A maverick senator has called for changes to a major tax break for Australian homeowners, a move likely to outrage many of his Liberal and Nationals colleagues.
Queensland Senator Gerard Rennick said he would be in favor of abolishing the 50 per cent rebate on capital gains tax (CGT) as long as there are no changes to negative gearing.
Labor previously had a policy of halving the CGT discount, but dropped it after coalition fear campaigns on the issue contributed to election losses in 2016 and 2019.
A capital gain occurs when an asset is sold for more than it cost you, or a capital loss when it is sold for less than it cost you. Australians pay tax on any net capital gain, which is the total capital gain minus any capital loss and minus any rebates.
Australian Those who have owned a property for 12 months or more will receive a 50 per cent discount on CGT, meaning they will only pay tax on half of the net capital gain they make when they sell a home.
The Greens have revived the CGT rebate issue in negotiations with Anthony Albanese’s government over the Help to Buy scheme, which is currently blocked in the Senate.
“If the Greens said they were going to scrap the 50 per cent cut on CGT profits… and use that for an income tax cut, I could live with that,” Mr Rennick told the paper. Australian Financial Statement.
Queensland Senator Gerard Rennick (pictured with his wife Lauren) said he would support the abolition of the 50 per cent capital gains tax credit as long as there are no changes to negative gearing
He said the Greens’ policy of limiting negative gearing would only lead to higher rents, but that changes to CGT were worth considering because they amounted to a ‘discount on passive income, not active income’.
But Mr Albanese has said he is unwilling to revisit the CGT issue to get the support of the Greens to back the Help to Buy scheme, saying it ‘stands on its own and on its merits’ .
Labor has taken the housing policy into the 2022 federal election, but has not yet managed to pass it into law.
If it passes the Senate, where Labor needs support from small parties to pass legislation, the government would pay 30 percent of an existing building or 40 percent of a new build.
Mr Albanese defended his housing policy on Monday morning, telling ABC Radio that the Government has “a whole range of programmes, this is just an additional program and what it actually does is enable shared equality and shared ownership so that people only need 2 per cent.” of a down payment’.
‘It makes it a lot easier to pay off and at a later date the person can then buy out the government share at a time that suits them, if they choose.
“It has worked effectively in Western Australia for over 50 years and has made a difference. It’s just one measure.’
The prime minister said it is unlikely the plan will pass the Senate quickly because “the Greens and the Libyan Party will go against the comprehensive housing plan.”
“They can be held accountable for it – why they would vote against a plan that would help more people into home ownership, about 10,000 a year,” he said.
However, Mr Rennick’s intervention in support of some of the Greens’ conditions for backing the Labor bill is unlikely to win the support of many more coalition politicians.
When Malcolm Turnbull was Prime Minister and Scott Morrison was his Treasurer. they considered changes to CGT concessions to improve housing affordability.
They looked at halving the discount or introducing a version where the discount would increase the longer the property was owned.
Labor previously had a policy of halving the capital gains tax rebate, but dropped it after coalition fear campaigns on the issue contributed to election losses in 2016 and 2019 (photo: a house for sale)
But the idea was quickly abandoned and the coalition continued to use the idea of possible changes as a stick with which to beat Labour.
The CGT rebate reportedly saved taxpayers $25.2 billion in 2022-23 on the sale of assets such as property and shares, which was a huge increase on the $9.3 billion it saved taxpayers in 2020 -2021 saved.
The top 10 percent of taxpayers received more than 80 percent of the CGT benefit.
Daily Mail Australia has contacted Mr Rennick for comment.