Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

WM Residences fills gap in Mordialloc townhouse market

Taxation

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Chair of the Tax Practitioners Board (TPB), Mr Ian Taylor, has  invited stakeholders to comment on four new draft information sheets providing practical guidance on how the Code of Professional Conduct (the Code) applies to tax (financial) advisers.
‘All registered tax practitioners, including tax (financial) advisers, need to ensure they comply with their obligations under the Code. To assist tax (financial) advisers to understand what this means for them, the TPB has issued four exposure draft documents relating to acting in the best interests of their clients, taking reasonable care to ascertain a client’s state of affairs, applying tax laws correctly and managing conflicts of interest,’ Mr Taylor said.
‘I encourage all interested parties to take the opportunity to review the exposure drafts and provide their comments.’
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<li><a href="https://www.tpb.gov.au/TPB/Publications_and_legislation/TPB/Publications_and_legislation/ED/0714_-_Code_of_Professional_Conduct_-_Acting_lawfully_in_the_best_interests_of_clients_for_TFAs.aspx" target="_blank">TPB(I) D32/2016 Code of Professional Conduct - Acting lawfully in the best interests of clients for tax (financial) advisers</a></li>
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<li><a href="https://www.tpb.gov.au/TPB/Publications_and_legislation/TPB/Publications_and_legislation/ED/0715_-_Code_of_Professional_Conduct_-_Reasonable_care_to_ascertain_a_client_s_state_of_affairs_TFAs.aspx" target="_blank">TPB(I) D33/2016 Code of Professional Conduct - Reasonable care to ascertain a client's state of affairs for tax (financial) advisers</a></li>
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<li><a href="https://www.tpb.gov.au/TPB/Publications_and_legislation/TPB/Publications_and_legislation/ED/0716_Code_of_Professional_Conduct_-_Reasonable_care__-_taxation_laws_applied_correctly_TFAs.aspx" target="_blank">TPB(I) D34/2016 Code of Professional Conduct - Reasonable care to ensure taxation laws are applied correctly for tax (financial) advisers</a></li>
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<li><a href="https://www.tpb.gov.au/TPB/Publications_and_legislation/TPB/Publications_and_legislation/ED/0717_Code_of_Professional_Conduct_-_Having_adequate_arrangement_managing_conflicts_of_interest_TFAs.aspx" target="_blank">TPB(I) D35/2016 Code of Professional Conduct - Having adequate arrangements for managing conflicts of interest for tax (financial) advisers</a></li>
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All submissions will be reviewed and considered before the final information sheets are published on the TPB website.
Submissions on the four exposure drafts close on 11 July 2016. Comments can be sent to <a href="mailto:tpbsubmissions@tpb.gov.au" target="_blank">tpbsubmissions@tpb.gov.au</a>
 
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po-LsXgBTHBmX

Property 101: Professional conduct draft for tax advisers

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If actions do indeed speak louder than words, then politicians don’t give a damn about housing affordability.
Often you’ll see their lips moving, and they appear to care about the cost of housing, but then they’ll take actions that cause costs to rise and affordability to worsen.
Victoria’s 2016-17 State Budget provides another example of why housing is so expensive in this country and why affordability is an enduring issue (although not nearly as serious as mainstream media would have us believe, especially outside of Sydney). 
The Victoria Government has added to the taxation burden on the industry that creates new homes for families. The Property Council is right to be “deeply worried about the Government's unwillingness to deal with its property tax addiction” and to ask for a cap on property tax increases. 
Governments at all levels treat the Australian housing industry as a cash cow and in every budget they milk it more. And the cost of providing housing keeps rising, while politicians point the finger of blame at innocent parties such as foreign investors and negatively-geared Australian investors. 
“Land tax is up 28 percent, foreign investor taxes have been tripled and stamp duty is forecast to exceed $6 billion for the first time,” says the Property Council, in the wake of Victoria’s State Budget. “Melbourne cannot expect to remain Australia's most competitive city for property investment when its property tax haul is surging.
“Another area which concerns the property industry is the stockpiling of Growth Area Infrastructure Contributions (GAIC). Property developers are paying more than their fair share. It is time for the Government to provide full disclosure on where the money is being spent.”
The so-called clampdown on foreign investors is, sadly, another ploy by politicians to give the appearance of doing something about housing affordability while finding new ways to milk the property industry of revenue.
It’s a little like the Federal Government lifting the tax on cigarettes – they claim it’s to discourage smoking but in reality it’s a grab for revenue. If they were serious, they’d ban smoking altogether, just as they would ban foreign buyers if they truly believed they were the prime cause of high house prices in Sydney and Melbourne. 
Victoria has introduced new taxes to slug foreign buyers and NSW is gearing up to do the same, while pretending it’s really a clampdown on illegal activity which allegedly pumps up prices.
The NSW Government is introducing new rules from July. Buyers and sellers of real estate will have to prove their residency and citizenship status before a sale is completed. A land tax certificate showing whether any money is owed must be supplied to a home-buyer by the vendors. The vendors must disclose their residency status and nationality when applying for the certificate. Foreign buyers will have to provide citizenship and visa details, plus FIRB clearance, through the stamp duty process.
The NSW Office of State Revenue will collect the new information on buyers' nationality. This will be passed to the ATO for inclusion in a national register of foreign ownership of land titles, which begins on July 1. The ATO will match data to ensure foreign buyers have paid a $5,000 fee for any property sold for less than $1 million, and $10,000 for properties over $1 million.
The process paves the way for the NSW Government to follow Victoria in imposing foreign buyer surcharges on land tax and stamp duty in the future.
How these moves address housing affordability is a mystery.
Here’s one way it may make it worse. Deterring foreign investment, upon which many major high-rise apartment projects depend, makes it likely many projects will not be built. The reduction in supply adds to the pressures which causes prices to rise.
NSW executive director of the Property Council Jane Fitzgerald says: “Turning investors away by imposing a huge new tax is one way to ensure it doesn’t get any better. There are international investors right now considering whether to build in NSW. If they choose to go elsewhere our housing affordability crisis will worsen.”
Well, exactly. But politicians, generally inept at seeing beyond the end of their noses, haven’t thought it through to that degree.
Rather than seeing foreign investment as being part of the solution (helping to lift the supply of dwellings), they choose to see them a problem – or perhaps, more correctly, as an unpopular minority to blame without losing votes.
Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a>
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terryryder-YECXbqmri2

