In 1999, the Profligate Howard/Costello Government destroyed the Australian Capital Gains Tax system introduced by Paul Keating in the Hawke/Keating tax reforms of 1985. The effect of this on affordability of Australian homes was identified by Greg Jericho in his article of 28 April 2016, and confirmed by Alan Kohler in his article of 27 November 2023, noting that the difference between the average wage and the price of the average house in Australia had increased exponentially, making homes unaffordable for many Australians. This motion proposes to restore equity in the Australian Tax system by treating income derived from increases in the real value of assets in the same way as earned income such as salary, wages and interest. This will have the effect, over time, of restoring the ability of Australians to afford a home of their own, and reduce the unproductive investment in housing (which is currently the highest percentage of GDP in the world).
General Resolution
Restoring the Keating tax equity legacy
Noting that the "Capital Gains Tax discount" will cost the Australian Government 14.31 billion dollars in 2025/2026, ACT Labor encourages the Albanese Labor Government to restore fairness to the Australian taxation system as follows: 1) Restore fairness between income earned from work and income earned from capital appreciation ("capital gains" realised at sale) so they are taxed on the same basis. This would involve: a) treating such income equally, with income earned from either source during a financial year taxed as income in that year (as is currently the case); and b) taxing capital gains realised at the end of a period of more than 1 year on a real value basis (i.e. assessed by reducing the gain by the applicable indexation over the relevant period). 2) To enable individuals to make appropriate arrangements, this change should apply from 1 July 2026 and not be retrospective (nor have any preservation or "grandfathering provision"), and 3) To protect investors with long held housing investments ("Mum and Dad" investors, usually with single properties), allow for maximum tax averaging of recent years to be applied to the taxable amount.