When times are tough, we all have to make sacrifices.
Ok then, reduce the home owners capital gain discount from 100% to 50% to match investors, since 75% of homes are owner occupiers you will get more tax revenue that way.
If you allow owner occupiers to deduct interest payments on their mortgages, repairs to the house etc fine.
The point about adjusting the CGT discount on residential property is to make houses less attractive to investors who make up 60% of the home lending market and more attractive to owner occupiers. I don't see anything wrong with that as I said before. Owner occupancy is a social issue not just one of economic "fairness" to investors.
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I don't consider that it's fair that potential owner occupiers are being squeezed out of the market by people who already own their own homes but get a taxpayer subsidy to take someone else's.
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Let me give you an example of how getting rid of the Capital Gains tax would cause Mum and Dad Investors to be subjected to heavy double taxation.
There is no subsidy.
Investors get to deduct expenses from their income that owner occupiers don't. Plain and simple.
If you kill the investor property boom, in the absence of any meaningful industry that once was, you kill what little is left of GDP.
I don't get that.
If investors don't buy the houses then the owner occupiers will. There is supposed to be a housing shortage which is why prices are so high. If the price becomes affordable again demand will increase and more houses will be built
What developers might lose on price they gain in volume. In any case it's been shown that investors mostly buy existing homes so what is the contribution to GDP of that ?
Thats not a subsidyInvestors get to deduct expenses from their income that owner occupiers don't. Plain and simple.
We all pay tax on our income, and deduct the cost incurred generating income, no one is allowed to deduct personal expenses though, why should they.
Just another example of where consumers are getting ripped off.
Why are you an investor in residential property ? (I assume from your responses that you are, but if not that's my mistake).
A income for one entity is a cost to another, double entry.
When a bank receives interest from a business they pay tax on it , the business paying the tax deducts it.
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No, depreciation is not "just like" raw materials, lighting etc.
Property is not my main investment platform, but it's an ok place to store some capital where it can earn a bit more income than a bank deposit, and the capital is protected from inflation, and I still plan on eventually getting back to my home town.
But when it comes to an individual, all expenses are "personal" so no deduction for us, even though the bank still gets taxed on the interest an individual pays to the bank.
Just another example of where consumers are getting ripped off.
Let me give you an example of how getting rid of the Capital Gains tax would cause Mum and Dad Investors to be subjected to heavy double taxation.
If a "Mum and Dad" decided 10 years ago to buy some Woolworths shares they would have paid around $23.40 if they bought well.
On Friday they could have sold them for $26.50, So over the 10 year period they made a capital gain of $3.10 per share.
Do they deserve to pay tax on 100% of that capital gain, no they don't and I will show you why.
Over that 10 year period, Woolworths had "after tax" earnings of $16.37 per share, the company has already paid tax on this $16.37.
Out of the $16.37, $10.01 was paid to the "Mum and Dad" as dividends, and the company retained $6.36 to grow the business.
So that $3.10 capital gain they earned, was 100% generated by retained after tax earnings of $6.36.
Charging the capital gains tax is double taxation to this couple, firstly they paid company tax when their company earned the profit, then when they withdraw their earnings as a capital gain by selling their shares, you want to tax them again.
If we want companies to invest their profits back into growing the the economy, we can't have a system that punishes businesses for retaining and reinvesting profits, All companies require money to grow, so when an investor gets a capital gain due to growth that was funded by after tax earnings, you need to recognise that.
About the only personal expense that might be justifiable is the cost of transport to and from work.
hmmmm... if WOW after tax earning adds to $16.37 a share; paid dividends and retained $6.36.
But then that imaginary mum and dad investor only gain $3.10 share... arne't they then making a capital loss. That's according to your logic right?
Maybe taxpayers should pay those mum and pop for their losses.
btw, how many Aussie Mum and Dad investors are there out there? And I don't mean "investors" through their superfund. Not that many.
The rich make a substantial amount of their income through capital gains - trust funds, inheritance, property and the stock market.
So those are obviously not "real" income, they're imaginary income with real money and should be treated differently to be fair.
I guess technically they have made a capital loss, or atleast haven't had the additional capital they added via retained earnings recognised, but you win some you lose some, the 50% CGT Discount atleast prevents some of their over taxation.
303,344 holding less than 1000 shares directly, about 66% of Woolworths share holders.
Even more in super funds (not sure why you think they don't count)
Some of the capital gain is genuine wealth creation, and should be taxed, hence why I am not calling for a 100% discount.
But surely you can't be silly enough to believe all capital gains are making you richer.
Lets say you bought a can of coke in the year 2000 for $1, and you kept it stored in a way it would never perish, and now you can sell it for $2.
Have you made a genuine gain? are you actually richer?
If you sold it for it's market price of $2, you haven't gotten richer because you would now have to outlay $2 to buy another can later.
But to make matters worse, you have to pay CGT, so you only end up getting $1.85 (with the discount) or $1.70 (without discount).
You have actually gone backwards, you couldn't even afford to replace the can, because the government has actually taken you capital, because there was no genuine wealth creation only inflation, but the tax was real.
What I am saying is that in some cases the capital gain is real, in others its not. in a lot of cases the capital gain is a mix of
1, Real wealth creation,
2, retained earnings and
3, inflation.
having the discount allows 1 to be taxed, why also allowing 2 and 3 to not get taxed.
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