Politicians don’t give a damn about housing affordability: Terry Ryder

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Just like the Labor Government in Victoria, overseas property investors will have to pay more to buy a home in NSW under Treasurer Gladys Berejiklian’s state budget­ plan.
The Daly Telegraph's state politics reporter Andrew Clennell says Ms Berejiklian is understood to be seriously considering a 1.5 percent foreigner land tax surcharge to "tackle housing affordability­."
It mirrors a 1.5 percent surcharge in Victoria, ­although there is a suggestion Ms Berejiklian could impose a slightly lesser rate of 1 percent.
Victoria also imposes an extra 7 percent on stamp duty for foreign buyers but Ms Berejiklian is understood to have ruled that out.
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jchancellor-FAypfDUnLy

NSW state budget plans foreign investors land tax surcharge

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GUEST OBSERVER
A long-term plan to cut the company tax rate from 30 percent to 25 percent is the centrepiece of the Coalition’s economic plan for jobs and growth.
The Coalition maintains the change will boost GDP by more than 1 percent in the long-term, at a budgetary cost of $48.2 billion over the next 10 years.
But the very Treasury research papers relied on by the Coalition tell a more modest story than the headlines. Using these papers, we show that the net benefit to Australians in the real world will be only about half of the headline benefit, and it will be a long time before we are any better off at all.
<h2>The short story</h2>
The Government has made two claims about the economic impacts of its plan to cut the company tax rate.
On Budget night Treasurer Scott Morrison said that the tax cuts would:
“… mean higher living standards for Australians and an expected permanent increase in the size of the economy of just over one percent in the long term.”
Later last week, Prime Minister Malcolm Turnbull said:
“The Treasury estimated last year…that for every dollar of company tax cut, there was four dollars of additional value created in the overall economy.”
<h2>Sound in theory, but there’s a back story</h2>
In theory, cutting the company tax rate boosts the economy in the long term. All taxes distort choices, and thereby drag on economic activity. Taxes on capital often have especially large economic costs because they discourage investment, which is mobile across borders. By some estimates, roughly half of the economic costs of Australian company tax ultimately fall on workers, as lower company profitability leads to lower investment, and therefore lower wages and higher unemployment.
But while the theoretical argument for company tax cuts is straightforward, the real story is more complicated.
<h2>The twist: a tax cut for foreign investors</h2>
The twist in the tale comes from Australia’s system of dividend imputation, or franking credits. The effect of this system is to make the company tax rate for Australian resident shareholders effectively close to zero. In nearly every other country, company profits are taxed twice: companies pay tax, and then individuals also pay income tax on the dividends, albeit often at a discount to full rates of personal income tax.
But in Australia, the shares of Australian residents in company profits are effectively only taxed once. Investors get franking credits for whatever tax a company has paid, and these credits reduce their personal income tax. Consequently, for Australian investors, the company tax rate doesn’t matter much: they effectively pay tax on corporate profits at their personal rate of income tax.
As a result, although Australia has a relatively high headline corporate tax rate compared to our peers, in practice the comparable tax rate is lower – at least for local investors. As a result, many of the international studies about the impact of cutting corporate tax rates are not readily applicable to Australia.
Local shareholders do get one small benefit from cutting corporate tax rates. If companies pay less tax, then they have more to reinvest, so long as the profits are not paid out to shareholders. Yet in practice, most profits are paid out. Therefore a company tax cut will generate little change in domestic investment.
By contrast, foreign investors do not benefit from franking credits. They pay tax on corporate profits twice: first at the company tax rate, and then as income tax on the dividends. This means that a cut to the company tax rate provides big benefits to them.
This week The Australia Institute pointed out that foreign investors from the United States and other countries that have tax treaties with Australia may not benefit from the company tax cut, because their home governments will collect the gains from any cut to Australia company tax as additional company tax. Yet this would only occur when foreign firms repatriate profits earned in Australia to the home country.
The big reductions in net tax revenue – and therefore the large benefits to companies – are expected when the corporate tax rate is cut from 30% to 25% between 2022 and 2027 for larger companies, including the bulk of businesses that are foreign-owned.
The headline from the Treasury modelling for the 2016-17 Budget is that this cut will ultimately increase GDP by up to 1.2% meaning larger foreign companies are attracted to invest more in Australia. The finding is based on work contained in a Treasury research paper that modelled the long-term impact of a company tax cut.
<h2>Activity is not income</h2>
However, it is a mistake to assume that all the increase in economic activity will make Australians better off. We often use Gross Domestic Product – the sum of all economic activity – as a short-hand measure for prosperity. But when the benefits disproportionately flow to non-residents, GDP can be misleading. It’s much better to look at Gross National Income (GNI), which measures the increase in the resources available to resident Australians.
Treasury expects that cutting corporate tax rates to 25% will only increase the incomes of Australians – GNI – by 0.8%. In other words, about a third of the increase in GDP flows out of the country to foreigners as they pay less tax in Australia. And because most of the additional economic activity is financed by foreigners, the profits on much of the additional activity will also tend to flow out of Australia.
<h2>You don’t get something for nothing</h2>
Yet even this increase in GNI of 0.8% is not the best estimate of the improvement in living standards Australians can expect from the Government’s company tax plan. If company taxes are lower, other taxes have to be higher, all other things being equal. In the modelling discussed so far, Treasury first assumes that these revenues can be collected by a fantasy tax that imposes no costs on the economy.
But that’s not what happens in the real world. So the Treasury research paper also models the scenario in which personal income taxes rise to offset the reduced company tax revenue. On this more realistic assumption, Treasury estimates that GNI will increase by just 0.6% in the long term, or roughly $10 billion a year in today’s dollars.
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/122984/width754/image-20160518-13455-yxfw6e.jpg" target="_blank">Click to enlarge</a>
