Labor’s reforms to negative gearing and the CGT discount [ie halving it] would commence from 1 January 2020

In an address to the Financial Services Council BT Political Series on 29 March 2019, Shadow Treasurer Chris Bowen announced that Labor’s reforms to negative gearing and the CGT discount [ie halving it] would commence from 1 January 2020. “This of course means that any investment undertaken prior to 1 January 2020 will be fully protected by our grandfathering arrangements. That is, all investments made before the 1 January 2020 will continue to enjoy the current negative gearing and capital gains tax concession arrangements. This gives investors adequate time to plan and invest this year before the new rules come into force.”

Mr Bowen said the negative gearing changes “will buttress some of this weakness by targeting tax concessions at new residential construction”.

Mr Bowen said a 1 January 2020 start date allows for around 7 months, “a less but we think sufficient amount of time to get the legislation in place before the changes are due to come into effect”. He said Labor announced its reforms to negative gearing over 3 years ago and has “withstood the shrill scare campaigns and the apocalyptic warnings”.

Build to rent

There are currently around 2.7 million renters in Australia. Labor announced last year that an incoming Labor Government would introduce a 10-year national plan to build 250,000 houses – “Australia’s biggest ever investment in affordable housing”. But Mr Bowen made further announcements on 29 March. He said Labor would reform the tax treatment for “Build to Rent” “to ensure it’s a viable part of the housing market in Australia, just as it is in several comparable countries”.

This would be done by ensuring Build to Rent housing can be included within a Managed Investment Trust when they meet requirements that are currently in place for commercial property assets, basically where they are a passive investment held primarily for the purpose of deriving rent. This means that eligible Build to Rent investments would pay a 15% tax rate, not the 30% rate proposed by the Government, which would be double the rate for investments in shopping centres and office buildings.

Mr Bowen said the central benefits of build to rent is “it provides more stable long term tenancies and more housing in desired locations close to public transport and close to employment opportunities”.

Superannuation

Labor will ensure women get paid the superannuation guarantee on Paid Parental Leave and Dad and Partner Pay payments and it will also gradually abolish the $450 a month SG threshold.

Labor will also change the law to include a right to superannuation within the National Employment Standards, which will give all employees the power to pursue their unpaid superannuation through the Fair Work Commission or Federal Court.