ALP tax grab on franking credits and CGT will reduce the returns on share investments and reduce national savings.
Instead of encouraging investments and savings, ALP tax policy will reduce the propensity to save and invest in Australian companies.
Investors in shares and superannuation funds will have lower returns and therefore have less funds to reinvest.
Individuals need to save and invest to accumulate wealth and provide for contingencies and retirement. When households save and invest, the nation prosper as savings and investment income generate further income, a multiplier effect on wealth accumulation.
Australian households are one of the lowest savings population compared to other nations. China economy is growing at a very much faster rate because of savings and investments. That leads to growth in individual and national income and wealth accumulation.
When Australians don't invest in companies, businesses will be foreign owned and dividends and business earnings will flow to other nations. National income will be lower, therefore Australians will be poorer over time. Therefore,contribute less tax revenue to government.
The working population is reducing due to ageing. If Australians don't save and invest to support the ageing population and not encouraged to self fund retirement, future tax payers will have to pay more taxes or the age pension and other govt payments will be much less as payments will not be affordable for the government.
ALP tax grab on Negative gearing, CGT, SMSF and trusts will dissuade property investors.
Returns on investment are income and capital gains.
With the high property prices, the rental income less expenses (including rates and land tax) and building depreciation do not cover the cost of capital and there are opportunities providing better returns in alternative investments.
The loss after deducting loan interest, expenses and building depreciation can be reduced by tax deductions, reducing the loss.
Under ALP, the incentive to invest in property will be substantially reduced due to removing the available tax deductions. The incentive can only be compensated by increase rental income (to reduce the loss) or /and drop in property prices (capital investment).Investors earned gross rent of $38.7 billion in 2013-14, a rise of just 1.8 per cent in the year. But they claimed $42.5 billion in deductions, for mortgage payments and other costs, and the net rent, claimed against other income for tax purposes, and lost to the public, was negative $3.71 billion. CoreLogic noted that the net rent was down 59 per cent since the peak of 2007-08, largely due to falling mortgage costs. The losses could rise again if or when interest rates rise.
Furthermore, the incentive to invest in property on the assumption of rising property prices do not fit in the present falling house prices environment. Investors taking risk on the longer term increase in property price valuation will be hit by higher CGT, under ALP, transaction costs and stamp duty.
www.theaustralian.com.au/business/wealth/labors-tax-grab-its-the-capital-gains-tax-stupid/news-story/4ca62ca5f3bcd63e147379c294608592
In addition, ALP hit on SMSF and trusts will affect superannuation funds and family investors investment strategy.Investors do pay tax. In 2013-14, they paid, even at the concessional marginal rate,around $5 billion in capital gains tax on $33 billion of net capital gains.More recent tax collections would be higher.
They also paid a substantial share of the $45.2 billion collected in 2014-15 in stamp duty, municipal rates, and land tax.
The CoreLogic numbers show that investment properties are cheaper than the general market, with 53 per cent worth less than $500,000. Investors are competing directly with first home buyers but they do not appear to be buying expensive properties to maximise the taxation advantages.
The numbers show that investors take a greater proportion of new properties, 40 per cent in March, than is widely believed.
www.copyright link/real-estate/australias-2-million-real-estate-investors-and-what-they-pay-in-tax-20160617-gplaoj#ixzz4BuosaKRG