<h2><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/122984/width754/image-20160518-13455-yxfw6e.jpg" alt=""></h2>
<h2>Other wrinkles in the story</h2>
Even this more modest Treasury figure may well over-estimate the long-term boost to GNI. In the real world, progressive income taxes impose higher costs than the hike to a hypothetical flat-rate personal income tax that Treasury modelled. Companies may also not increase investment as much as Treasury expects, and those firms that are part of oligopolies in Australia may not increase wages by as much as Treasury assumes.
While these are reasons to expect that the Treasury modelling overestimates the economic benefits of a company tax cut, they are offset by some more conservative assumptions. Treasury believes that tax cuts modestly change how much firms shift profits overseas; it may overstate how much tax cuts flow into additional profits rather than higher wages in those industries that it does recognise as oligopolies; and it may discount the benefits of investors making less distorted choices between debt and equity funding.
<h2>The verdict on the first claim</h2>
The bottom line is that, on Treasury’s own modelling, a corporate tax cut will increase Australian incomes in the long term by up to 0.6%. The Treasury research paper doesn’t commit itself to a timeframe, but it cites other work that expects the economic benefits of company tax cuts to take 20 years to bear fruit, with half the benefit in 10 years. Given that the important (and expensive) part of the corporate tax cuts only starts to take effect from 2022, Australia will be waiting 25 years for a 0.6% increase in incomes.
This economic benefit needs to be seen in context. If Australian per capita GDP and GNI increase at 1.5% a year (as the budget papers routinely assume), then over 25 years, incomes will rise by 45.1%. Corporate tax cuts mean that instead, incomes will rise by 45.7% – or perhaps a bit less. It may still be worth doing, but it’s not a plot twist that dramatically changes Australia’s story.
Others claim that in the past, company tax cuts have had no measurable effect on the economy. This is disputed – there may well be a link between corporate tax cuts and economic growth. But it’s inevitably hard to see in practice because on Treasury’s own modelling the economic effect of company tax cuts is small relative to other changes.
<h2>Not four-to-one, more like dollar for dollar</h2>
This brings us to the Government’s second claim. Late last week, Mr. Turnbull said that each dollar in company tax revenue cut would deliver an extra four dollars in GDP.
His claim appears to be drawn from an earlier 2015 Treasury research paper that modelled the economic impact of major Australian taxes, including company tax. The more <a href="https://www.treasury.gov.au/PublicationsAndMedia/Publications/2016/working-paper-2016-02">recent</a> Treasury working paper, released in Budget week, implies a slightly larger $4.30 increase to GDP from each $1 in revenue cut.
But again this misses a big part of the story.
First, this claim is about GDP, and therefore includes the disproportionate increase in the income of foreigners. Our analysis of the Treasury modelling shows that the increase to Australian incomes, or GNI, is only $2.80 per dollar of revenue lost from a corporate tax cut.
Second, when corporate tax is replaced by a still hypothetical but marginally more realistic flat rate income tax – rather than a complete fantasy tax that has no impact on the economy – the increase to Australian incomes is less again: only $1.80 per dollar of revenue lost.
Third, the Prime Minister has framed the boost to the economy in terms of the long-term increase to GDP per dollar of company tax cut. Treasury calculates the revenue “dollar” lost after considering the additional tax revenue that the government hopes to collect from all taxes in twenty years time as incomes rise because of greater investment.
<a href="https://www.theaustralian.com.au/federal-election-2016/federal-election-2016-pm-bolstered-by-160bn-reform-promise/news-story/e5fe769c97a196959b6e34e14bcc273d?nk=21bd5293c6c9bf91e73e578611f79538-1463363505&amp;login=1">Many people</a> would interpret the Prime Minister’s statement to compare the ultimate benefit per dollar of tax revenue given up in the shorter term. On this basis, the increase to Australian incomes in the long term is only $1.20 for every dollar given up in the short term as a result of corporate tax cuts.
This story ends the same way. Corporate tax cuts may be worth doing, but the outcome is unlikely to set pulses racing.
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/122985/width754/image-20160518-13481-1ugr3e5.jpg" target="_blank">Click to enlarge</a>
<h2><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/122985/width754/image-20160518-13481-1ugr3e5.jpg" alt=""></h2>
<h2>The journey matters</h2>
So far, as the Treasury research paper does, we’ve focused on the long-term economic boost from a company tax cut once the economy has fully adjusted. But the journey to get there also matters.
For a decade, a cut to corporate taxes will reduce national income. Foreigners will pay less tax on the profits from their existing investments in Australia, reducing Australian incomes. Foreigners own about 20% of all capital in the economy, so it’s a big windfall gain for them. We estimate that when a 5 percentage point tax cut for big business is first implemented, national incomes will be reduced by about 0.5%, as a result of the immediate loss in company tax revenues formerly paid by foreign investors.
The benefits to Australians from a corporate tax cut only accumulate slowly as foreigners make additional investments. Treasury cites a paper that estimates that the benefits of corporate tax cuts take 20 years to flow through. Assuming that these benefits increase at a constant rate, Australian income will only be larger than otherwise after about 10 years.
Of course, the upfront costs of a company tax cut over the first decade must be offset against the long-term gains. On our estimates, the loss of income incurred over the first decade will only be offset by higher incomes after about 19 years. If Australians want the modest economic benefits of a corporate tax cut, they will be waiting a long time.
<h2>The moral of the story</h2>
Company tax cuts are not a knight in shining armour to save the Australian economy. On the basis of the modelling that the government uses to support its case, corporate tax cuts can make a modest contribution, and then over the very long term. That story won’t sell as many copies. Truth, on this occasion, is duller than fiction.
John Daley<a href="https://theconversation.com/profiles/john-daley-1870" rel="author" style="line-height: 1.3em;"> </a>is chief executive officer, Grattan Institute and can be contacted <a href="https://theconversation.com/profiles/john-daley-1870" target="_blank">here</a>.
Brendan Coates is fellow, Grattan Institute and can be contacted <a href="https://theconversation.com/profiles/brendan-coates-154644" target="_blank">here</a>.
Both are authors for The Conversation
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The full story on company tax cuts and your hip pocket

