Treasurer Jim Chalmers has admitted Labor’s tax reforms in the upcoming budget will focus on housing, as Labor considers scrapping negative gearing and reducing the capital gains tax discount.

Australia’s capital gains tax discount allows individuals and some trusts to pay tax on only 50 per cent of a capital gain when they sell eligible assets, including shares or investment property, that have been held for more than 12 months.

Negative gearing allows investment property owners to claim losses and running costs, such as loan interest and council rates, against their taxable income, which critics say encourages investors to buy more property.

During an interview on Sunrise, Chalmers said any tax reforms would be focused on housing – to be announced at the next Budget, which will be handed down on May 12.

‘When we think about the intergenerational unfairness in the budget, in the economy and our society more broadly, a couple of the drivers of that are in housing, are in the tax system,’ he said.

‘We’ve been upfront with people and said that we think that there are issues in the housing market and in the tax system that we are working through.

‘There are some issues of intergenerational fairness that we’re very focused on.

‘One of those issues is around whether or not young people can get a toehold in the housing market.

Treasurer Jim Chalmers has admitted Labor’s tax reforms in the upcoming budget will focus on housing, as Labor considers scrapping negative gearing and reducing the capital gains tax discount

‘I think a lot of us are very concerned about, over time, the way that there are fewer and fewer younger people who are able to buy their own home, so housing supply is the main game.

‘We want to make sure that people can actually get a toehold in this market as well. And so that’s driving some of these deliberations as we get closer and closer to finishing the budget.’

But Shadow Treasurer Tim Wilson said the government scrapping some of the discounts for the capital gains tax or tinkering with negative gearing in the name of generational fairness, as some have speculated, would not make things equal.

‘I’ve yet to hear a single argument that increasing a tax increases the chance of giving economic opportunity,’ he told ABC Radio.

‘What the prime minister isn’t doing is giving the next generation of Australians hope about building a better future for self-starters who want to get ahead and creating an economic environment of opportunity.’

Source: https://www.dailymail.com/news/article-15777223/Jim-Chalmers-makes-admission-Labors-big-tax-changes-set-announced-weeks.html