Two months after Jim Chalmers delivered his controversial budget, some of the serious financial upheavals it triggered remain unresolved. Its unintended consequences are leaving many Australians poorer – including some of those it was ostensibly designed to help. One of the most important exemptions provided since the budget – to new capital gains tax imposts for start-up businesses “focused on developing one or more new or significantly improved innovations for commercialisation” – has missed the mark.
In their submissions to Treasury’s consultation on the CGT carve-out, business groups warn that many innovative start-ups will fail to qualify for the exemption under proposed criteria. The criteria were focused too much on tech and ignored innovation in other sectors such as mining exploration, advanced manufacturing, agribusiness and health services, the Australian Chamber of Commerce and Industry argued. ACCI chief executive Andrew McKellar said many forms of commercially significant innovation offering productivity and growth would be excluded from the narrow CGT concessions, and taxed more heavily.
And companies that qualified would be unnecessarily burdened with “administrative requirements and behavioural distortions”, the Australian Industry group warned. Before his economic roundtable in August last year, the Treasurer identified over-regulation and red tape as a brake on sluggish productivity.
Ai Group CEO Innes Willox said the complex exemption rules would do the opposite to what should be the key principle behind tax reform: simplicity.
Property auction clearance rates across capital cities rebounded to their highest level in nearly two months at the weekend, but the housing sector, including prospective first-home buyers, continues to suffer in the fallout from the budget. That includes buyers suffering negative equity in areas popular with first-time buyers, especially those with limited equity who bought on the basis of the federal government’s 5 per cent deposit scheme, with the government acting as guarantor. Prices have gone backwards in nine out of 10 of the most popular postcodes under the scheme.
The ability of tenants to save for a first home is also being eroded by rent hikes, driven by supply shortages and landlords facing higher taxes. The immediate rental increases of $10-$25 a week in the nation’s capitals are more than five times Treasury’s forecasts of $2 a week. And the supply situation will be worsened by the government’s deal with the Greens to ban self-managed superannuation funds from borrowing money to invest in residential property. Housing Industry Association chief economist Tim Reardon told The Australian the government had underestimated the importance of SMSF investors to the housing sector. They offered an ideal source of new home supply, he said, as they were not allowed to live in the homes they bought. The ripples of Labor’s crackdown on investors’ returns are spreading, to the economic detriment of many across the community.
Two months after Jim Chalmers delivered his controversial budget, some of the serious financial upheavals it triggered remain unresolved. Its unintended consequences are leaving many Australians poorer – including some of those it was ostensibly designed to help. One of the most important exemptions provided since the budget – to new capital gains tax imposts for start-up businesses “focused on developing one or more new or significantly improved innovations for commercialisation” – has missed the mark.
In their submissions to Treasury’s consultation on the CGT carve-out, business groups warn that many innovative start-ups will fail to qualify for the exemption under proposed criteria. The criteria were focused too much on tech and ignored innovation in other sectors such as mining exploration, advanced manufacturing, agribusiness and health services, the Australian Chamber of Commerce and Industry argued. ACCI chief executive Andrew McKellar said many forms of commercially significant innovation offering productivity and growth would be excluded from the narrow CGT concessions, and taxed more heavily.
And companies that qualified would be unnecessarily burdened with “administrative requirements and behavioural distortions”, the Australian Industry group warned. Before his economic roundtable in August last year, the Treasurer identified over-regulation and red tape as a brake on sluggish productivity.
Ai Group CEO Innes Willox said the complex exemption rules would do the opposite to what should be the key principle behind tax reform: simplicity.
Property auction clearance rates across capital cities rebounded to their highest level in nearly two months at the weekend, but the housing sector, including prospective first-home buyers, continues to suffer in the fallout from the budget. That includes buyers suffering negative equity in areas popular with first-time buyers, especially those with limited equity who bought on the basis of the federal government’s 5 per cent deposit scheme, with the government acting as guarantor. Prices have gone backwards in nine out of 10 of the most popular postcodes under the scheme.
The ability of tenants to save for a first home is also being eroded by rent hikes, driven by supply shortages and landlords facing higher taxes. The immediate rental increases of $10-$25 a week in the nation’s capitals are more than five times Treasury’s forecasts of $2 a week. And the supply situation will be worsened by the government’s deal with the Greens to ban self-managed superannuation funds from borrowing money to invest in residential property. Housing Industry Association chief economist Tim Reardon told The Australian the government had underestimated the importance of SMSF investors to the housing sector. They offered an ideal source of new home supply, he said, as they were not allowed to live in the homes they bought. The ripples of Labor’s crackdown on investors’ returns are spreading, to the economic detriment of many across the community.