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Labor will limit negative gearing to new housing from 1 July 2017. 
All investments made before this date will not be affected by this change and will be fully grandfathered.
This will mean that taxpayers will continue to be able to deduct net rental losses against their wage income, providing the losses come from newly constructed housing.
From 1 July 2017 losses from new investments in shares and existing properties can still be used to offset investment income tax liabilities. These losses can also continue to be carried forward to offset the final capital gain on the investment.
For more information, <a href="https://www.alp.org.au/negativegearing" target="_blank">click here</a>.
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Property 101: Labor's negative gearing policy

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GUEST OBSERVER
Stamp duty concessions, including exemptions for downsizers and adjustments for off-the-plan buyers, should be incorporated in the WA state budget to tackle Perth’s failing housing targets. 
With the release of Perth’s long-term planning blueprint in 2011, there was a clear objective to reduce urban sprawl by driving higher-density housing options in established areas as the city’s population grows to over 3.5 million people.
Since then, we’ve seen changes in the types of housing being constructed in metropolitan Perth with an increase in multi-residential complexes, rather than the traditional trend of single dwellings.
This has been driven by a shift in buyer attitudes towards apartment living as well as many councils adopting planning schemes that are conducive to higher-density housing.
However, it’s clear that more needs to be done as Perth’s infill development continues to fall short of the state’s target of 47 percent.
Initiatives key to reaching housing goals
Two initiatives that are conducive to the state’s long-term planning targets are the exemption of transfer costs for downsizers and the modification of stamp duty for off-the-plan purchases.
These concessions should be included in the WA budget, scheduled for May 12, to incentivise buyers to continue to move into high density housing and, in turn, support the state reach its infill targets.
1. Exemption of transfer costs for downsizers
The introduction of a one-off stamp duty exemption for people over 65 who are selling their family home to downsize.  The exemption should be available in any cases where the family home sells for less than $1 million and the buyer purchases a property of a lesser value. Given that many retirees are hesitant to downsize because of the high stamp duty costs involved, a one-off exemption would provide a significant incentive to move to a smaller residence, possibly in a higher-density complex. It would also help free larger blocks in established areas for development of more higher-density housing options.
2. Modify how stamp duty is applied for off-the-plan purchases
Changing the way stamp duty is applied to off-the-plan purchases will drive more buyers to higher-density housing options. An effective method, which is utilised in other Australian states, is to charge stamp duty on the value of the land alone, rather than the combined value of the land and the dwelling. For example, take a developer who acquires a development site for $1 million and then seeks to build 30 apartments on the site. 
This would make the value of the land of each apartment worth approximately $33,000, which a potential buyer of one of the apartments would then pay stamp duty on. This should only be applied to off-the-plan purchases made prior to the start of construction. Any apartments purchased after the start of construction would have to pay stamp duty on the full price of the land and dwelling. 
Such an initiative would incentivise buyers to purchase high-density housing options during presales, because they save on the stamp duty. It would also assist developers attain finance for these projects, as lenders typically require about 60% of apartments sold as presales before approving funding.
Without further impetus for buyers to move to high-density housing, Western Australia, and more specifically Perth, risks falling significantly short of its key housing goals.  
Such stamp duty concessions are a swift and low-cost lever the Barnett government can pull in its forthcoming budget to help realise its long-term planning blueprint.
 
