In light of recent media reports regarding potential policy changes to Negative Gearing and Capital Gains Tax (CGT), what is the practical perspective within the OzB community?
Should government reassess property investment and the claims associated with it?
and baby bonuses…
Given the falling birth rate, this one will take care of itself.
What baby bonus?
There’s a newborn supplement, it’s not a ‘baby bonus’
And it’s means-tested.
“To get this you must:
- be eligible for Family Tax Benefit Part A
- not be getting Parental Leave Pay for the same child.”
@Specialist Diaz: Yeah, what a joke. After passing all that, all you get is $2k for your first child and $600 for your next ones. I remember when they were handing out $6k/child like 15 years ago. That was a more legitimate baby bonus.
@supersabroso: Wow, first child wins again thanks for giving me kids an inferiority complex government
@serpserpserp: First child, second child, middle child, last child, only child - everyone thinks they have something to complain about.
they were handing out $6k/child like 15 years ago.
July 2001 it was $8k (maybe $6k). My youngest was born 23/06 and was 4 weeks premature so we got SFA even though we thought we were within the eligibility period. woops
@Specialist Diaz: Curious why we're encouraging less wealthy people to repopulate… It should just be a tax incentive per extra child
Curious why we're encouraging less wealthy people to repopulate
Generally less entitled and kinder to others of different situations them
@serpserpserp: Obviously you draw the line somewhere though, right? I come from a pretty low socio-economic neighborhood and most of the kids from my block have shacked up with sex workers, have convictions recorded against themselves and/or have a meth habit. I suspect they each do less for the state than it does does for them. My sense of sympathy has long-since whittled away and I think most of these people were completely devoid of it to begin with.
I'm not one of the top few percent of income earners myself but don't they account for something like a third of commonwealth revenue?
I realise, yes, that most high income earners don't work much harder than anyone else and have had doors opened for them but everyone here has different doors opened for them….
@drfuzzy: Unfortunately too easy to avoid — the mega wealthy have no issues because their children will be on a payroll somewhere in a heartbeat, and anyone having a genuine crack at it (but failing), or still doing something productive that doesn't fit with a traditional idea of employment will be punished.
with falling birth rates we need to encourage more kids not discourage. Unless of course we are making replicants soon..
but funny that most wealthy and smart couples will only have 2 children, and the ones under are getting 4-5 babies
I might need to rewatch Idiocracy as a study refresher
Good for entertainment but remember it is just a fictional movie, not reality.
Like the NeverEnding Story, just sweet fantasy not reality.
We should pour all our money into developing artificial gestation. Women have voted with their wombs here (as is their right). We can never fix free will but we might be able to fix the problem anyway.
@cfuse: I'm all for that in the 'bringing to term' part (which is where the research is focused)
But the idea of rich people just paying for baby-assembly lines is gross.
@smalltime0: What do you think IVF is? Artificial gestation would just be about filling in the gaps in that existing production line.
If you are worrying about humans as commodities then you're very late to that party. The concern I have is what happens when we get the possibility of the gains from industrialisation of reproduction, and of the capacity for the state to make as many people as they require (most likely to spec).
Consider the pragmatic value of eugenics here. If you had a sperm sample from an Einstein level intellect then making ten thousand offspring from that is a no brainer, simply because the value of even one similar level offspring justifies the costs incurred. When everyone has the same technology then it becomes an arms race, so even if you didn't start your own eugenics program then you'd have to do so in reply. Then it's just a logical progression down a path that has the capacity to be truly nightmarish. You could literally brute force your way to understanding DNA one deliberate mutation at a time.
Costs too much to have kids.
We already have an excellent baby bonus scheme, it's just been re branded and improved from the 20 years ago when there was a 5k lump sum when the kid was born. My low socio-economic neighbour quite literally was pumping out kids for that short sighted payment, buying plasma TVs etc with it.
Nowadays, it's called Parental Leave Pay, and instead of a lump sum, parents get it over 22 weeks (soon to improved to 26 weeks).
The payment amount is $915.80 a week, $915.80x22=$20,147.60.
Soon to be $915.80x26=$23, 810.80.
This figure is tied to the national minimum wage, which has been getting OK increases the last couple of years too.
So yeah… We have a baby bonus, it just has a less catchy name than it used to, it hasn't disappeared, in fact it's quadrupled in size. A real policy success story that should be celebrated, giving new parents and newborns an easier first year in life compared to a new TV followed by immediate financial challenges.
and fhog as well.
Why not make a strawman argument instead of answering the question?
yeah, i think they should get rid of TRS.. its a stupid system
the tourist refund scheme which everyone uses not just tourists who wont be returning to australia
UK did that and they think GBP4bn of business they have lost to France.
and power subsidies….
well where at it cut out welfare.
