RBA says review negative gearing

Topic has been done to death I know, but I guess this article probably deserves more attention than most.

http://www.sbs.com.au/news/article/2015/07/15/rba-says-review-negative-gearing

Strap on the flame suits and argue away!

 

RBA and sitting government are two different beast!

 

Its got me thinking that the Govt may actually be looking at easing some of the neg gearing benefits.

One idea doing rounds seen as palatable to electorate and not be seen as a lie by Govt is to cap (not a ban) Div 43 capital allowance deductions where that annual deduction creates a loss. The effect of such a change basically severs the 50% CGT discount on the eventual CGT cost base adjustment and also brings forward increased tax which averages around 30% of the deduction. Its believed it may **** off many investors but would be more palatable than a outright end to NG. Easy to implement in law.

The reasoning for it argues it may take heat out of boom bust and limit tax breaks but preserve the general nature of losses but it may also affect newer properties more than older existing properties. So its not perfect. It also doesn't address losses prior to Div 43 etc...May be seen as a poor solution that favours some properties over others (ie new v old). Idea I heard was for it to only apply to passive investors direct and through a trust interest. Not the big property owners (AMP etc)

My source for that thinking was a MP canvassing ideas and a greater understanding of the issue that is doing rounds. There are a number of policy proposals being canvassed. I haven't seen them.