Damian Collins is the founder and managing director of Momentum Wealth and can be contacted <a href="https://www.momentumwealth.com.au/damian-collins/" target="_blank">here</a>.
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Stamp duty concessions key to achieving housing goals: Damian Collins

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Despite being widely described as a “tax rort for rich investors”, negative gearing is not a tax concession (a tax deduction as opposed to an exemption or rebate). It does, however, encourage over-investment and over-leveraging in Australia’s housing market, as the Financial System Inquiry Murray Report concluded.
Consequently, while not the only reason for increasing house prices and affordability issues in some locations, negative gearing has become a focal point in an election year for tax reform debate and a review of housing policy.
From Waleed Aly to the prime minister on his own blog, negative gearing is generating much talk without context.
<h2>Where does the idea come from?</h2>
Gearing describes the use of borrowing to finance an investment. When the interest costs of servicing that borrowing exceed the net income of the investment, it is said to be negatively geared.
The idea underlying negative gearing is relatively straightforward: when an individual (or business) incurs costs associated with generating income, those costs are tax-deductible from income.
As it is applied to investment properties in Australia, when interest costs of the mortgage exceed the net rental income of the property (that is, it is negatively geared) then the net loss on the investment property may be used by an individual to offset their ordinary wage income.
This is because, under the current rules in Australia, investment property losses are not “quarantined”. That is, the losses on an investment property are not only tax-deductible against the income from the investment property. As a result, the higher your total income, the greater the tax-minimisation benefit of negative gearing.
Quarantining losses is a major point of difference in the application of negative gearing in Australia to the rest of the world, and a key area that previous reforms in Australia have targeted.
<h2>International examples</h2>
Compared to the rest of the world, Australia’s negative gearing policy is one of the most generous to property investors.
Of OECD countries, New Zealand and Japan have the most similar treatment of negative gains to Australia. In these countries, negative gearing is allowed with relatively few restrictions.
On the other hand, the United Kingdom applies strict quarantining rules to loss-making properties. Investment property losses may be applied to the pool of income from investment properties and carried forward, but the losses may not be deducted against wages (i.e. non-passive income).
However, this summary should be treated with extreme caution. An international comparison of negative gearing treatment is incomplete without also examining the rules for capital gains and other housing market distinctions such as owner-occupier versus investment properties and new versus existing developments.
In the United States, while not a system to aspire to, even interest on owner-occupied housing is fully tax-deductible against ordinary income. By contrast, in Sweden, tax deductions from negative gearing of rental properties are permitted (although quarantined with income from other capital assets), but imputed rents from owner-occupied housing are taxed.
The net welfare gains are cumbersome to measure and entwined with government policy.
<h2>Previous attempts at reform</h2>
In 1984-85, major reform to negative gearing policy in Australia took place.
Prior to the Hawke government’s tax reforms, negative gearing rules quarantined investment property losses and allowed investors to carry these losses forward to offset future income when, or if, the property became positively geared.
In the space of six months, investment property losses quarantines were lifted (in order to boost the stock and affordability of rental housing) and then removed.
From property investors’ perspective, this final reform was severe: losses were quarantined on an asset-by-asset basis and could not be carried forward to offset future income.
Though this reform was not retrospective (that is, it would apply only to properties purchased after July 1985), it was largely criticised at the time and arguments that it caused rents to increase dramatically prevailed. While these analyses have been questioned in more recent debates, in September 1987 the reform was repealed and the system largely as it exists today was set.
The one major subsequent attempt at reform to negative gearing came in the 2010 Henry Tax Review. The primary recommendations for a “fairer” and more efficient housing market were for the removal, or reining in, of negative gearing. Specifically, negative gearing losses should be capped at 40 percent.
At the time of the report’s release, then-prime minster Julia Gillard chose to maintain the status quo with respect to negative gearing. Her response on ABC’s Q&amp;A shows that negative gearing is a bilaterally difficult topic.
<h2>Where are we now?</h2>
With calls for negative gearing reform from a range of voters, economists and advocacy groups such as ACOSS, why has no major political party achieved significant reforms to negative gearing?
There is the elephant in the room: the majority of Australian voters have a direct interest in the stability of the housing market.
Beyond that, the added confusion is the conflict between what negative gearing policy aims to achieve and the reality.
It is true that negative gearing distorts the housing market. It encourages over-investment and over-leveraging in Australia’s residential real estate sector. And this is exactly what it was intended to do.
But when combined with the existing progressive income tax structure, the relative benefit to low-income versus high-income earners is easily muddied.
For over 30 years, negative gearing has been untouched under the primary political motivation – that it increases the housing supply and, importantly, the stock of rental housing. It has taken this long to conclude that the stated aim does not appear to have been achieved. Finding a better alternative is not going to happen overnight, no matter how persuasively Waleed Aly puts the case against it.
<h2>So what are the reform options?</h2>
The Turnbull government has ruled out changes to negative gearing in the pre-election budget. The government has walked away from earlier suggestions of capping the losses that may be claimed from negative gearing, or restricting the number of negatively geared properties in an individual’s portfolio.
By contrast, Labor’s policy has been placed on a pedestal by proponents of reform. Labor proposes to restrict the tax benefits of negative gearing to new properties only. In theory this would redirect housing investment (which currently is concentrated in existing properties) to housing construction and help to boost supply.
Labor’s proposal would be a further distortion. Taken to its limit, offering incentives for investment in new properties also encourages speculative developments. The policy risks unoccupied housing investments and the resulting “ghost towns”, without improving housing affordability.
Complicating this analysis, however, is the complexity of the tax system and housing market policy. Negative gearing should not be analysed in isolation from capital gains (on which the Grattan Institute has published a comprehensive report) and other special treatments of housing such as stamp duty, land taxes and first-home-buyer exemptions. Rather than take a sledgehammer to the current policy, a good reform should encapsulate this spectrum of housing market distortions.
Danika Wright is lecturer in Finance, University of Sydney and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/danika-wright-121868" target="_blank">here</a>.
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Negative gearing reform has chequered recent history

