CAPITAL GAINS Tax & NEGATIVE GEARING

CAPITAL GAINS Tax & NEGATIVE GEARING 

In recent discussions with friends in several different social circles, people have told me that negative gearing and capital gains tax deductions were brought in by John Howard and are responsible for our current housing chaos.

Let's look at the history.... 

First 

CAPITAL GAINS TAX

https://en.m.wikipedia.org/wiki/Capital_gains_tax_in_Australia

Before 1985 no GGT

 

1985 CGT brought in by Hawke Keeting. Cost base indexed.
1  First CG calculated as the sell price minus the indexed cost price.

 2 THEN the persons tax bracket or rate was calculated by taking the CG divide by 5 and adding that umber to their other income.  

THEN

3 Add the full CG  to the other income and calculate income tax on all of that at the rate decided above.

1999 Howard govt discontinued the cost based indexing and reduced the averaging or discount from 1/5 to 1/2.

Second

NEGATIVE GEARING

Introduced in the 1930's

https://www.capitl.com.au/a-brief-history-of-property-gearing-in-australia

https://en.m.wikipedia.org/wiki/Negative_gearing_in_Australia

CONCLUSION

Howard did indeed make it far more attractive to engage in negative gearing.