Home Australian Capital Territory Chief Executive | ThinCap changes remain deeply flawed

Chief Executive | ThinCap changes remain deeply flawed

  • February 07, 2024
  • by Mike Zorbas
The Treasury Laws Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Bill 2023 in its current form will hurt the supply of homes we desperately need

The year starts as it may continue.

Governments in structural deficit citing noble causes in redesigning taxes.

And so, the nobly intended, deeply flawed Federal ThinCap legislation is set to pass later this week.

Though we have done much to improve this tax grab cloaked in OECD principles, the scale of the backwards step for investment in Australian property is well known to readers.

It is real hard to be polite about this.

As we said in our opening statement to the Senate Committee last week,

“And this is the daftest part … which no stakeholder who comes before you today will, or could, have a sensible answer to… Australian businesses – investing in Australia with only Australian assets and debt – remain caught in a profit shifting prevention Bill, where there is no offshore jurisdiction to shift profit to. Surely, at least, that must yet be fixed.”

Needless to say, our Capital Markets Division will continue to review the impact of these changes with a view to future advocacy and amendments.

Break glass in case of neg gearing changes

Unusual last week to speak about changes to negative gearing. It is after all no longer the policy of the government.

And yet here we were saying this,

“As we start 2024, housing supply is facing headwinds including high cost and hurdles of financing, bad weather, rising material and labour inputs matched by decreasing construction productivity, low market capacity, labour market competition from welcome and historically large infrastructure builds and green infrastructure construction, planning delays, and ever-changing and disruptive state property taxes among other negatives.

The federal government knows housing supply is the key to more housing choice and sustained downward pressure on the cost to buy and to rent across Australia.

Deloitte modelling of proposed 2019 negative gearing changes showed a reduction of housing construction by 4.1 percent. 

Taken today, these changes would boot the government’s admirably ambitious 1.2 million home target from 2029 firmly into the next decade.”

That and altering negative gearing is nowhere near the first thing you would change about our ancient and mystical tax system even if it didn’t reduce new home construction.