Aus­tralia to ban for­eigner in­vestors from tax in­cen­tive

Financial Mirror (Cyprus) - - FRONT PAGE -

Aus­tralia may re­strict a prop­erty tax scheme to only its cit­i­zens af­ter it was re­vealed that for­eign in­vestors dodged close to US$ 60 mln in tax in 2013.

Aus­tralian Tax Of­fice data showed al­most half of the coun­try’s 52,670 for­eign in­vestors that de­clared rental in­come in 2012-13, the latest fig­ures avail­able, claimed a loss, mostly through neg­a­tive gear­ing, News Corp re­ported.

Neg­a­tive gear­ing al­lows land­lords to off­set the cost of their in­vest­ment prop­erty, such as main­te­nance, agent fees and in­ter­est on mort­gages, against the in­come re­ceived from rent. It has been blamed for hand­ing the ad­van­tage to higher-in­come earn­ers and pric­ing low­er­in­come earn­ers out of the prop­erty mar­kets in Syd­ney and Mel­bourne, where house prices are sky- rock­et­ing.

The gov­ern­ment, fear­ing voter back­lash from the 1.27 mln Aus­tralians us­ing the sys­tem, has been loath to change the sys­tem com­pletely, but is in­ves­ti­gat­ing a move on re­strict­ing or abol­ish­ing the sys­tem’s use for over­seas in­vestors.

By us­ing neg­a­tive gear­ing, for­eign in­vestors in 2012-13 re­duced their tax bill by 73%, sav­ing US$ 57.75 mln.

“Neg­a­tive gear­ing by non-res­i­dents is un­der ac­tive con­sid­er­a­tion as part of the Tax White Pa­per process,” a spokesper­son for Trea­surer Joe Hockey told News Corp.

The im­pact of the scheme on the na­tion’s bot­tom line is com­pounded by the speed at which for­eign in­vest­ment is grow­ing. From 2012-13 to 2013-14, over­seas in­vest­ment dou­bled to US$ 26.2 bln.

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