EXCLUSIVE: Labor is officially abandoning plans to change negative gearing if it wins government and will not touch the legislated stage three income tax cuts, with shadow cabinet formally deciding its position on the policies on Monday morning.
Opposition Leader Anthony Albanese and Labor's leadership team met this morning and decided to officially dump the negative gearing policy from its election platform.
Caucus has endorsed the decision, and also agreed to ditch a plan to halve the 50 per cent capital gains tax deduction.
Former Opposition leader Bill Shorten went to the 2016 and 2019 federal elections vowing to scrap negative gearing on all properties purchased after a certain date, unless they were new. The move was aimed at improving housing affordability and levelling the playing field for first homebuyers.
Despite Labor promising existing investors would be protected from the changes, critics argued it would drive down house values and affect mum and dad investors, home owners, renters and the construction industry.
Labor will also support the coalition's stage three income tax plan, which delivers significant cuts for high income earners.
Following Labor's 2019 election loss, new Opposition Leader Mr Albanese said all policies would be reviewed.
Earlier this year, Labor formally dumped its franking credits policy, which would have abolished franking credit refunds for people who paid no tax. The Coalition dubbed it the 'retiree tax' and used it to campaign against Labor at the 2019 poll.
Both sides of politics are now readying themselves for the next federal election, to be held between August this year and May 2022.
What is negative gearing?
As the Federal Treasury's website acknowledges, it's not actually an official part of any tax legislation.
Negative gearing describes a situation where an asset costs the owner – including interest – more than it earns.
Negatively geared assets often include property, but the term can be applied to any type of investment.
Owners of negatively geared assets can then deduct their loss against the rest of their income when assessing their personal income tax.
It is a strategy often applied to investment properties, where an owner might hope that the capital gain (sale price minus cost of asset) when they sell the asset will more than offset that loss.
Bill Shorten's Labor policies at the 2016 and 2019 federal elections would have halved the 50 per cent capital gains tax deduction and limited negative gearing to new properties only, though it was grandfathered.
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