I am a Landlord.
I think Negative Gearing is a horrible deal.
Going out of my way to lose $1 just to claim back 40c, then hoping there is capital gains (not guaranteed) is not good at all.
The Grattan Institute has calculated that Negative Gearing AND the CGT discount have accounted for about 2% in price increases.
NG is not the problem.
CGT Discount is not the problem.
Demand exceeding supply is the problem.
Going out of my way to lose $1 just to claim back 40c… …is not good at all
Absolutely. At face value, it's insanity.
then hoping there is capital gains (not guaranteed)
Nothing is guaranteed, however the culture and incentives around investing in housing practically ensures prices keep rising
NG, CGT discount et al are not the problem in isolation, they're all contributors to the wider problem and should be part of a holistic view of tackling the problem.
It's not 'culture and incentives' which ensure prices keep rising. It's a simple supply and demand equation. New land is created only very slowly. But people have babies and the country has migrants. So the inherent value of land increases over time.
No one seems to say that the share market rises over time due to 'culture and incentives'. The market will ensure that any good with an inherent value increases. Of all the things in this world that are scarce, land is the foremost, so people pay a lot for it.
We're not having babies though
Without migrants our population would be contracting hard.
So at this rate we'll import too many for our infastructure to handle, blow up the economy and have a mass exodus. This is giving me Japanese vibes.
@Drakesy: People aren’t having babies because they can’t afford anything because there’s too much migration.
@CommuterPolluter: The real punch line is your inability to compete with other people on the job market.
Take some responsibility for your own failings. If you can't afford anything, it's one person's fault. Take a guess?
@CommuterPolluter: It baffles me that you still complain about the world's easiest job market. Just blame yourself, okay?
Shares in the stock market are productive assets. Capital is raised to form businesses and produce outputs. Residential real estate does nothing apart from providing shelter, so having massive amounts of capital allocated to it is woefully inefficient and a waste of resources.
@afah0447: Shares are not themselves a productive asset. They are only a proxy of the underlying productive asset.
New land… Hate me if you wish. Golf Courses are an excellent potential source of "new land". Just resume 1/2… 9 holes for a course is enough.
<Ducks>… and runs.
Demand exceeding supply is the problem.
this
the majority of people want to live in like 5 cities.
i.e. only way forward is building more dwellings; government either needs to do it themselves or encourage developers.
Labor would be stupid to bring NG legislation to the next election.
They won't /can't get back in anyway. The MSM will have them voted out.Their anti-democratic campaign has been going since the last election result.The even enlisted lickspittles like Natalie Barr to run the fear/smear campaign for the brain dead. The ALP should have just delivered all their election promises period, and dropped NG and other public interest policies on the senate. If nothing else Albo should call a double dissolution to eradicate the fake greens. They don't have the environments back anymore, so they have zero legitimacy by name or action. The upcoming war should sort things out. Pray that Dutto is not in charge when that happens.
You genuinely think Dutton will win? I just can't see that happening with the divide between the Nats and Teal supporters. Nuclear power seems like political suicide IMO but I guess we will see.
@larndis: This country is a hollow shell of itself. Ppl will vote (directly ) for Dutton and his born again dog whistling WAP, if nothing else.
Or indirectly .
We vote ppl out, not in, so Dutto will slide in like a Bradbury. Him and Trump,Putin and Netanyahu. What joy.
The MSM is in charge of the election
@Protractor: I'm not incredibly anti-Putin, but;
Putin was appointed and not elected for his first Presidency, Yeltsin resigned in '99 and he was next in the line of succession. You can make the argument that he had to be elected Prime Minister first, but he wasn't. He was only Prime Minister for about 2 months before Yeltsin resigned, and Yeltsin appointed him Prime Minister without him having won a seat in the Duma.
@Protractor: Lmao Dutton would be doing a lot better in the polling if he really was dog whistling that. There’s no way he would cut migration.
@CommuterPolluter: No he'd deliver Paulines wish list & rescue poor victimised farmers, LOL.
https://theconversation.com/peter-duttons-fast-track-for-whi…
He can't help himself.
@CommuterPolluter: You underestimate the liberals. He will promise to cut migration by an ineffective amount for the headline and the media will give it front page coverage.
@Protractor: I think if Dutton was even remotely slick and presentable he would win in this country. I have to believe he’s unelectable. The dude has zero charisma, looks like a potato, and is tarnished with being a part of the pathetic ScoMo era.
