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The Forum > General Discussion > A hole in labor's negative gearing winfall.

A hole in labor's negative gearing winfall.

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Labor would have us believe their negative gearing policy will save us $40 billion over the next four years. I think that is the figure, but correct me if im wrong.

The one thing I doubt they have factored in is the fact that many who NG on older homes now will simply buy in the form of a trust instead. A trust costs about $1500 to set up, give or take and is tax deductable.

The point is as NG effects PAGY earners only, they pay their taxes then claim back expenses, whereas a trust claim their expenses, distribute their income, then pay their taxes.

So there is no doubt a large chunk of that money will not see the light of day.

If this is the case, whats the point of taking an axe to what is providing much needed housing, many of which fall under the affordable housing scheme.

In short, is the potential gain going to be worth the possible pain.

I really don't think they have thought this over.
Posted by rehctub, Wednesday, 25 May 2016 6:13:54 AM
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I agree, a quickly made up policy with no idea how it effects people.
Posted by kirby483, Wednesday, 25 May 2016 10:52:29 AM
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Trusts are not clear cut. If you put property in a trust you effectively do not own the property any more it belongs to the trust. The trust is run by someone that is unknown to any of the trust members, and has full distribution rights of any profits after all liabilities have been paid. So you pay tax on any income you are allotted from the trust. Big timers make use of trusts and never get any payout. Everything is ploughed into the trust. Less costs for running the trust by someone you donít know. Not for short time safe keeping. Family trusts are declared to the tax office every year along with recipients of moneys, underage recipients moneys are held until the recipient becomes of age.
A trust is giving up your ownership of money or property. You are a beneficiary to the trust, and inescapable of taxes to be paid sooner or later.
Posted by 579, Wednesday, 25 May 2016 2:12:59 PM
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579, your key words are 'sooner or later', but we need revenue sooner rather than latter.

NG gives us revenue now, and refunds are delivered later.
Posted by rehctub, Wednesday, 25 May 2016 6:03:48 PM
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Negative gearing is a rort.
If you cant making a profit on your rent seeking why should the taxpayer support your stupidity?
Posted by mikk, Wednesday, 25 May 2016 9:46:08 PM
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Budget forecasts have conflicting constraints:

1 The longer the forecast, the more effect external factors have (change of government or GFC) and lower the accuracy. (similarly weather predictions for next year or in 5 minutes are either unreliable or useless)

2 However, the shorter the forecasts the less influence new policies will have.

For this reason budget forecasts of 4 yrs are chosen. While treasury will do models for 10yrs (or longer) they are really for academic interest only.

Coming to the point, it is interesting that Labor has done all their costings over 10 yrs where the revenue is bugger all to start with and increases over time, yet their spending starts immediately.

Labor cannot submit a 4 yr forecast because its savings are pitiful and its spending is huge, and it has a budget black hole between $30bn and $67bn depending on which promises they keep.
Posted by Shadow Minister, Thursday, 26 May 2016 7:22:37 AM
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