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Negative gearing cost reaches $13 billion a year

They have been credited by some analysts as key factors for Bill Shorten’s failure to defeat the government at last year’s election, particularly in Western Australia and Queensland.

The ATO data shows there were more than 2.2 million people with rental properties in 2017-18 of which 1.3 million made a loss.

While the total number of people making a loss increased by just 1.6 per cent over 2016-17, the total losses rose to $13.1 billion or by almost 7 per cent.

Most people are negatively gearing a single property but the biggest increase has been among those with 3 homes or apartments.

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The figures also reveal any changes to negative gearing would most affect Queensland and WA voters.

While there are more positively geared properties among NSW investors, in Queensland there are 512,000 negatively geared owners compared to 252,000 who make money on their property.

In WA, more than two-thirds of the 340,000 rentals are negatively geared.

Tax experts believe negative gearing costs this year will blow out as landlords absorb rent discounts or non-payments on their properties due to the coronavirus pandemic.

Labor’s franking credit policy, which was the source of a parliamentary inquiry, was heavily attacked by seniors groups.

Franking credits totalled $10.2 billion in the 2017-18 financial year, shared between 2.8 million people. It was a $900 million increase on the previous year even though the number of people benefiting fell slightly.

Labor's franking credits policy was the focus of a parliamentary inquiry where retirees raised their concerns about the proposal.

Labor’s franking credits policy was the focus of a parliamentary inquiry where retirees raised their concerns about the proposal.Credit:James Brickwood

Credits continue to flow overwhelmingly to high income earners.

In NSW, 63 per cent of the state’s men who earned more than $1 million each gained an average $222,500 in franking credits. In Victoria, where 59 per cent of people with taxable incomes above $1 million, the average gain from credits was $203,569.

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But the figures also show many middle income earners benefited from credits.

Among people earning between $70,000 and $80,000 in NSW there were 56,491 people sharing in $105 million worth of franking credits at an average share of $1868.

In Victoria, for those earning between $70,000 and $80,000 there were 41,321 people sharing $84 million at an average of $2037 each.

Labor leader Anthony Albanese has signalled an end to the franking credit and negative gearing policies.

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