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 GUEST OBSERVER
As is custom, there were a number of official announcements and an abundance of rumours and unofficial ‘leaks’ in the lead up to the release of the 2016-17 federal budget.
As widely anticipated, there was very little in terms of budget measures specifically aimed at housing. However, the significance of the tax reform contained within this budget was arguably underestimated, particularly if you consider the changes projected for the out-years. In the near term, small businesses are the main beneficiaries of the announced reforms. 
The key areas addressed in the budget: 
The Government has held firm on their commitment not to make any changes to capital gains tax or negative gearing provisions. Furthermore, comments within the Treasurer’s budget speech suggest the coalition have solidified this position ahead of the upcoming election.
The plan to lower the company tax rate to 25 percent through a staged implementation over the next decade, with a number of changes for small businesses to take effect in this budget period.
A modest change to the personal income threshold for the second highest marginal income tax rate which was increased from $80,000 to $87,000 (slightly higher than expected) in order to ameliorate concern about bracket creep; Commitment to the Smart Cities Plan; A Youth Employment Package; significant reforms to the superannuation system; the ATO has been provided with additional resources to bolster enforcement activity, primarily aimed at addressing multi-national tax avoidance. 
In the sections below we discuss the overall economic and fiscal outlook presented in the 2016/17 Budget along with some of the key forecasts. This is followed by additional explanatory detail regarding the key announcements most relevant to the residential building industry. 
Economic Backdrop &amp; Fiscal Position 
The Budget presents a “steady as she goes” outlook for economic growth over its forecast horizon. The key economic assumptions on which the Budget was developed are summarised in the table below.
<a href="/images/2016/05/06/Screen%20Shot%202016-05-06%20at%2010.20.14%20AM.png" target="_blank">Click to enlarg</a>e
<img src="/images/2016/05/06/Screen%20Shot%202016-05-06%20at%2010.20.14%20AM.png" alt="">
In terms of the economic assumptions underlying the Budget projections, the Treasury foresees the rate of economic growth returning to 3.0 in 2017/18 and remaining at this level over the forecast horizon. The acceleration of economic growth will help drive a reduction in the unemployment rate to 5.5 per cent by the end of the forecast horizon, a little lower than the 5.75 average rate expected for 2015-16. Against this backdrop, inflation is expected to pick up a little but remain in the relatively comfortable 2 per cent to 3 per cent range. Stronger GDP growth, and the decline in the cash value of the budget deficit over time means that the relative size of the deficit is expected to fall from 2.4 per cent of GDP in 2015/16 to 1.4 per cent of GDP in 2017/18. 
Of note are the estimates of the contribution that dwelling investment will make to economic growth in the years ahead. HIA’s projections are for dwelling investment to fall by 5.4 per cent next financial year and by 6.7 per cent in 2017/18. The HIA’s forecasts are based on the assumption that new home commencements will decline from about 214,300 in 2014/15 to 160,100 in 2017/18, while renovations activity is projected to recover modestly over the same period. Realising the outcomes expected by Treasury will require a continuation of the current record levels of new housing activity and strong growth in the renovation market. 
While the changes to superannuation and the lowering of the Official Cash Rate will encourage more investment in other avenues like rental investment, it is unlikely that this will be sufficient to deliver the continued growth in residential investment that Treasury is anticipating. 
In terms of the projections contained in yesterday’s budget, the size of expected future deficits has increased since the forecasts in December 2015’s Mid-Year Economic &amp; Financial Outlook. In 2015/16, the underlying cash balance is expected to reach $39.9 billion followed by $37.1 billion in 2016/17. Thereafter, the deficit is projected to decline significantly, falling to just $6.0 billion by 2019/20, the latest year for which Treasury forecasts have been prepared.
<a href="/images/2016/05/06/Screen%20Shot%202016-05-06%20at%2010.21.31%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/05/06/Screen%20Shot%202016-05-06%20at%2010.21.31%20AM.png" alt="">
Extension of the provision enabling small businesses to immediately depreciate assets valued up to $20,000 to the end of June 2017, and making this provision accessible to businesses with revenue up to $10 million. 
A ‘Ten Year enterprise Tax Plan’ aims to incrementally lower the company tax rate to achieve a 25 per cent rate for all companies by 2026/27. Over time, the size of companies eligible for the 27.5 per cent tax rate will be lifted each year until all companies are taxed at this rate in 2023/24. The rate for all companies will then be incrementally lowered over the ensuing four years to reach 25 per cent by 2026/27. 
The government will extend the unincorporated small business tax discount. From 2016-17, the discount will be available to businesses with annual turnover of less than $5 million, up from the current threshold of $2 million, and will be increased to 8 per cent. The maximum discount available will remain at $1,000. Over the next decade, the discount will be further expanded in phases, to a final discount of 16 per cent. 
The Youth Employment Package 
This program, Youth Jobs PaTH (Prepare, Trial, Hire), has three components: the first provides pre-employment skills training for young job seekers; the second provides a $1,000 inducement to businesses to provide a 4-12 week internship for program participants along with an income supplement for the participant; and the third is $6,500 ‘Youth Bonus’ wage subsidy payment for employers who take on a young worker who has been in employment services for longer than six months. 
Reforms to superannuation 
The purpose of the superannuation system is to be enshrined in legislation in line with a recommendation of the Murray Review. This will define the purpose as: providing an income in retirement to substitute or supplement the Age Pension. This provides legislative basis the government of the day to target the superannuation tax concessions at those who would otherwise be likely to be remain dependent on the Age Pension, this is likely to come at the expense of tax concessions currently available to those likely to be self-funded in retirement. 
Those with combined incomes and superannuation contributions greater than $250,000 will pay 30 per cent tax on their concessional contributions, up from 15 per cent. This represents a lowering of the previous income threshold of $300,000. 
The superannuation concessional contributions (ie pre-tax contributions or contributions where a deduction is claimed) cap has been lowered to $25,000 per annum, down from $30,000 for those under 50 and $35,000 for those over 50. 
This has been partially balanced by enabling unused concessional contribution caps to be carried forward on a rolling basis for up to five years for those with account balances of $500,000 or less. 
The government have introduced a $500,000 lifetime cap for non-concessional contributions (ie contributions made from savings for which no deduction is claimed). 
The Government will introduce the Low Income Superannuation Tax Offset to replace the Low Income Superannuation Contribution when it expires on 30 June 2017. 
From 1 July 2017, the Government will lift current restrictions and allow individuals under the age of 75 to claim tax deductions for personal superannuation contributions to eligible superannuation funds. 
The current spouse tax offset has been broadened. The income threshold for the receiving spouse (whether married or de facto) will be lifted from $10,800 to $37,000 
2016-17 Federal Budget 
‘Tax Integrity Package’ – additional resources for the ATO 
The government have provided additional resources to the Australian Tax Office to establish the Tax Avoidance Taskforce. The key focus will be pursuing tax avoidance by multinationals and high wealth individuals. 
The government will introduce a new ‘Diverted Profits Tax’ targeting multi-nationals shifting profits earned in Australia to lower taxing jurisdictions 
Warwick Temby is executive director, HIA and Shane Garrett is senior economist. They can be contacted <a href="https://hia.com.au" target="_blank">here</a>.
<a href="https://hia.com.au" target="_blank"></a>
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HIA's Federal Budget Report Card

