On the 8th March 2013, exactly 10 months after the announcement was made in the Australian Federal Budget, the Deputy Treasurer David Bradbury released a draft of the proposed legislation for changes proposed to remove the current 50% Capital Gains Tax Discount for foreign investors including Australian expatriates.
SMATS Group has been leading the charge to have these changes cancelled and welcomes the release as it can now bring a level of certainty to this issue which has been hiding away since the Budget.
Having lodged an initial Submission to the Treasurer in May 2012, we have followed up the release of legislation with a further detailed submission outlining the unintended consequences of the proposed change. Click here to read our Submission.
On Mr Bradbury’s website he stated that one of the key reasons for removing the discount was that “The discount is not necessary to attract investment from non-residents into these assets”
We couldn’t disagree more, and the Government is intending to place A$18 billion a year of Foreign Investment in the Australian property market at risk for the sake of a potential tax collection of A$55 million.
These funds are solely placed in brand new property that creates jobs and economic activity and provides essential additional accommodation for Australia’s fast growing population.
In addition, Australian expatriates also invest billions of dollars each year back into Australia and the proposed change looks to penalise them for time spent abroad by pro rata reduction of the discount to ensure no discount was entitled while live overseas.
By trying to raise a modest additional revenue, the Government is placing thousands of jobs at risk as a contraction in foreign investor and expatriate activity will mean less new house construction.
SMATS Group will continue to lead the push to have this change stopped and has provided for an online petition for people to support. Click here for join our petition.
We firmly believe that this change will have a detrimental impact on the Australian construction industry and general economy, hence we are determined to bring to the Government’s attention the dangers of this change.
If the change does come into effect, it will likely mean a lift in property prices in the short to medium term as supply will reduce with less foreign investor activity. This may be good for individuals that already own property, but it will be a disaster for the Australian population seeking quality affordable housing in a market where supply can’t keep pace with demand and vacancy rates are amongst the lowest in the world.
We urge everyone to get behind our Submission and help us make this important stand for the benefit of our great country.