Negative Gearing and the Taxation of Capital Gains in Australia

George Fane, Martin Richardson

    Research output: Contribution to journalArticle

    Abstract

    This paper studies the interaction between negative gearing and three capital gains tax regimes - the current Australian system, the one that prevailed between 1985 and 1999 and a realisation tax that mimics an accruals tax. We report estimates of the effective rates of income tax for each regime in two scenarios - slow anticipated real capital gains and very rapid unanticipated real capital gains. We conclude that negative gearing should be retained and capital gains taxation reformed to approximate an accruals tax. This desirable package would be no harder to administer than the current regime.
    Original languageEnglish
    Pages (from-to)249-261
    JournalEconomic Record
    Volume81
    Issue number254
    DOIs
    Publication statusPublished - 2005

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