Labor Leader Bill Shorten slammed for foreign residential investment tax cut call
TREASURER Scott Morrison has slammed Labor for calling for a massive tax cut to foreigners and big business to build and rent out apartment blocks while blocking company tax cuts and increasing the tax on families who buy an investment flat.
NSW
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LABOR leader Bill Shorten has been accused of “hypocrisy” for calling for a 50 per cent tax cut for multinationals, foreigners and sovereign wealth funds to build mega-blocks of residential apartments in some of Sydney’s ritziest areas.
Treasurer Scott Morrison has slammed Mr Shorten and Shadow Treasurer Chris Bowen for the “complete mockery” of blocking company tax cuts and increasing the tax for suburban families who buy an investment flat, while giving a massive tax cut to foreigners and big business to build and rent out residential apartment blocks.
Mr Bowen has indicated Labor has plans to halve the tax rate from 30 per cent to 15 per cent for foreign capital and big developers, who use managed investment trusts, to build residential “build to rent” apartment blocks.
Supported by the Property Council and the NSW Treasurer Dominic Perrottet, “build to rent” schemes mean an institutional landlord owns an entire apartment block with the aim of offering longer-term rentals.
The Turnbull government has only lowered the tax rate if the Build to Rent scheme is for affordable housing for low-income earners, such as nurses and teachers.
Mr Morrison said it was pure “hypocrisy” that Labor “won’t let Australian companies get a 25 per cent tax rate but they want to give big multinational funds a 15 per cent tax rate”.
“Labor want to increase the tax that mums and dads pay for buying a flat in Blacktown from their superannuation but they want to cut in half tax paid by big multinational foreign funds to invest in Sydney real estate,” he said.
“It makes a complete mockery of Labor’s claims that they want to crack down on multinational tax when they want to cut their tax in half for investing in Sydney real estate.”
Mr Bowen is proposing to extend the lower 15 per cent tax rate to all residential properties for rent — not just affordable housing — if it is through a managed investment trust, which is a trust structure that has been used by foreign capital to own property in Australia.
Under the current rules, that structure, if it owns residential property, is taxed at 30 per cent and the lower rate only applies if it is for affordable housing.
Labor’s plans would help big business like Mirvac along with foreign multinationals, global sovereign wealth funds from Singapore, the Middle East and Europe and American life insurance companies build major residential blocks to rent out in Sydney.
A Macquarie Research report dated September 2017 states that Mirvac Group “continues to advance its plans to enter the build-to-rent residential market.”
“MGR (Mirvac) is looking to raise about $164 million, initially to fund a seed project in Sydney Olympic Park and for working capital,” it states.
“The club will also be granted a first right of refusal over an additional three projects along the eastern seaboard with a total estimated value on completion of about $750 million.”
Another Build to Rent project in Double Bay, by Fortis Development Group, will offer five year leases when it is completed in August 2019.
Speaking at the Property Council’s Capital Market’s Summit last week, Mr Bowen indicated he would extend the tax incentive beyond affordable housing.
“The benefits of the build to rent are obvious, it will increase housing supply and increase the stock of rental accommodation - that’s got to be a good thing,” Mr Bowen said in a media release dated May 30.
“The unilateral move meant that Managed Investment Trusts will no longer be able to invest in residential property with the exception of affordable housing from 4.30pm on 14 September 2017.”