PVO: Imagine that you have to get the value of your property every year…and then pay taxes on the taxes that have risen in value. These Australians are hit by this every year
Imagine how you would be a real estate investor if you conquered and saved to buy units as an investment, and the government certainly requires you to officially value your expenses each year.
Then, in the year when the appraised value increases, you will tax it 30% on even if you don’t sell the assets and are forced to pay your tax debt immediately.
In other words, the only way to finance tax bills when you don’t want to.
You will find it all outrageous.
Well, that’s the government’s plan to tax unrealized pension gains. You are paying taxes to your main assets (such as a home purchased in a super fund) and if you can’t pay, you have to sell the assets to pay the tax.
No wonder tax professionals think this is bad taxes. No wonder the country’s two largest accounting agencies – Chartered Accountant ANZ and Certified Practical Accountant – describe the new rules as “poor design.”
Paying tax on things you haven’t made a profit from is a bad policy, simple and simple. It won’t pass the fair test at all.
Labor hopes to find more income and equity income and owners’ tax methods. Jim Chalmers is seeking to plug loopholes in his budget as he spends more than the country’s means.
Imagine how you would feel as a real estate investor if you made a little conquer and saved as an investment purchase unit, and the government asked you to pay for your own expenses each year.
But if someone thinks the new super tax is limited to a few people, they need to think about it again. As it is not indexed at $3 million, more Australians will be forced to pay taxes on unrealized gains in their super accounts over time.
And, importantly, the more Australians are hit by this injustice and well-designed taxation, the harder they will be to pay their bills.
Rich people often have money elsewhere and they can pay taxes using assets that have not been sold. They have a larger portfolio.
But as time goes by, when this new tax starts to hit the rest of us, a large percentage of those affected will be forced to sell from their super to pay the tax.
And if these design features are not flawed enough, you can’t even make up for the tax hit of annual tax growth, while paper losses in other years. If assets go down, it’s too bad, you still have to pay taxes on a year that’s going up on paper.
This is ridiculous.
To be clear, I’m not sure if I’ll be asked to pay this tax unless the vegetables go down and lower the threshold below $3 million. Therefore, my complaints about its design are not based on one’s own interests.
Guess who else doesn’t have to pay taxes? Many state politicians, bureaucrats and judges don’t have to do this constitutionally. Their super payments are protected by labor.
What is the fair situation?
Modeling shows that Generation Z will be stugged by taxes when it reaches retirement age because it will not be indexed (stock images)
I had a serious debate on the broader tax reform with all my heart, in which I was open to the tax portfolio, which might include inheritance tax, higher, broader GST, taxes on family homes, and restrictions on negative attitudes. Even changes to capital gains tax are worth a look.
As long as the government is open to reducing other inefficient taxes, let’s debate. Overdue.
The last serious tax reform was at the beginning of the century, when the Howard administration introduced the Goods and Services Tax.
Our tax and expenditure system is now broken and needs repairs. But like the super tax of the labor force, sporadic applications of new taxes often lead to poorly drafted changes.
The discussion needs to be more comprehensive, it needs to involve proper consultation and debate with tax experts. This is not happening with the upcoming super tax.
Labour had this idea, and it told tax experts, who replied that the design was poor and needed red lines. Of course, that didn’t happen.
Labour won the election (not focusing on the issue), so it now claims a mandate for a legislation. It does have a mission by definition because it announces its intentions on the super side so that it can be comfortably won.
But in the pantheon of elections, this is not a particularly powerful person. The Election Day victory may be emphasized, but the reason has nothing to do with this poorly designed tax.
That said, the opposition does not put it in the spotlight during the campaign is a failure, just like the league’s candid credit policy ahead of the 2019 election.
When parliament returns at the end of July, new taxes on unrealized gains will be legislated. Interestingly, whether the opposition could blend its actions and uncover the inherent mistakes in it – using the issue to make the reelected Labour government play a role.
Don’t hold your breath.
