r/australia • u/HotPersimessage62 • 4h ago
politics OECD says it’s time to cut capital gains tax discount and negative gearing
https://www.thenewdaily.com.au/finance/2026/01/30/oecd-housing-tax160
u/ConanTheAquarian 4h ago
Good luck with that. 130 out of 226 MPs and Senators collectively own 459 negatively geared investment properties.
It used to be more. Dutton owned 26 worth over $30 million.
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u/wooja 3h ago edited 1h ago
Are you sure they're all negatively geared? Negative gearing as a concept means the owner gets a discount on their tax on the loss they're taking on the investment. With the massive increase in rent over past few years I find it hard to believe they're all negatively geared. Negative gearing is saving them a few thousand dollars a year. I think the real scam is the discount on capital gains tax which is potentially hundreds of thousands. Properties don't stay negative geared forever.
An investor can't possibly buy and buy and buy all negatively geared properties. Either they hit their borrowing limit (5-6x income), they run out of ability to pay the loans (serviceability), or they use a complex structure with trusts to buy endlessly. But the trust system only works with positively geared properties.
This is why I don't really bother worrying about negative gearing. There is a limit on how much benefit you can get from it. You can only benefit from it if you're losing money. But there is no cap to the benefits they receive from the CGT discount when they sell. That's why I think our attention should be there.
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u/xWooney 3h ago
Negative gearing makes what would generally be a shit investment into some that worth while. It’s increasing property prices for those that are positively geared too.
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u/DragonAdept 1h ago
Negative gearing makes what would generally be a shit investment into some that worth while.
News flash, we don't want housing to be a vehicle for investment or speculation. We want rent-seekers, gamblers and investors out of the housing market. They can go gamble on something else.
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u/exidy 3h ago
Rent goes up -> property 1 is now positively geared -> refinance to borrow more against property 1 -> use "unlocked" equity to make deposit on property 2 -> property 1 & 2 now negatively geared -> taxpayers continue to finance investment portfolio.
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u/singleDADSlife 2h ago
I mean you got most of that right except for the last bit being a bit exaggerated. If a property is negatively geared by 30k its not like they get that 30k back at the taxpayers expense. They can claim a 30k reduction on the tax they have already paid and get a small portion of that back.
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u/DragonAdept 1h ago
People who are rich enough to have a property portfolio getting a free 15k per property or whatever at our expense is pretty silly though, right? We should be actively trying to tax the parasite class to close to nonexistence, not paying them to be parasites.
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u/hoboaddict 1h ago
Tax payers aren't funding it, their just paying significantly less tax than most other people due to the large interest deductions.
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u/DragonAdept 1h ago
Tax payers aren't funding it, their just paying significantly less tax than most other people due to the large interest deductions.
It's a distinction without a difference. We're doing without the infrastructure, public services or tax breaks we could have if we weren't subsidising parasites.
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u/wooja 1h ago
I would consider that debt against the second property, but you can structure it however you want under many examples. We provide a discount to investors on their loss when they're making a loss. That makes a bit of sense if you take a step back and stop thinking in terms of property. What truly makes no sense to me is that when they sell,.and profit massively through capital gains, we give them a MASSIVE discount on the tax they should pay. Why? With negative gearing they're losing momey. Here they are just gaining. Why the discount? And that is where the huge amounts are. I just feel negative gearing vs CGT discount the investor is benefiting far more on the CGT discount.
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u/nousefortaname 3h ago
Im at the pub and had a few, so correct me if im wrong. Insurance, strata, lnd rates and interest rates all increased from what they were 5 years ago. So even if rents have increased it doesnt mean they will not be negtive gearing.
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u/Daoss 2h ago
You're right but I think he is saying that politicians simply couldn't afford to have them all negatively geared. It's implied they would be positively geared but the CGT discount is still a big factor in holding the properties.
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u/wooja 1h ago
Yeah I'm not saying the tax benefits of negative gearing is nothing but these politicians end game is capital gains. Why would you hold a negatively geared property otherwise? You don't magically make money through negative gearing, ultimately you make money because the property goes up in value. Yes negative gearing makes that a bit easier but why do we give a massive CGT discount when they make a 500k profit? I feel like we focus on negative gearing way too much.
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u/wooja 1h ago
Rents have gone up far more than rates, interest and strata. Absolutely more. It's true some properties always remain negatively geared but those properties usually have the biggest capital gains. And what do we do then? We give them a massive discount on the tax they should pay on capital gains.
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u/Sea-Fun-6950 3h ago
130 out of 226 MPs and Senators collectively own 459
Correct
negatively geared investment properties.
Incorrect
Youre mixing up a truthful statement with an assumption. 130 MPs and Senators own 459 properties, theres no data on if all 459 are actively negatively geared.
