4 March 2016
Media Release - #2016023, 2016

Labor contradict themselves on their own negative gearing proposal

Labor’s failure to think through their reckless proposal to abolish negative gearing has been shown up by outright contradicting themselves on just how far this reckless policy will go. This once again demonstrates why Labor can’t be trusted to run our transitioning economy.

If it isn’t bad enough that Labor want to remove negative gearing for mum and dad investors who are just trying to get ahead by investing in established rental properties, they have now been caught out having to admit that it goes even further and they are going to abolish negative gearing for other assets as well.

Last week Chris Bowen promised Labor would only remove negative gearing for new investments in existing properties by only referencing ‘net rental losses’, stating:

‘The only thing Labor is removing is the ability to offset net rental losses against wage and salary income, except for investments in new houses which will continue to receive existing taxation concessions.
Chris Bowen media release – Wednesday 24 February 2016

Yet on Thursday, Mr Bowen said Labor would remove negative gearing for other asset classes:

‘The fact is that Labor’s policy does not allow negative gearing on things that aren’t propertyor shares and the like.’
Chris Bowen doorstop interview – Thursday 3 March 2016

With Labor changing their mind on what their negative gearing policy means each day, it demonstrates yet again just how much Labor has failed to think this reckless proposal through.  It is no wonder that Australians are increasingly seeing why Labor can’t be trusted to manage our successfully transitioning economy.

According to ATO statistics, in 2013-14 net financial investment losses on ‘shares and the like’ totaled more than $615 million for over 100,000 taxpayers. From what Labor had promised and their claim that it was all about ‘housing affordability’, these Australians would have reasonably believed they were not subject to Labor’s latest tax grab.  

What else has Labor not told you about their plans for higher taxes and who else is in their sights?

Labor should come clean and release the assumptions they asked the Parliamentary Budget Office to model on their rushed and reckless policy.

An example of how an investor will be hit by Labor’s changes to negative gearing:

Dave takes out a personal loan of $100,000 to capitalise his small business and make a return (by investing in it through shares). He also has a part time job, which helps pay for his loan. The company issues dividends, but not enough to cover the cost of the interest on his loan. Under Labor’s policy, Dave will be unable to deduct the full amount of this loss, as he has insufficient investment income to fully offset the amount. He is doing nothing wrong, he is merely trying to grow his business.

Under Labor’s policy, Dave will be unable to deduct the interest on the personal loan, as he has no other investment income to offset the amount. He is doing nothing wrong, he is merely trying to grow his business.