Negative Gearing, the 50% discount and the ALP

Just a quick note on the ALP’s policy on removing negative gearing… The Opposition has announced they will limit negative gearing to new housing from 1 July 2017.

From the announcement it appears the losses from negative geared properties that are not new properties will not be able to be offset against any salary and wage income.

However, these losses can still be used to offset income from investments, or can be carried forward to offset the final capital gain on the investment.

Interestingly, the policy document put out by the Opposition states that this limitation on negative gear losses also applies to “new investments in shares”. Therefore, it does appear that from 1 July 2017 you may not be able to offset negative gearing losses on any newly acquired asset, including shares, against your salary and wage income unless the asset is new residential property.

The opposition has announced it will halve the capital gains discount for all assets purchased after 1 July 2017 to 25%. All investments made before this date will still be able to access the 50% rate. In addition there will be no change to the rate of the discount in superannuation.

Most interestingly, the policy document states that the CGT discount will not change for small business assets. So it appears that if you are a small business entity selling an active asset, you still will get the 50% rate. But until we see the final legislation it is difficult to state how the new rules will apply.

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About Ken Mansell

As a stay at home Dad most of the week this is my way of pretending I am still the tax counsel of ASX and SEC listed companies, working at big 4 firms, working at the Federal Treasury, on the Henry Review and at Parliament House for the previous government.
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