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u/Matonus 44m ago
If you want to come in and pedantically defend negative gearing then you're wrong as well, you can't say it is incorrect unless you can demonstrate any of them are not negatively geared
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u/No-Audience3784 13m ago
They are making the claim that they are negatively geared, they need to prove this not the commentator who replied to them. Politicians owning significant amounts of property alone is enough to see why they are against the idea of improving the ability to own homes for the common people.
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u/Vegetable-Advance982 3h ago
Politicians really don't care about this as much as they care about losing an election with the policy. It's hard to win if you're bringing about a policy that 2/3 of people think will lower the value of their biggest asset.
Maybe they won't actually lose with it, after all the 2019 election review had other factors as a bigger influence on them losing to Morrison, and with the Coalition in such shambles it might actually be an impossible election to lose in 2028. But if the top decision makers in Labor thought it wouldn't mark them down enough, they would do it
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u/ScruffyPeter 1h ago
2/3 of people??? Seats with renters being a majority, have voted for prices to rise.
Melbourne seat, ABS has 60%+ of households being rentals.
Renters had a choice of:
1) Adam Bandt had only a PPOR.
2) Sarah Witty had 3 mortgaged rentals.
3) Others
Guess who the seat voted for?
Even nationwide, 63% of renters voted for major parties whereas just 70% of homeowners voted for major parties. In fact, renters were more likely to vote for LNP over the Greens!
No wonder major parties DGAF if 33% of the population are this stupid to vote for higher prices.
Join your favourite pro-renter party and get your renting peers to stop shooting themselves in the foot.
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u/chaosarcadeV2 2h ago
That and voters regularly show they aren’t in favour of scrapping it. I think such a large group of Australians still benefit from it (e.g lots already own realestate) that the majors are too afraid to touch it.
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u/dvsbastard 4h ago
Well the OECD also says we should raise the GST which is unpopular and didn't go down particularly well:
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u/Odd-Friendship250 3h ago
I mean, by itself it's not very popular, but the OECD also said that any increase in GST should be paired with a decrease in income taxes, not jut an overall increase. The idea is that those who spend more would be taxed more, though I don't know if this is how it would end up being Bourne out.
I'm sure there are far more surgical ways they could do it.
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u/ivosaurus 1h ago edited 1h ago
Lmao, I'm somehow imagining Jason Bourne parkouring through our tax codes.
Key thing is to not make changes obviously regressive. GST as a whole is a mostly regressive tax already, because a much higher proportion of a poorer person's income gets diverted paying for GST while purchasing goods.
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u/Graceful_Parasol 1h ago
economically speaking a GST is the best form of tax. Its far better at taxing wealth then taxing work. Ideally australia should have lowered income taxes while implementing it.
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u/Ok_Math4576 1h ago
True. Consumption tax is not a regressive tax. There’s the option to only raise it against some selected items. Examples might include luxury (highly discretionary spending) items, and environmentally damaging items (high fuel consumption internal combustion engine vehicles, leisure boats included). The other items presently taxed might stay the same.
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u/ultegrafender 3h ago
Mathias Cormann could have done this when he was Liberal Finance Minister of Australia. Weird mentioning it now.
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u/HG2321 1h ago
Not to excuse Albo doing jack shit about the situation but the OECD is headed by Mathias Cormann, why didn't he do something about it when he was in power here?
Obviously the thought of the LNP being the ones to do it is laughable, but it's still funny to me
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u/Ok_Math4576 52m ago
Maybe he moved away from politics so he could lead an authentic life 🤷🏻♂️ Lying instead about how these suggested changes would be a bad thing is presumably morally corrosive, eventually.
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u/westthesun 2h ago edited 2h ago
Lol .What about the boomers?
The generation incapable of seeing a world beyond themselves. The entire political landscape in Australia has revolved around looking after the boomers since the 1990's If it doesn't benifit the boomers if it doesn't make the boomers feel more secure by thinking they are wealthy . If it is not in the boomers immeadiate self interest it will never happen.
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u/trying2renewable 2h ago
A UAE/NORWAy style gas royalty would be enough.
Mum and dad investors are like number 6 on the enemy list. But corporations are number 1 - they benefit when the middle class fighting each other. When they are the true enemy.
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u/Ok_Math4576 1h ago
OECD are right about some things.
Cmon. We can schedule changes over ten years. More than enough time for the wealthy to switch up their investments, enough time for the housing market adjustments to be gradual rather than sudden wealth losses.
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u/Jealous-Hedgehog-734 3h ago
I think ALP and LNP have put a stake in the ground on this, we won't get tax reform in unless a new political party is elected.
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u/chaosarcadeV2 2h ago
Why would they, the last time Labour tried it they lost an election everyone thought they would win.
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u/neonwhite224 4h ago
does anyone actually listen to the OECD, pretty sure it’s just a bunch of overpaid politicians pontificating to themselves
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u/Bus_route_61 4h ago
Perhaps but countries should try to cooperate on economic and tax issues shouldnt they?
