One of the arguments usually used is that negative gearing is a tax rort for greedy, rich property investors at the expense of the average “Aussie Battler.”
GOVERNMENT ANALYSIS SHOWS THIS IS WRONG
The Australian reports Government analysis shows that:
- 22.6 per cent of police use negative gearing, a bigger proportion than the 17.3 per cent of tax accountants, 16.7 per cent of management consultants and 11.9 per cent of university lecturers.
- 19.2 per cent of ambulance officers and paramedics use negative gearing compared with 17.4 per cent of financial advisers and 15.6 per cent of economists.
- 18.9 per cent of train and tram drivers use negative gearing compared with 17.2 per cent of solicitors and 18.6 per cent of real estate agents.
However the rich benefit more
There is little doubt that when you look at the numbers negative gearing – the practice of using negative cash flow on property investments to reduce taxable income, and the associated capital gains tax discount of 50%, disproportionately benefit Australians in high-paying occupations, not Australians on an average incomes.
Fairfax reports Tax Office data, showing nearly 30 per cent of anesthetists negatively gear their properties, compared to just 3.6 per cent of cleaners.
Surgeons (27.7 per cent), finance managers (23.4 per cent), mining engineers (22.2 per cent), and lawyers (22.1 per cent) are also far more likely to use the strategy than people in lesser-paying jobs, the data shows.
Sales assistants (3.7 per cent), hairdressers (5 per cent), nurses (9.6 per cent) and teachers (12 per cent) are much less likely than surgeons and lawyers to use negative gearing.
MORE MYTHS BUSTED AROUND NEGATIVE GEARING
The Property Council of Australia welcomes the findings from a new Deloitte Access Economics report Mythbusting tax reform that finds negative gearing is neither “evil”, “a loophole in the tax system” nor the “key culprit” impacting on house prices.
Chief Executive Ken Morrison said these findings are an important contribution to the debate on tax reform.
“Deloitte’s report adds to an expanding base of evidence which debunks the myths around negative gearing,” Mr Morrison said.
“As the report shows, pointing to negative gearing as the primary driver for higher house prices is wrong.”
“Negative gearing has been in place for 100 years and can’t be blamed for last week’s auction results.”
“We have seen a distinct shift in the hot property markets of Melbourne and Sydney in recent weeks.
This wasn’t due to any changes in tax policy, it is a result of new housing supply coming onto the market and finally taking the pressure off prices.”
“And that’s why it’s so important to sustain a strong level of new housing construction if we are to tackle housing affordability long-term.”
Interestingly, Director of the Grattan Institute, John Daley, says such claims are misleading because they confuse the number of Australians using the finance strategy with “where all the money goes”.
And he’s produced the following graphics featured in Fairfax Media to make his point:
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