No plans for Labor or Coalition governments to abolish negative gearing

The Coalition currently has no plans to remove negative gearing tax breaks used by a third of Australian property investors if it wins power in September.

Even if removing negative gearing were recommended as part of a broader White Paper tax review, it would only seek a mandate to change tax rules as part of a second term election campaign.

A story on thewest.com.au claiming shadow treasurer Joe Hockey would review negative gearing tax breaks for property investors as part of an incoming Coalition government tax review, has been rubbished by his spokesperson, Tony Ritchie, who is demanding a retraction.

“Tony Abbott was clear last Thursday night, saying if a Coalition Government is elected it 'will consult with the community to produce a comprehensive white paper on tax reform'.

“'We’ll finish the job that the Henry review started and this government squibbed. We want taxes that are lower, simpler and fairer and will take proposals for further tax reform to the following election.'

“Mr Hockey nor the Coalition has identified any particular tax that will be reviewed.

“If the White Paper makes recommendations the Australian public will be asked to give a second term Coalition a mandate before any taxation reform is undertaken.

“There could be no fairer or transparent system,” said Ritchie.

At the same time incumbent federal treasurer Wayne Swan has ruled out making any changes to negative gearing telling reporters in Adelaide today the government had “ruled out any change to the existing arrangements" in its response to the Henry report.

The recently published ATO annual report revealed that around two-thirds of Australia’s 1,811,174 property investors - 1,213,597 taxpayers –  using negative gearing provisions to claim losses on their investment properties for the 2010-11 tax year up from 1,110,290 who claimed losses in the 2009-10 tax year.

The average loss recorded for negatively-geared property investors was $10,947 in 2010-11, up from $9,132 in 2009-10.

Investment adviser Scott Pape stirred up a hornet's nest of responses from readers when he suggested that the government didn't have the "ticker" to remove negative gearing tax breaks.

Now he can add a likely Coalition government to his list.