Australian Property Sector Welcomes Tax Plans
Tuesday, May 4, 2010
While it considers that there were many positives for the property industry
from the Henry tax review and the Australian government’s announced tax
programme, the Property Council of Australia (PCA) has called on the government
to clarify its plans for a second wave of tax reforms, particularly in relation
to inefficient property taxes.
The Henry tax review's recommendations and the Australian government's new
tax reforms have largely been welcomed by the commercial property sector. The
PCA’s chief executive, Peter Verwer, said: "The government has ruled
out any tinkering with the negative gearing and capital gains tax regimes. The
gradual increase in the superannuation rate to 12%, the reduction in company
taxes, concessions to small business, and the establishment of an infrastructure
fund are also big positives."
However, the government has also committed to further waves of reform, he added. “At the top of its list should be the modernization of Australia's
outmoded property tax system. Dr Henry's report clearly demonstrates the critical
importance of replacing inefficient property taxes with a modernized approach
to real estate taxation."
The PCA looks for a detailed commitment in relation to the process for reforming
state property taxes, particularly stamp duties. While this, it says, will be
a highly political process it feels that the alternative would be higher (and
new) property taxes in the future.
"The Henry review also recommended a major update and re-write of trust
rules to reduce complexity and uncertainty,” he concluded. “We look
forward to the federal budget, where we anticipate the government will signal
measures to deliver a simple, elective, managed investment trust regime."
The PCA notes that the exemption of trusts from controlled foreign companies
and foreign investment fund rules, and from thin capitalization rules, is already