@mooney: Yes, just like the triple Lazarus bypass Howard? ,only crunchy.The rest is history. I reckon ppl in Straya are more than ready to vote for a party who wants to make there home a military, protect/enable/support hate speech and make bullying our way of life.
On average every second election we out-stupid ourselves.
@larndis: All Dutton (and Albanese for that matter) needs to do is win 3-4 seats in WA to get the gig - which is why he and Albanese are spending so much time here - my wife met PD at the Royal Show yesterday. Albanese was here earlier in the week. After the stage 3 reversal and the general anti-mining rhetoric of the ALP, he's got a very good chance of getting those seats. As for his nuclear stance, I reckon that's going to find traction with the electorate, especially in WA where there are more engineering-minded people than the rest of the country. He should also go hard against immigration as there is a lot of anger out there over our current open border policies.
Albanese is currently not in a strong position and he knows it.
@R4: Well the Coalition have 55 seats, I don't think picking up four is WA is going to get them in government. Bookies seem to have the ALP well ahead, of course that could change but it's hard to see what Dutton can offer to appeal to all the Nat/Lib/Teal seats. Historically we tend to change governments every two terms, so I would definitely rather be in Albo's shoes than Dutton's.
@Protractor: Exactly. The smug look on Bill Shorten's face in the weeks leading up to that election was something to behold. He was even telling people that he was the next PM. And remember, Tony Abbott won an election that the left-wing media was saying was unwinable for him.
@R4: Left wing media? Who actually is that?
The pissant 5% that isn't right wing media, that controls the western worlds destiny and most of the developing world trailing in their dust?
Onion boy may have won an election but he did nothing more substantial as PM other than eat an onion and knight people to fullfill a fellatio fantasy about being a King. In fact he anointed (and made sure he was always seen with) so many uniformed has beens to positions of power, he became known as the commander in chief. Thanks for reminding me how hilarious that whole dead zone of our history was.
All hail Lord Rupert
@R4: This is a conservative viewpoint. And if you take into account readership numbers /influence /impact, the right runs the show (our lives) .
https://www.reddit.com/r/australia/comments/8vgokb/australia…
Greens won't lose senate positions in a double dissolution though. The quotas in the senate are halved, which makes their last quotas in each state (the ones they essentially are winning and losing on election night) easier for them to get, to the point of assured.
In a DD, Greens are neutral/slight gain… but the incumbents lose to minor parties/independents. We have the risk of having half-term United Australia Party & Anti-Vaxxers winning a spot with 0.X% of primary support.
A double dissolution means you only need a half quota to enter the Senate, which means more Greens, fake or not.
A normal election - half Senate - 100/6 = 16.66% for a seat.
Double dissolution election - full Senate - 100/12 = 8.33% for a seat.
Demand exceeding supply is a symptom of the problem.
I don't think removing NG and the CGT discount will fix the supply/demand issue, but I do think it should be removed because it doesn't make any sense as a tax incentive.
The supposed point of it is that it would encourage people to build more houses. But that hasn't happened, so let's remove the tax break that doesn't incentivise what it was meant to and use the funds on something that works instead (that and some half decent regulation around land banking, stopping local councils from preventing development, more infrastructure spending on outer suburbs, etc, etc)
The supposed point of it is that it would encourage people to build more houses. But that hasn't happened, so let's remove the tax break that doesn't incentivise what it was meant to
But it does incentivise new building because the primary method of negative gearing is on depreciation which is heavily favoured towards new buildings for their first 10 years. This is why many investors sell their IPs within 10 years and buy another new build.
Investors buy 17.8% of new properties and 17.1% of existing properties as per the last NAB property survey. There's not really much of a difference.
Because despite depreciation benefits, existing property tends to have better locations, lower prices and more growth.
Down here in Victoria local investors only buy 8.6% of new properties, even foreign investors buy more new properties than that. Considering the cost of NG is in the billions, it doesn't seem a particularly effective incentive compared to just forcing investors to buy only new properties or pouring that money into social housing.
Firstly, you claim back 47c if you're in the highest bracket.
Secondly, you don't have to go out of your way to claim negative gearing. You can often get there just with depreciation, which is an invisible and often inflated deduction and has nothing to do with cashflow.
Thirdly, while capital gains are not guaranteed, the whole point of the equation is that any amount now you get back with negative gearing represents 47c in the dollar at present value, while future capital gains will only ever be taxed at 23.5% and are deferred. You can also choose the year you sell the property, so you might not even pay at highest marginal rate.