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State and local government taxation revenue from property increased by 10.5 percent for the 2014-2015 according to the Australian Bureau of Statistics. 
The Australian Bureau of Statistics (ABS) has just released government taxation for the 2014-15 financial year which shows that a majority of state and local government taxation revenue comes from property.
Throughout the  2014-15 financial year, state and local government taxation revenue was recorded at $89.278 billion, up 7.0 percent over the year with $45.203 billion or 50.6 percent from property. 
According to the latest Property Pulse report by CoreLogic RP Data, property tax revenue increased by 10.5 percent for the period and said since the 1999-00 financial year, total state and local government taxation revenue has increased by 103% compared to a 150% increase in property taxation. 
"Taxes on property are split into two broad categories, taxes on immovable properties which includes the following sub-categories: land tax, rates and other, and taxes on financial and capital transactions which includes: financial institutions transaction taxes, government borrowing guarantee levies, stamp duty on conveyances and other stamp duties," the report said.
"The chart shows the value of taxation revenue from the two broad categories over time. In 2008-09, taxes on financial and capital transactions fell away dramatically while taxes on immovable property continued to rise. More recently taxes on immovable property have continued to steadily increase while taxes on financial and capital transactions have also ramped up significantly. 
<a href="/images/2016/04/28/Screen%20Shot%202016-04-28%20at%201.09.50%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/28/Screen%20Shot%202016-04-28%20at%201.09.50%20PM.png" alt="">
"The two largest sources of tax are: stamp duties on conveyances and municipal rates which account for 40.8 percent and 35.4 percent of total tax revenue respectively.
"The only other significant source of tax revenue is land tax accounting for 14.8 percent of revenue. Over recent years the value of taxation revenue from municipal rates and stamp duty has increased substantially while land tax increases have been limited. The fact that stamp duty is now the greatest source of tax revenue for state and local governments must be of some concern. This is due to the fact that it is a tax on transactions unlike municipal rates and land tax which are taxes on the property. Transaction taxes are entirely reliant on the market and while they surge when values and transactions are rising, when either or both fall this source of revenue drops significantly (see 2008-09). 
"Over the most recent financial year, stamp duty has been the largest source of tax revenue in NSW, Vic and NT while in all other states municipal rates is the largest source of tax. For NSW and Vic in particular it highlights the strong increases in home values across those states throughout 2014-15. NSW is experiencing the largest surge in stamp duty revenue, up 98 percent over the five years to 2014-15."
<a href="/images/2016/04/28/Screen%20Shot%202016-04-28%20at%201.10.57%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/28/Screen%20Shot%202016-04-28%20at%201.10.57%20PM.png" alt="">
"Property taxes are the most important sources of revenue for state and local governments however, the reliance on volatile stamp duty revenue provides challenges for these governments. This is a good reason to advocate for the replacement of stamp duty with universal land taxes. Although no one likes a new tax, it provides more revenue certainty to local and state government and it doesn’t deter the buying and selling of properties like stamp duty’s impost can."
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Property taxation revenue continues to rise: CoreLogic RP Data

