Negative gearing impact would be widespread, says H&R Block
The implications of any change to negative gearing will impact both wealthy and lower-income earners across Australia, according to H&R Block.
With the ATO reporting in 2011-12 that 72 per cent of investors with negatively geared properties earned $80,000 or less, H&R Block claimed that the removal of negative gearing stands to impact many middle-income families, who may be forced to sell their property as a result of rising tax bills.
H&R Block noted that Labor has previously considered removing negative gearing for all but new properties, while the government has established a focus on those individuals with multiple negatively geared properties.
Mark Chapman, director of Tax Communications for H&R Block, said: “What is certain is that whatever approach is taken, there will be unintended consequences, not just in terms of the impact on the property and rental markets but in terms of administering whatever new rules are introduced.
“The potential for taxpayers to work around the rules is very real. That will increase the pressure on government to seek to block any potential loopholes with complex law, which will be difficult for ordinary taxpayers to follow and will increase compliance costs – not exactly a good look when the government and the ATO are pushing to cut red tape and reduce compliance costs.”