Rising interest rates are expected to push negative gearing tax deductions above $100 billion over the next four years, according to Treasury’s annual Tax Benchmarks and Variations Statement:
The overwhelming majority of these deductions go to higher income earners, according to the Statement:
“In 2019–20, 79% of the tax reduction went to people with above median income, and 35% of the reduction went to people in the top taxable income decile”, the Statement notes.
“Rental deductions are most commonly claimed by those with higher taxable incomes, particularly those in the seventh or higher taxable income decile”.
This is the first time the Statement has included the value of rental property deductions. And this has ignited a scare campaign from The AFR’s Karen Maley that Labor would curb negative gearing concessions:
To which Treasurer Jim Chalmers played with a straight bat: “We’ve made clear what our priority is here when it comes to tax breaks, and that’s the superannuation tax concessions for people with balances over $3 million”.
I personally cannot see the Albanese Government abolishing negative gearing after losing both the 2016 and 2019 federal election on the issue.
But you never know. Labor may try to at least cap the amount that can be deducted, which would be sensible.