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Prime Minister Malcolm Turnbull has written a blog disputing the Grattan Institute's report recommending significant changes to negative gearing that could save more than $5 billion a year.
"I have a great deal of respect for John Daley and the Grattan Institute, but on this occasion they have it wrong," <a href="https://www.malcolmturnbull.com.au/media/misconceptions-about-negative-gearing" target="_blank">Mr Turnbull wrote in a blog post on his website</a>.
"Unfortunately, the paper is littered with factually incorrect statements, claims that are unsupported by evidence and direct contradictions.
"And its economic analysis in many places leaves a lot to be desired."
"And its economic analysis in many places leaves a lot to be desired.
Malcolm Turnbull's then lists the following examples:
<ul>
<li>
The paper claims that negative gearing “goes beyond generally accepted principles for offsetting losses against gains”.  But this is factually incorrect.  The ability to deduct interest and other costs from personal exertion income has been a generally accepted principle in Australia’s tax system for more than a hundred years. While there are some exceptions to this principle, they have been strictly limited to instances of flagrant abuse (as was claimed to occur with ‘hobby farms’) or to situations where taxpayers might use losses to gain welfare benefits.
</li>
<li>
The paper argues that negative gearing and the CGT discount create significant distortions in the housing market, but then directly contradicts this when it says that changing them will have little impact.  Really?  How can changing the policies that Mr Daley says are supposed to create such huge distortions have no impact?
</li>
<li>
The paper argues that negative gearing benefits wealthier taxpayers. However, in countries which have adopted the ‘quarantining’ approach, the result has been to drive middle and low income earners out of the investment market, as they cannot afford to carry the loss-making periods when costs are high relative to rentals. In contrast, under both Daley’s proposal and Labor’s, wealthy Australians would continue to be able to deduct net rental losses from their other investment and property income. How can a change which would actually make the tax system more advantageous to those on higher incomes be fair? How will it improve wealth inequality when it will make it more difficult for those on lower incomes to build up wealth?
</li>
<li>
The paper ignores the fact that reducing the CGT discount to 25 per cent would give Australia the second highest CGT rate among comparable countries. While the paper claims this too would have no harmful impacts, that assertion is directly contrary to the evidence, which it systematically ignores.  
</li>
<li>
The paper also ignores the fact that under reasonable assumptions, if the CGT discount was reduced to 25 per cent, the effective tax rate on real capital gains would under reasonable assumptions be close to 70 per cent.  As a result, the paper dismisses, with little analysis, the important point that high rates of capital gains discourage entrepreneurial investment, whose returns generally come in the form of capital gains.    
</li>
<li>
Removing negative gearing would mean a tax increase for wage and salary earners and would affect incentives to work. The paper ignores these efficiency costs.
</li>
</ul>
 
Tax reform to target Australia’s distorting capital gains tax and negative gearing regimes could net the government A$5.3 billion in tax revenue per year, according to a new report from the Grattan Institute.
The report can be found <a href="https://grattan.edu.au/report/hot-property/" target="_blank">here</a>.
 
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