579,

You clearly have no idea how trusts work. Getting rid of negative gearing reduces the demand for new houses, costing jobs and tax revenue there, and pushing up rents.

I have a trust with a large loss that I am claiming as we speak, brought about by a business that did not go the way as intended, so that loss can and is being taken up. Basically the same principle as negative gearing.

Now while you may say that is not fair, the fact is for three years while I was unemployed as such, I had a small business that underperformed and this is like a safety net for those willing to take risks, and rightly so because without such assurances, fewer will take such risks. Then what!

Now had that loss been through over lending on property and a downturn in rents, then same deal applies.

The trust takes up the loss, then distributes the profits, if any, and the beneficiary pays its appropriate tax. HOWEVER, the trust CAN NOT distribute the loss, so unless there is activity directly with that trust, the loss stays there. It has of cause been paid by the directors/trustees in the first place.

Now that's settled, answer my question about your faith in treasury as my understanding is treasury is made up of over paid seat warmers.

Negative Gearing was initially introduced to generate additional new housing stock when it was needed and did so - for a while.

It no longer does so and has turned into little more than a tax-dodge for investors.

Anybody is free to purchase an investment property but I can't see why I have to pay additional tax to cover their interest payments, especially when I don't get a share in the profit it may generate.

I see $bn Bill is trying to fill in the $67bn black hole in his spending policies by backflipping on promises.

Butch what you say comes straight from the ATO site. Of course your loss stays in the trust, you can't withdraw what is not there. How many trusts are there do you think. It's a matter of what the trust was set up for.

But many are nervous about threats from the Australian Taxation Office, which is cracking down on payments from trusts to companies where the money is not actually paid but remains in the trust. This could affect thousands of small businesses and farming operations that rely on the funds staying in the family trust as working capital. The ATO wants these "unpaid present entitlements" deemed as dividends paid by the company and therefore taxable by the trust at the highest marginal tax rate.

The general public know there is something “not right” with the tax treatment of family trusts (discretionary trusts). Accountants and tax lawyers working with discretionary trusts know first hand that the income tax treatment has trouble passing the “smell test”. Even the most aggressive tax minimisers would concede that.

Pay your tax Butch a quit trying to rort the system.

rache, negative gearing also subsidizes rents. Would you like to see those subsidies go as well, because that's whats at stake here.

579, I will pay my taxes once my loss has been taken up. Im guessing you are one of those who think losses should not be tax deductible as well. If that is the case, where is the investment going to come from. Who in their right mind is going to take the risks that provide the majority of jobs?

While on the subject of risk, who is going to risk buying a new property as an investment when the unknown factor is the value once it has been lived in.

On a side issue, I see the banks are already starting to tighten lending, no surprises there I might add. This is only the beginning.

So if either of you rent, my advice is brace yourself because you are in for one hell of a shock once the investors are chased away, unless of course you wish to rent the new home.

I say that because all of a sudden the new home buyer and investors will be competing for the same item and guess who can pay more? This in its self will push prices up.