There has been a lot of conjecture recently regarding Negative gearing and how the government will deal with it or potentially make changes and thought this article I received today from a respected Global accounting firm Deloitte makes some very relevant and respected points. Have groups like this make these sorts of statements goes a long way to explaining how any changes will be hard to implement in our current Taxation structure.
International accounting firm, Deloitte, defends negative gearing.
International accounting firm Deloitte has weighed into the debate surrounding the taxation system surrounding property investment and ownership in Australia.
In their second Shedding light on the debate: Myth busting tax reform report, Deloitte has defended negative gearing as being no different to the other methods of deduction used by people to reduce their tax burdens.
“Negative gearing is seen as a loophole, with the rich making out like bandits from it,” the report said.
“Yet the ability to deduct expenses incurred in earning revenue is an accepted principle of our tax system – and most other tax systems too.
“It is standard practice to allow taxpayers to claim a deduction for a real economic loss that they incur to earn their income.”
The report also downplays the idea that negative gearing has had an adverse effect on housing affordability, instead claiming that interest rates and other tax arrangements have resulted in prices increasing.
“Interest rates have a far larger impact on house prices than taxes do. Housing prices are through the roof mostly because mortgage rates have never been lower,” the report said.
Simon Birch – 27th October 2015
Sandridge Financial Solutions