Silly question about Negative Gearing?

I think the difference here is we are collecting taxes; we can collect more for sure, but we also have a massive spending problem and a massive hands-out problem, combined with a diminishing revenue base.

And' we can't even sell our existing businesses to Local companies because they are not viable to purchase based on the cost base and the likely profits if they have to compete with O/S imports.

We are an uncompetitve Country in terms of manufacturing, and it is only getting worse....more folks with their hands out to follow.

UNLESS; we provide massive incentives for businesses to come here and hang out the shingle, start making stuff and employ folks.

They won't come here - or stay here - if their cost base is so high hat they can't compete, and/or we as a Nation start to realise that we will have to pay more for our goods and services and buy locally, stop shopping online and from O/S and get behind local producers.

I would rather have a Google paying what is perceived to be not enough tax, yet employing thousands of folks, than the reverse where they say goodbye, and thousands are down at the Centrelink Office.

Maybe a bit over-dramatic, but not really when you ,look at the last few years.

 

I don't blame the haves either, it's the government that is at fault in allowing this to happen. I want the rules changed. It will hurt me a bit, but so be it.

 

Macrobusiness is (still) on the warpath in support of NG changes, with its latest article pointing out some of the furphies the property industry is currently making in a bid to kill off reform. Not planning on getting into a sh*tfight with anyone who remains steadfastly opposed to NG changes, but it's food for thought all the same.

 

Thanks @sonofthewest good article.

Given the public opinion about REAs, their opposition to a policy can only be a good outcome for the policy. The REAs protest will change the public persona of mum and dad investor to the local REA.

The bankers are smarter: at least trying to appear contrite.

 

It's definitely possible in the long term, but I don't see the Coalition--which will likely retain (a slim) hold on power--changing its stance anytime soon. The industry will fight tooth and nail to prevent change, even in the face of public support for reform, and given our political parties rely quite a bit on industry funding to do their jobs it'll be a tough call to back policies contrary to their funders' interests.

 

Maybe not this election..but better late than never.
Aussie-John Symond in the thick of it. He surely knows which side of toast is buttered:
Negative gearing scare campaign self-serving: Labor

 

These two are kind of opposed though. A major reason that Perth and Adelaide are where they are on the property map is because of how poor the job markets are right now and vice versa in Sydney and Melbourne.

The average full time salary in Australia of roughly 85k is in roughly the 85th percentile, meaning that just 15% of the population earn at or above that level of the people working full time, they intentionally inflate this number by not including all workers (as they do with not specifying the underemployment rate with unemployment figures each month and hiding it inside a terrible quarterly report instead.

The median household income of $60k is the point at which 50% make as much or more, as you can see there is a massive disparity if the "average full time worker" is making 85k but 50% of households (aka both workers) are combining to make 60k or less.

I think it's only a matter of time on current trends. Liberal right now know that they still have the majority of boomer votes in the bag and will continue to pander to that section of society but as the ownership rates continue to plummet for generation Y and as more and more reach voting age the liberals are going to have to either change their stance on housing affordability being a bad thing or they're going to lose elections in the very near future.

If Labor were smart they'd be attacking this a lot harder than they are, their soft **** approach isn't winning them many votes because Gen Y is educated enough and disenfranchised enough to not buy their BS either.

Next election though with ~4 years more of Gen Y and ~4 years less of boomers is going to be very interesting if Liberals win and continue to actively oppose and worsen housing affordability as their platform indicates so far.

 

These are the most trusted professions in Australia | The New Daily

Always good to be backed up by well respected FIRE industry lobbyists. Almost as good as the graphical analogy of the precarious little house of playing cards, cards commonly associated with gambling. Campaigns imitating satire, who comes up with this stuff?

 

Continuity with/and Change .

 

The Govt does not control all the levers.

I have seen many areas and occasions where the r/e's couldn't give a house away, despite all the current factors in place.

I have also seen many times where folks will pay an arm and leg to live in what I regard as a terrible area, and a terrible property....supply and demand can often over-ride all these issues currently under debate.

No, I cannot claim the expenses from the business (workshop) against any PAYE or IP income.

If the IP was bought in the Company name, then yes I could, but to buy an IP in my Company name (and probably a lot of other investors) is not possible to do due to lack of assets to borrow against, lack of serviceability, various other Bank "hoops", etc.

If the Gubb is serious about removing NG and decreasing the CGT concession to "level the playing field", then I believe they should also exclude the rental income from our PAYE income tax assessment, or at least apply a much lower tax rate to any IP income added to the PAYE taxable income.

But of course; that will still not make the Have-nots happy....to them; we would still be getting too much of a free kick.

 

How is rental income different from other capital income say dividends or term deposits?

 

Kind of. There were plenty of jobs in Sydney before the RE boom.

 

With the new changes is there a way to maybe set yourself up as a business where you invoice your employer each month. There for the Tax the "business" pays is tax deductible against other investment losses.

 

Dividends from shares and Term Deposits are income earned, but there are no expenses incurred in receiving that income (other than maybe Bank fees and broker fees).

And no-one - either the Public or the Media - is complaining about TD's and dividends currently.

I'll wager that a lot of folks who reckon they are shut out of the property market and who blame investors for their plight are out there enjoying dividends and TD interest, though.

IP's have a huge range of expenses incurred in creating the (rental) income.

Because of this, the Govt deems it to be similar to running a business that has expenses which are claimable against the income/revenue the business generates.

I think it would be fair and reasonable that if IP investors have to incur expenses to own their IP, and then get taxed on the income it generates, then they should either get tax concessions on those expenses, or if not; then receive a tax discount on the IP income, and assess it separately from any other income - just like a business.

The problem is the entity in which the IP is purchased.

This is one of the things that clouds the issue.

 

Many industries don't allow that.

 

yea I figured, it may become a thing in the future though and accountants everywhere will be rubbing their hands together

 

Bring it on!.

I would love to make my staff into contractors - no responsibility for them in terms of sick pay, holiday pay, Super, Family/carers Leave, long service leave, public holiday pay, etc.

And; if they are duds then I can get rid of them immediately without having to jump through the 500 Fairwork hoops that are killing our employment.

One of the insidious hidden impacts on all businesses is the "dead wood" component; and these days it is extremely hard to get rid of it.

 

Income is income irrespective of the asset class i.e. equities/property/TDs. Tax is on net earnings, not the gross. There are expenses involved in purchase/sale of equities as well, especially when borrowed.
Why should the capital income be offset against labour income ? the whole world treats the two incomes separately and I am sure there are property investors outside Australia, who manage just fine. Quarantine it within the business structure and pay a lower tax, if it is a legitimate business.

 

I am more than happy for the Gubb to allow everyone to buy IP's in the normal fashion, treat the income separately from all other PAYE income, and tax it accordingly and assess the expenses separately...still keep the NG and CGT, and tax the profit at an attractive rate so folks will be even bothered.

Of course; this is LaLa land stuff....won't happen.

In reality, they should allow it to be done via a company structure and run it like a true business, asnd again; won't happen.

And; good luck getting a loan from the Bank for it...anything "company" or "commercial" - which is how it will be viewed; will probably be about be a 30% lend and 70% cash or equity from somewhere else.

It's doable of course; but enormously prohibitive.

 

That is the reason, it needs to be done.
Take away the tax advantages and the cheap credit, and the inflationary pressure on the asset will subside (along with the incessant exchange of the existing stock ), not to mention the tax savings for the govt.
Keep the tax advantages for the new construction so the industry growth is not effected.
Your posts are beginning to read more like labor party's justification for changes to NG and CGT.