Treasury figures reveal $18 billion capital gains windfall for Australia’s richest 10 per cent
The latest tax expenditure figures released on Friday by the Treasury department show this financial year the richest 10 percent of Australians will receive $18bn worth of tax breaks from the capital gains tax discount – nearly 5 times more than everyone else.
The latest tax expenditure figures released on Friday by the Treasury department show this financial year the richest 10 percent of Australians will receive $18bn worth of tax breaks from the capital gains tax discount – nearly 5 times more than everyone else.
In 1999, John Howard and Peter Costello changed the way capital gains were taxed. A capital gain is the profit someone makes on an investment – for example shares, or most importantly property.
Howard and Costello decided to give half of the capital gain from investments and speculation tax free if the asset was held for more than a year.
So, for example if someone bought an investment property for $900,000 in 2019 and sold if 3 years later for $1,300,000 (which happened to the median price of a house in Sydney at those times) they would have made a $400,000 profit.
But thanks to Howard and Costello (and every government since then that has decided to keep the discount in place) they get $200,000 of that profit tax free (the other half gets added to their taxable income and they pay tax on it in the same way they would if it was any other type of income like wages).
As you would expect the people who get the most benefit from the 50% tax free handout are the very wealthiest. But the scale of the benefit is truly jaw dropping.
In this current financial year, the Treasury estimates that the total benefit of this tax break cost the government $21.8bn in foregone revenue. Of that, 83% goes to the richest 10% of households in Australia – or just over $18bn: