What will you do when/if negative gearing goes?

Is there a coherent position (other than you/he/she said) that you are willing to take responsibility for ? All anyone can read is contradictions "I support ABC but...XYZ...hence I do not support ABC but a review of ABC..."

Anything which gets rid of these rorts is acceptable as an interim measure till fully eliminated, irrespective of political affiliations .

 

@Skilled_Migrant there's really no point trying to discuss tax policies with someone who can't grasp the difference between the CGT concession and the CGT exemption. No wonder you seem to completely miss the point of my posts. I will leave it there. Cheers

 

As expected, no coherent position, no justification, no responsibility, just greedy continuation of rorts. Cheers.

 

If I was a young person this thread might persuade me to download Pokemon Go and go hang out outside your IPs, a la Rhodes fights back after being swamped with Pokemon Go players

 

I was going to leave this but I was reading an article about super tonight that demonstrates how fundamentally incorrect your position is.

Where rational investors weigh up the pros and cons of a particular strategy, they must be allowed to implement the original strategy without fear that the law will change mid-stream and leave them out of pocket.​

UPDATED: Retrospective changes to super are just plain wrong

Current private shareholders had the option, when they bought their shares, of buying in a company or buying in their own name. They chose to buy in their own name because the law, at the time of purchase, stated that upon the sale of those shares the investor would only have to pay tax on 50% of the capital gain. You are proposing to unilaterally change the tax status of all of those investments so that, at the sale of those shares, the investor would have to pay tax on 100% of the capital gain. Despite what you claim, this is a retrospective change to the taxation legislation and is fundamentally wrong. If governments started retrospectively changing tax legislation, what do you think would happen to investor confidence to invest in Australia?

 

• Look up the difference in retrospective and prospective. There is time to rearrange the affairs before the changes take effect i.e. notice has been given, so the changes are prospective. http://www.smh.com.au/federal-polit...-the-new-rules-for-super-20160511-gosk0y.html Even in the article that you have quoted there is just haggling over the notice period "..... by introducing a phase-in period of at least 36 months."
  
• Going by your definition no changes can ever be made to any law. Even if we WRONGLY assume that the changes are retrospective, there is nothing in the constitution preventing Ex-post facto legislation changes both at the state and federal level. So theoretically it is possible for us to break a law which does not exist. Retrospective Legislation and the Rule of Law - Rule of Law Institute of Australia
• There is nothing unilateral about the changes, it is well within the budgetary powers of the elected executive, to bring about these changes.
• If the discussion is about CGT concessions, there is a bit of judicial context also which justifies retrospective legislation: Justice Deane in Polyukhovich: “the wrongful nature of the conduct ought to have been apparent to those who engaged in it.” In other words, the immorality of committing a war crime was so significant and so obvious that there was no injustice in retrospectively making it illegal. It is worth arguing that the wrongful nature of CGT rorts should be apparent to those engaging in it . But we will never know as CGT changes do not pass the initial hurdle of retrospective as those effected have been given adequate notice.
  
• It is a rather shaky business model that relies on preferential taxation for its profitability. There is an element of regulatory risk, which always arises when legislative instruments are reviewed and businesses should have foresight and allowance for it.
• Regarding investor confidence, ironically the changes are being inducted to boost the investor confidence via improving revenue measures. Otherwise we could have continued with status quo.

On a separate note, I do concede the mix up in the exemption and concession regarding CGT.

 

Nonsense. Rearranging tax affairs when it comes to real property is time consuming and expensive. For example to transfer to a company would incur full stamp duty. Anyway, that is not what retrospective means. Changing CGT for existing assets is retrospective. This is a fact, not my opinion.

More nonsense. I have given you examples of changes to tax law that were not retrospective in this thread. Have you even been paying attention? When CGT was introduced in 1985, pre 1985 assets retained their CGT free status and do so to this day. Then the CGT legislation was changed in 1999/2000 to introduce the 50% CGT concession. This change to the legislation was not retrospective either. Assets purchased prior to 1985 were still exempt from CGT. How you can know this and still claim that no changes can be made to any law without the change being retrospective is absurd.

I never claimed it is ultra vires for a government to retrospectively change tax laws. Of course they can do it if they wanted to. But then how is an investor supposed to undertake tax planning with any certainty, knowing their decisions today can be made invalid tomorrow by retrospective changes to tax law? This is why the CGT laws introduced in 1985 were not retrospective and why Labor's recent proposal to revise the CGT concession was not proposed to be retrospective. It's really not difficult to comprehend.

Oh please, you are now comparing people claiming a legitimate tax deduction to war criminals? Dramatic much? The biggest rort in the Australian tax system is people on high incomes only paying 15% tax on money they contribute to superannuation. Are they like war criminals too? Get real.

This is just ignorant. How does an investor have any confidence in how they structure their tax affairs knowing the government could retrospectively change the rules they are using to make their decisions?

Again a false choice between 2 things. The third choice is to make a change but don't make it retrospective. You know what that looks like because I keep quoting it at you and you keep dismissing me. Pay attention this time. It looks like this:

Labor will halve the capital gains discount for all assets purchased after 1 July 2017. This will reduce the capital gains tax discount for assets that are held longer than 12 months from the current 50 per cent to 25 per cent.​

This is an example of a "reform" of CGT concessions that is not retrospective. Why do you think Labor only proposed the change to post 1 July 2017 investments and not all existing developments?

When you are arguing from the moral high ground, it makes you look smarter when you use the correct terminology to refer to things

 

I heard some residents started throwing water bombs at some of them.

 

The ideal of the rule of law goes beyond effectiveness of legislation. The most
important argument against retrospective laws is that they defeat the expectations of
citizens formed in reliance on the existing state of law. This shifts the focus from the
effectiveness of legislation to the interests of citizens. A stable framework of rules
allows citizens to plan their affairs or to make what Rawls refers to as "plans of life".
The provision of such a framework respects human autonomy and dignity by making
it possible for persons to make choices and thus exercise some control over their future.
Looking at it from the citizen's point of view enables us to say that the vice of
retrospective legislation is that it defeats the expectations of those who have been
guided by the law. Such persons have an interest in the continuance of the laws upon
which they relied in making their choices; if this does not happen, the results their
choices were intended to achieve may not in fact be achieved. They argue that they
reasonably relied upon their expectation that the law that would be applied to their
actions would be the same as the law that was in force at the time they did the relevant
action.The question then, is whether, and if so when, it is justifiable to defeat these
expectations and disappoint those who have relied upon them.

Deciding to change the CGT concession from 50% to 0% on all existing privately held investment assets is a retrospective change to the legislation. This will affect millions of Australians, every investment property owner, every share holder, anyone who has bought art or collectibles. It is ridiculous to assert that all of these investors are greedy and it is fine to change the rules on them now because they had it coming. I would love to see a government **** off millions of investors and then languish in opposition for decades.

 

• Care to provide source ? I gave you link to high court decisions which interpreted the constitution. How can it be retrospective when the CGT has not even be applied. Future earnings are being targeted. Take google tax as an example: Can google argue that the tax is retrospective because it will have to pay extra tax ?
• Time consumption, and expense is not a qualification for retrospective or prospective.
  
• Have a read of the interpretation of retrospective super changes wherein your reasoning is particularly refuted "But on this reading, almost every change to taxation law could be called retrospective." Fact check: Are the Government's super changes 'not at all' retrospective?.

• Repeating words like nonsense and absurd does not lend any legitimacy to the argument.
• What happened in 1985 is one way of doing it, not the only way. If the government wants to extend the largess based on political reasons, it does not become de-facto modus operandi.

• Your points are simplistic and very easy to comprehend as they always emanate from self interest and never stray from course.
• Investor certainty is simple to implement. Do not run a business model based on tax avoidance. If you do, take responsibility for it and in spite of fear mongering the sky will not fall.

• Agree about the bigger rort. Is that a justification for continuation of a smaller rort ? By the same reasoning rapists should not be punished, because murderers are committing a bigger crime.
• War criminal was a contextually relevant example for rationale behind retrospective legislation.

• If you can cease naval gazing , maybe you will understand why the CGT changes are being brought about.
• Government operates at macro (national) level. The investors which are being assured are the ones which lend to country, states and banks. Assurance is also required for the risk rating agencies - that economy/budget is sound and tax leaks are being plugged to raise more revenues without effecting the marginal tax rates.

• I know labor's policy, which in my opinion does not go far enough.
  
• Does one policy position mean that any other positions is retrospective ?
  
• Any changes made to taxation on future earnings are not retrospective (simple but uncomfortable fact). Is google tax retrospective ?
  • If no, how is it different from CGT changes.
  • If yes, there is nothing to discuss.

 

Undet your proposed change to CGT would you say gains up until 2017 are eligible for the 50% discount and gains thereafter are not? A simple retrospective evaluation could determine property value at this point in time.

Or are you suggesting under your desired system all gains up until 2017 are no longer elligable for the 50% discount if held for a further 36 months?

If the latter then to me this is retrospective. If the forme then to me this is progressive. Obviously as a property investor I would prefer the same as was done in the past where properties held prior to 2017 maintain the exemption forever, but at a worse case I could handle a partial exemption.

 

Your out only now???? This is what the 'other side' does, they whine and whine getting further behind while the others continue to build amazing lives. Enough with all this nonsense and back to building your amazing life

 

I buy property in my Trust so negative gearing is irrelevant.

Also I thought negative gearing was a dirty word, it is in my house it keeps you poor


MTR

 

I agree. The argument has shifted to CGT now, which would make buying in trusts less relevant.

 

thanks, have not read all the thread. With Trusts you pay no more than 30% tax.

 

That's not true. With companies you pay no more than 30%.

With discretionary trusts you should pay no more than 30% but if you distribute to someone on a higher rate or fail to distribute you can pay a lot more.

 

Further if CGT discount was abolished companies would be the preferred property holder due to land tax. Company can always be owned by a discretionary trust though.

 

It is immaterial what you or I feel, tax changes to future earnings/profits are not retrospective.
Yes, there will be short term pain while adjustments happen.

Edit: I do appreciate the declaration of interest. Only if more posters would do the same.

 

Well said.
This is the elephant in the room about NG/CGT that no one talks about. Currently residential property is predominantly held by individual investors due to the unfair tax advantages as compared to corporate structures. Once this tax advantage is taken away, it might have a lot of unintended consequences.

 

Not sure I understand what your saying here. I know that their have been retrospective tax rulings made before. like investing in Australian films.