I don't disagree that the importance of NG to house prices is massively overstated. If you really want to see house prices go down, institute a land tax (which all investors pay) on residential property, or include the family home in the pension assets test, or apply capital gains to the sale of the family home. Trying to take away investors' negative gearing is just throwing a little petty tantrum when there are so many bigger subsidies going on, directed at the family home.
Taxing family homes is an awful idea, from a societal perspective. Sticking a huge tax on moving prevents people from being able to easily relocate, to upsize/downsize as required and puts huge pressure on people needing to sell for financial reasons (lost job, disability, etc). I also don't see how it will push prices down at all either, because people won't ever want to sell, better to just keep passing it along and never let the capital gain event occur.
Playing funny games with taxation isn't going to solve the problem either. We are simply not building enough housing and haven't been since pre-covid. We had an apartment boom in 2015-16, but now that has gone no one is investing in more multi-dwelling properties and the number of standalone houses is at the same level it has been for over a decade.
"We are simply not building enough housing". to accommodate the hundreds of thousands of immigrants the government is bringing in every.single.year.
There. Fixed it for you.
We do have a tax on moving, it's called stamp duty.
Pretty much everyone clamouring for a land tax, wants stamp duty to be removed at the same time.
Demand exceeding supply is the problem.
Ding ding ding. The government is hell bent on a "big Australia" created by importing unlimited people, and the quality of life of everyone here is suffering for it.
Some stats for u.
Australia is usually in the top 5 each year in terms of reliance on personal income tax to fund its outgoings (social benefits etc.). It averages to about 11-12% of GDP every year.
Do you know how the country predominantly sustains that level of $ from income tax each year? And the answer is not productivity. Big Australia has its pros and cons but so does a small Australia. Quality of life may not be better just because immigration goes down.
Do you know why we need to spend more each year?
Instead of importing people to inflate GDP, we could actually make money off the resources we give away. We could actually tax corporates rather than relying on personal income tax.
Quality of life was higher before excessive immigration, and continues to drop.
Going out of your way? You don't have to do shit to do NG lol.
Buy an IP, enjoy paper losses in your IP from capital losses, and then sell later for a 50% tax discount.
It's massively profitable with little thought, and at least for me it's trivial to be making money from the IP (not taking into account capital growth, just pure year to year profit in cash) while also negatively gearing it (because of paper capital losses) so you get tax back for nothing.
Also it's worth noting as you say the Grattan Institute highly recommend removing NG as it had a lot of positive effects and as you mention, shouldn't affect owners of houses significantly so it's a win/win for everyone beyond a tiny sliver of highly wealthy people.
Going out of your way? You don't have to do shit to do NG lol.
Going out of my way meaning purposely choosing to buy an investment that is guaranteed to lose money from Day 1.
Buy an IP, enjoy paper losses in your IP from capital losses, and then sell later for a 50% tax discount.
I don't want to pay capital gains tax on capital losses.
(not taking into account capital growth, just pure year to year profit in cash) while also negatively gearing it (because of paper capital losses) so you get tax back for nothing.
If we are not considering capital growth, where is this year on year profit that allows you to negatively gear??
That's the thing though - negatively geared properties can be (and often are) cash flow positive. With expenses like depreciation, you don't actually lose any cash, it's just book value. Buy a house (ignore the land) in 2000 for $100,000 and you can claim back a $2,500 depreciation expense every year for 40 years. When you sell it in 2040, the house won't sell for nothing despite it's book value suggesting it's worth nothing.
DingoBilly's use of the word "profitable" is in the context of cash flow being positive.
Stupidly enough, you can negatively gear to the point where you fall into low-income tax brackets that get additional tax offsets
So the properties are cash flow positive from day one but with 'paper' losses to reduce tax?
Got any links?
@Molebag: No I'm not talking about the theory, I mean links to actual properties that are
"trivial to be making money from the IP (not taking into account capital growth, just pure year to year profit in cash) while also negatively gearing it (because of paper capital losses) so you get tax back for nothing."
@larndis: You cant just link a property and say thats a negatively geared, positive cash flow property. It comes down to how its financed and what an individuals working and tax paying situation is. Its not something everyone can exploit - probably one of the reasons some people hate it so much.
Demand exceeding supply is the problem.
Correct.
Negative gearing wasn't meant to be used in this way. It is just there to simplify the calculations because you don't have to carry the loss forward (nowhere in the tax code does money just disappear).
Those who think NG is some kind of tax dodge is getting it all wrong.
The $1 you pay in interest (principal is not tax deductible) goes to banks that pay their depositors interest, employees, suppliers and shareholder (dividends) and they get taxed at personal tax rates. Sure these people might not be paying 45% MTR but it provides a living for people.
Why not knock out the “tourist” refund scheme at the same time…