No tax dodging at Australia’s major property companiesReports in today’s Sydney Morning Herald and The Age newspapers alleging Australia’s listed property companies are paying less than their fair share of tax are completely untrue and fail to understand how property trusts work. The report by the United Voice and the Tax Justice Network misses the point of managed investment trusts and the significant contribution they make to the Australian economy. Chief Executive Ken Morrison said the reports totally miss the point. “The property industry is actually the nation’s single largest tax payer, contributing $34 billion in real estate specific taxes in 2013. That’s before you count the corporate tax and GST the industry pays. “Today’s media reports shows a complete lack of understanding of how institutional grade property is owned in Australia. “The tax is being paid, it is being paid by the end unit holders. “Institutional investment property is owned in property trusts (or real estate investment trusts). “The property companies listed in the articles today manage their properties on behalf of the actual end owners of the units in the trust, which are often superannuation or pension funds or direct mum and dad investors. “Managed investment trusts (MIT) were created to ensure mum and dad investors have the same opportunity to invest in property as high net worth individuals and corporations. “The MIT regime levels the playing field for all investors, and helps ordinary Australians prepare for retirement. “It is the end owner – the unit holder – who pays tax on the income from the properties, with the level of tax they pay based on their own applicable tax rate. “This ensures that the investor who benefits from the investment is the one taxed on the investment. “The property trust structure is common throughout the developed world and is a well understood and long term practice here in Australia. “It allows investors to invest in what would otherwise by large, illiquid assets. It is not a tax dodge. “The article should be asking why property is the only asset where you pay tax when you purchase, when you own and when you earn income.” “The stapled securities structure has helped Australia to maintain its competitive edge and remain nimble in market downturns. It is a key feature that has helped attract investment to Australia and inject significant tax revenues into the economy. “Australia’s property trust regime is admired around the world as one of the most advanced and equitable systems. “The property industry is working closely with Government to ensure a fair and equitable tax system to improve competitiveness, productivity and investment opportunities for all Australians.” Media contact: Ken Morrison, Chief Executive, Property Council of Australia, 0412 233 715 Andrew Mihno, Executive Director, International & Capital Markets, 0406 454 549
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