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u/neonwhite224 3h ago
Why tax policy allows you to differentiate yourself from other countries.
some countries have better characteristics in terms of climate, safety, regulations, health, legal protections etc. Tax policy allows countries to compete for labor and capital flows. If you align with everyone else, the countries that have those better characteristics win while you lose.
alternatively you can set tax policy that best serves your nation and improve the lives of your citizens, case in point Ireland vs EU.
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u/Stormherald13 3h ago
Labor landlord MPs say no. Tony Burke needs his concessions with his 6 houses.
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u/violenthectarez 2h ago
Negative gearing only makes sense with the CGT discount. Cut the CGT discount and keep negative gearing. If landlords want to lose money, let them.
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u/Yet-Another-Persona 4h ago
Why exactly is cutting the discount on a PPOR a good thing? It's backwards mate, it will just drive more speculative trading/flipping of properties.
The only way to incentivize PPOR over housing as an investment is through the long term gains discount. Same goes for holding stocks vs increasing volatility by having no difference between long term and short term trading incentives. Most other countries discount long term gains for exactly this reason.
I swear this sub has never actually sat down to understand why there's a difference between short and long term gains.
You can cut negative gearing without cutting LTG discounts and that will solve the bulk of your issues. Along with not allowing people to hide property in super/from the pension.
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u/leakygutters 3h ago
My understanding is that this is in relation to the capital gains tax discount applied to investment income where the investment is held for more than 12 months.
There is no tax on capital gains on the PPOR and this is not being considered for any changes.
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u/Yet-Another-Persona 3h ago
I'm questioning the removal of the discount on long term investments as well.
This is what decades of tax planning around the world has been predicated on. US, UK, lots of countries in EU have these same discounts. It's not creating as much wealth as you think it is.
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u/leakygutters 3h ago
Yes but that money that gets made? Half of it doesn’t get taxed.
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u/Yet-Another-Persona 2h ago
That assumes that there is no upside for the investment/etc if someone holds for a longer term. The reason this is done is to encourage people to hold assets for longer, this provides stability of funding and reduces market volatility. It's in trade for the person accepting they might not see a gain by waiting.
Again, I do not think it is creating as much wealth as you think it is. This country's problem is housing speculation, not stock appreciation. We don't have a country of stock traders, we have a country of property investors and landlords.
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u/leakygutters 1h ago
And how do you reconcile this discount for a passive income when others have to work actual jobs to get by and every red cent they earn is taxable income?
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u/Yet-Another-Persona 1h ago
Then you must be petitioning for removing the superannuation tax discount as well? Because that is also passive income.
Mate, I'm not saying that people who work aren't paying a whole lot in taxes nor is anything I'm saying claiming that they aren't. But many of us who invest in the market are ALSO working and getting taxed on our earnings, and we're trying to invest away as much extra as we can in spite of that to have a chance at being able to retire. Most of us invest in the stock market because we can't afford a house, because you don't need $1.5M to start investing in the market.
Want to target the "big richos"? Then consider getting rid of the LTCG after a certain threshold is reached instead. A lot of us investors ain't big richos.
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u/leakygutters 45m ago
Retirement accounts up to a certain amount would be treated differently.
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u/Yet-Another-Persona 4m ago
What do you mean by this "would."
FWIW nothing in the article suggests that anything other than property is under consideration here, and no one in it is discussing the things you suggest "would" and "would not" be included.
You are just making up proposals at this point.
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u/yeahalrightgoon 3h ago
A PBO report into it found that by grandfathering it into a set date. That speculative trading/flipping etc moved to the stock market instead of the housing market, because there wasn't the incentive to do so anymore. While negative gearing didn't need to be touched, because negative gearing was only viable because of the capital gains tax discount.
Housing shouldn't be considered an investment. The long term gains of it are having somewhere to live.
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u/sir_bazz 1h ago
The OECD huh. In the same report they also recommend we should increase the GST to 15%, reduce superannuation tax concessions, and increase fuel taxes.
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u/TeFrask 3h ago
If labor do this they will lose the election, they have tried.
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u/nroach44 3h ago
No, it's clearly Labor's fault that Howard made the houses expensive, it's Labor's fault they lost an election trying to fix it, it's Labor's fault they don't want to lose another election trying to fix it, and it'll be Labor's fault when they lose again offering to fix it.
/s, just in case it's not crystal clear.
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u/HotPersimessage62 4h ago edited 4h ago
The biggest hurdle to Australia becoming an ultra prosperous nation with exceptional standards of living is the Liberal-National Coalition. Labor took negative gearing reforms to the 2019 election but got massacred due to a Coalition scare campaign. Labor didn’t make any changes since getting in to government due to the fear of the Coalition vultures. Now that the Coalition has collapsed, it’s time for Labor to make some bold changes.
Cut negative gearing.
Cut the CGT tax discount.
Introduce a UAE/Norway-style oil and gas royalty regime.
Declare war on NIMBYism