty)

Prime Minister Malcolm Turnbull says the fact investment property tax concessions heavily benefit high-income earners is "beside the point", and Labor's plan to restrict deductions is "unjust".

A Grattan Institute report today showed the top 10 per cent of income earners — before rental deductions — get almost half of all tax benefits of negative gearing.

The same group receives two thirds of all capital gains income.

But Mr Turnbull has told 7.30 the income of claimants is not relevant.

"That's beside the point — of course people on the highest incomes will make the highest gains because they tend to have more property," he said.

"There are well over a million Australians who have an investment property, most of whom are on average earnings, who have an investment property and they are negatively gearing it."

Who uses negative gearing?


Search our database to see which occupations are claiming the most negative gearing tax deductions.

The institute wants to scrap negative gearing and halve the capital gains tax discount, saying it would add more than $5 billion annually to Government revenue.

Labor wants to curtail negative gearing to a lesser extent.

Mr Turnbull told 7.30 the Opposition's plan was "unjust and ill-thought out and reckless", saying wealthy Australians could continue to negatively gear against other investment income.

"Workers, people whose income comes from their personal exertion will not be able to negatively gear, but people whose income comes from investments will. Now how is that fair?" he said.

Buyers would not be removed from property market: Turnbull

Mr Turnbull also defended the Government's claim that Labor's plan would remove a third of buyers from the residential property market, saying it was "common sense".

The 'mums and dads' argument


Scott Morrison says it's mainly the middle class who use negative gearing to get ahead but does this argument stack up?

But he could not produce modelling to support the argument.

"Around a third of the people who borrow money to invest in property are investors and most of them will be negative gearing," Mr Turnbull said.

"Even if they were positively geared ... if for whatever reason they suffered a net rental loss they'd have to cover it out of their after-tax income, so that is a very big risk.

"So we can say very confidently that under Labor's plan all or almost all of those personal investors who are borrowing money to buy investment property would not take that risk because the consequence obviously, the expense of having to offset your net rental loss against your own income is very high."

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