Morrison dismisses RBA note suggesting restrictions to negative gearing “may be a good thing”
Tuesday 10 May 2016
In an internal briefing note from the Reserve Bank of Australia, it’s been suggested that any changes toward restricting negative gearing would be a good thing for the Australian economy.
The 2014 document, released recently under the freedom of information legislation, notes that the RBA “...are only concerned with negative gearings interaction with capital gains tax.”
Investors are currently taxed at a marginal rate on half of any capital gains they make when they sell their investment property, whereas with negative gearing 100% of the losses that arise from investments are tax deductible. The memo expressed concerns that “the concessional rate of taxation of capital gains might encourage leverage speculation, particularly in combination with negative gearing provisions.”
It added that, “Property is especially impacted as it can be purchased using higher leverage.”
Treasurer Scott Morrison, however, has dismissed the document’s importance, saying in an interview with the ABC, “This was a note, not official RBA advice that was prepared in 2014.”
“Back in 2014 there were issues around these matters, APRA took the action that was necessary and now we’re in a position after those APRA measures were taken where the Reserve Bank has said quite plainly those measures were effective,’’ he said.
“What the RBA said in 2014 was addressed by APRA and it worked, so I think frankly it is out of date.’’
Malcolm Turnbull announced that negative gearing tax concessions would remain unchanged under his government. In his budget speech, Morrison said that, “Those earning less than $80,000 a year in taxable income make up two thirds of those who use negative gearing.”
“We will not remove or limit negative gearing – that would increase the tax burden on Australians just trying to invest and provide a future for their families,” he said.
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