Australia's federal budget has taken a swing at negative gearing and capital gains tax (CGT) concessions, policies that critics say are basically a VIP pass for the wealthy to speculate on housing. And the budget's own figures have just confirmed that the velvet rope is very much in place.
The top 1% of lifetime earners have pocketed over $700,000 in tax concessions from CGT, negative gearing, and discretionary trusts over their working lives. In 2022-23, the top 10% of income earners snagged 83% of the capital gains tax giveaway and 37% of negative gearing benefits. Meanwhile, the median income was a modest $58,216, meaning most of these perks went to people who are laughing all the way to the bank.
For the uninitiated, capital gains tax is what you pay when you sell an asset (like a house) for a profit. Since 1999, investors get a 50% discount if they hold the asset for more than a year, because apparently patience should be rewarded with tax avoidance. Negative gearing, or 'rental loss' in Treasury speak, lets landlords deduct losses from their taxable income when their investment property hemorrhages cash.
Of the more than 1 million tax filers in 2022-23, only 71% actually used the CGT discount. But don't get too excited: 95% of that benefit went to Australians earning above the median. And even among the well-off, inequality reigns: over half of the CGT benefit went to the top 1% of income earners. So if you're rich, you're getting a discount; if you're super rich, you're getting almost all of it.