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.”
This is an atrocious deal struck between the most destructive government Australia has ever had to endure and the Greens, a useless political party that knows it will never be voted in but happy to hold a gun to Australians trying to build wealth to support them in retirement, to get their own way.
Having the ability to purchase residential investment property via a SMSF LRBA for many self-employed Australians is the perfect vehicle to enable them to build a healthy superannuation portfolio to provide a comfortable retirement.
Albanese cannot be trusted, at all, and this further emphasises this socialist government wants to control all aspects of Australian’s lives, the same way China controls their people.
We need to ensure the Government is aware of this distain with which they are viewed by so many Australians.
If the government is bringing in 500,000 people each year , they will need a house or unit to rent or live on the streets ?
You need Investors to provide housing
The following has been forgotten Also when the cgt started , the waiting list for public housing was 5-10 years and the government spend on admin And renovations blew there budget so the private investor come in to take on the risk and provide housing an obtained a tax benefit fo this burden and create wealth and to spread the rental /social housing through out the community and not having ghettos
This has been missed or forgotten by many
We should move to Malaysia – it’s legitimately the best place to be.
RIP AUS
Say good bye to the housing market. Funds are going elsewhere. I and a number of investors i know of are looking to New Zealand. No capital gains tax and better investment climate.
What idiots. So its ok for industry super funds to invest in resi property but not individual SMSF. Please explain that logic.Now watch the rents go way up up and up.
The greens are a complete waste of space and irrelevant. They have no idea. 1%. Maybe they should ask the ATO for the correct figures as to what SMSF’s own rental properties and what the funds balance is. They’ll find that the majority of “wealthy property investors” aren’t wealthy. They are mum’s and dad’s trying to build their super, so they don’t have to rely on the aged pension.
Having and LRBA means that they are not wealthy. If you need a loan to purchase a property, how does that mean you are wealthy.
Labours message – don’t save and invest to try and get ahead. Just rely on us to keep you in poverty in old age. The Greens message – umm, who knows.
This is outrageous. I don’t want to live on a government pension. I want to do all I can to secure a modest retirement. That involves investing. Investing has risk. That risk is born by the investor. That risk must be managed. Generating wealth within an SMSF and using safe smart leverage to do so allows the ability to generate independence from the government. I expect to pay my taxes out of super that’s fair. Within super I am generating independence from the government into retirement. That’s why we have super. The Govt will not be able to afford to pay the pension into the future – can’t even keep up with inflation. How does one get ahead. I’ve worked so friggin hard and now I – at this exact moment – am trying to secure an LRBA in SMSF – to fund a simple retirement plan. My entire strategy for over 10 years has been geared to this – I’ve worked so hard to be in this modest position to self fund my retirement. Now – bang – dead. Years and years of planning and hard work and professional advice – dead. There will always be wealthy people. Always. Good on them. You can’t stop that. I wish my dad was a billionaire, even a millionaire, but he wasn’t so I’ve had to work hard to try and get ahead. But why punish me, like many, trying to generate a small amount of wealth for retirement and to pass on to my kids. I just hate with strong emphasis the path of this government. Equity is not equality. Equality is we all get a level playing field to work with. We have opportunities to work hard over a long time – plan ahead and educate yourself to be wise. That takes a lot of dedication and sacrifice. We all have the chance to work hard and to plan and invest and make life changing decisions to get ahead. But the rules now change with nothing voted by the people. Communist socialist Australia. It is so so so sad. Equity is the slogan – we are all the same. Really? Do we all want to be the same??. Why does our govt and some of society want socialism? Why can’t people look into history to see what misery that brings? What drives the GO in Fair GO if everyone trying to GO is getting kicked in the nuts to make it fair to make us all Equal. “Equity” is the worst mindset ever. Equality is better but another E word is Effort – Effort needs to be respected and not stripped in the facade of Equity. What a disaster. I just don’t get it.
Well said
excellent work, well said
The irony of this Greens move is that the lower end investors will be those impacted by not being able to LRBA residential property. Smaller SMSFs are often the ones that use this strategy. “Wealthy people” have access to finance at a better rate so didn’t use LRBA. The restriction on negative gearing saw the “spruikers” out in the airwaves positioning SMSFs as the “go to investment vehicle to avoid the restriction”. More fool them.
The government is showing it’s lack of financial literacy yet again in these Budget changes. They could have, for example, added SMSFs to the restriction on negative gearing and achieved sector neutrality. This would have allowed SMSFs to positive or neutral gear residential property. Where are you Daniel Merlino? MIA?
So we are now back to the unsolved issue of the shortish of financial advisers. If SMSF trustees can’t get into property and they don’t have a good knowledge of other asset classes, they need advice. Any solutions Greens?
Well next what Communism.. Greens have XXXX Australia
Direct quote from Chalmers:
“This is a very small part of the housing market. SMSFs, for example, are less than 1 per cent of total residential property borrowing, and less than half a per cent of new residential borrowing each year.”
So yeah, it’s going to have such a large impact on house prices 🤨
The more the Greens lack in understanding principles of economics and supports buyers the more the lack of housing causes prices to rise. What is needed is support for SUPPLY, not support for DEMAND!!!
These 2 groups are absolutely wrecking the Australian economy
wow – what a joke. aspirational Aussies no more. welcome to the socialist Australia.