In a deal with the Government the Greens have agreed to support the government’s first tranche of tax changes to pass the Senate this fortnight.
The amendment will close self-managed superannuation fund’s exemption from the prohibition on being able to borrow to fund investments. Superannuation funds are generally prohibited from borrowing to purchase assets because it increases financial system risk.
However, in 2011, SMSFs were given an exemption, enabling limited recourse borrowing arrangements (LRBA) to purchase property.
In a statement, the Greens said this change will be prospective, protect contracts signed before the date of commencement and provide time to finalise arrangements
The Greens said they have criticised Labor’s tax package for locking in over $30 billion in tax handouts per year from Australia’s budget to the “wealthy property investors”.
“This grandfathering encourages property investors to hold on to properties that are eligible for tax breaks, and means 1.7 million properties will remain in the hands of property investors, not first homebuyers,” the statement said,
“While Labor’s low ambition means that the inequality and housing crisis will be worse than it should be, for longer than it needs to be, the Greens will continue fighting to further restrict tax breaks for wealthy property investors.”
Larissa Waters, Greens leader said this was a “once in a generation moment” to help young Australians but by grandfathering in wealthy property investor tax perks Labor has once again chosen to put the one per cent over the millions of people trying to buy their first home.
“Backing this bill puts an end date on these tax breaks but Labor’s low ambition means that that inequality and the housing crisis will be worse for longer. This enduring housing crisis will now be squarely of Labor’s design,” she said.
Nick McKim, Greens Economic Justice spokesperson said Labor has missed a generational opportunity to do something significant about the housing crisis, but despite their lack of ambition the reforms are a small step in the right direction.
“The Greens have been fighting to repeal these tax breaks since they were introduced and when they finally go, it won’t be a day too soon,” he said.
“Labor has chosen to skew this package to benefit wealthy property investors in every way they can. They have delayed relief for renters, pulled up the ladder on first homebuyers, and let the one per cent keep $33 billion in tax breaks.
“The changes we have secured means that there will be fewer wealthy property investors turning up to auctions and outbidding renters who want to buy their first home.”
Shadow treasurer Tim Wilson said the Government’s budget is in complete disarray.
“Jim Chalmers no longer knows what’s in his budget. The Greens are dictating the terms, and what we know is Jim Chalmers declared war on small business in his budget. Now the Greens are telling him he has to fight another battle against self-managed superannuants,” he said.
“Australians can no longer trust this government that it’s on their side. The Albanese government has declared war on small businesses and self-managed superannuants, and now we’re increasingly in a position where Australians are questioning how they’re going to get ahead. If they’re a young Australian and they’re saving to get ahead to be able to save a home deposit, they’re going to be hit by Labor.”
