House debates

Wednesday, 2 March 2016

Questions without Notice

Taxation

2:29 pm

Photo of Scott MorrisonScott Morrison (Cook, Liberal Party, Treasurer) Share this | Hansard source

Mr Speaker, I thank you for that. I thank the member for his question and for the opportunity to talk about those on high incomes and negative gearing. Those opposite have a policy which allows those who have large investment incomes through shared dividends and things like that, after the changes are put in place, to continue to be able to buy existing properties and to offset the net rental losses against their investment incomes.

What that means is, if you are a CEO of a big company—and you could be on several million dollars a year; you could be pulling down over $100,000 a year in dividend income that comes from your shares—you can go down the road and you can buy an investment property, an existing property, and you can offset the net rental losses from that property against your investment income from the big share dividends you get as a result of the salary packaging that you have. But, if you are a nurse, if you are a teacher, if you are a police officer, if you are a paramedic, if you are a Defence Force member, if you are any of these and you want to go down and do exactly the same thing as the CEO on $2 million and over $100,000 a year in share income, then you cannot do that—you cannot offset that net rental loss against your wage income.

Those opposite think this is a fair measure, but what it shows is that, once again, they do not think it through. They never think these things through. They have turned rushing to failure into an art form on that side of the House, because they just do not consider the consequences of the decisions that they are making. They do not consider the consequences: that, under their policy, everyone who buys a new home—a first home buyer, an owner-occupier—as soon as they put the key in the door of that new property, it turns it into an old property, and immediately it is like driving the new car off the lot. People out there know what that means. If you drive a new car off the lot after you have bought one, you know it depreciates in value. Under their policy, that is what it does. They never think these things though.

If you are trying to manage a transitioning economy, you cannot afford that sort of recklessness. That is why, whether it is on innovation policy or targeted infrastructure policy or ensuring that small businesses are getting the right opportunity to work, save and invest, on this side of the House we know what it means to manage a transitioning economy, and we are seeing it happen under our administration.

Comments

Tibor Majlath
Posted on 3 Mar 2016 1:27 pm (Report this comment)

The Minister claimed that "if you are a nurse, if you are a teacher, if you are a police officer, if you are a paramedic, if you are a Defence Force member, if you are any of these and you want to go down and do exactly the same thing as the CEO on $2 million and over $100,000 a year in share income, then you cannot do that - you cannot offset that net rental loss against your wage income." under Labor's policy. What is the Minister talking about?

Under Australia's current tax laws which encourage negative gearing, those who own negatively geared properties can reduce the impact of the financial loss from their property, by offsetting it against assessable income. But, how could someone in their wildest dreams currently on Morrison's $80,000 taxable income do the same as a CEO on $2 million and over with $100,000 a year in share income? Perhaps you can carry the loss forward. Labor says all investments before 1 July 2017 will not be affected by the negative gearing tax and capital gains changes.

The Minister claimed that under Labor's policy, "everyone who buys a new home - a first home buyer, an owner-occupier - as soon as they put the key in the door of that new property, it turns it into an old property". What the Minister means is that if the property is sold on then negative gearing will no longer apply.

As an investor, it is still possible to use negative gearing on new housing under Labor's policy which limits negative gearing to new housing from 1 July 2017. All investments made before this date will not be affected by this change and will be fully grandfathered.

The Minister often claims that "We, on this side of the House understand", but why not enlighten the rest of us as to why not all things are/were on the table with a bit more clarity?