Family home ‘tax break’ under pressure – again 119



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Until now the family home has always been excluded from tax and means-testing, but will that last? The family home ‘tax break’ has been singled out in a new review of the tax system by the Productivity Commission, only a week or so after new treasurer Scott Morrison urged retirees to sell their homes and spend their money, rather than leaving all their money tied up in their homes.

The Australian today reports families are paying lower tax rates than others with less than half their wealth mainly because the “family home” is ­sheltered from tax and means-testing.

Reporting on the findings of a review of the tax and welfare system, The Australian said the average effective tax rate (including the GST and net of cash welfare) is 18 per cent for families with assets of $150,000 (after subtracting any liabilities) but 13.4 per cent for those with assets of $750,000, the Productivity Commission has estimated.

The study found almost one-third of families were receiving welfare but paying no income tax (mainly retirees), while half paid income tax and ­received no welfare.

“While common preconceptions suggest that there is a high level of churn in the tax and transfer system, overall, [those that pay and receive were] just under 20 per cent of all families,” the commission said.

The Australian says the analysis will focus ­attention on perceived unfairness in the personal income tax and welfare systems.

It also comes only weeks before Prime Minister Malcolm Turnbull is due to ­release the government’s green paper on tax reform.

As Starts At Sixty reported,  treasurer Scott Morrison has already created waves by setting his sights on those who are no longer working and their family homes.

“Anything that helps people work save and invest, anything that helps the economy become more adaptive, and deal with the transition that’s taking place and enables it to diversify, I’m interested in all of those ideas,” he said.

“With an ageing population, under the right settings, we are unlocking the capital of older Australians, then you are creating new markets for those services in Australia.”

In effect, what Mr Morrison wants is for older people to sell their homes and spend their money instead of leaving it locked up in the family home.

What do you think? Is it time to rethink the family home ‘tax break’? Is it fair that those better off are paying less tax? Or should the family home be left exempt, a fair reward?


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  1. I think that family homes up to a certain value should be exempt. However this could be difficult to calculate given the ups and downs of the real estate market. For instance the same house in Sydney is worth far more than that house in say Wagga Wagga. We have all heard of people living in expensive houses and collecting welfare. I think that these are the situations that need to be addressed. Just recently the assets tests for aged care have changed. When I put my Dad in care 4 years ago his house was not included in the asset test. Once I sold Dads house than the proceeds were included. I had no problem with this as I only wanted him looked after. Where the difficulty will arise now that the principal place of residence is included is what happens if there is a surviving partner. The house will probably have to be sold and then where does that person live. I am not having a good feeling about these proposals. I fear that innocent people doing the right thing will be caught up with catching people who are abusing the system.

    2 REPLY
    • Having a house worth a lot of money doesn’t mean you have cash. They probably bought their houses when they were young and the area has developed around them and increased to a significant value and they shouldn’t be penalised. By the way I receive not one red cent from the government.

    • would you like to be the one to tell someone they have to sell their home , while a neighbor with a more modest house gets to keep theirs? It should be all or no one . Personaly I think all homes should be exempt

  2. why not they have the lowesr interest rates ever i cant afford to buy one abd my rent keeps going up

  3. Grab a tent and head for the beach, perhaps we will all die of exposure and they will be happy. Sell the homes of Liberal voters, they voted for this

    3 REPLY
  4. My home is small and not worth much so this would not affect me, however, I think taxing the family home is extremely unfair. Some folk have worked very hard to have the home / car / caravan / boat they want so why should they be taxed. These assets are theirs because of their hard work and careful management of their income. They should NOT be taxed no matter what the value. Savings in the bank have already been taxed so should not be taxed again – same as Superannuation. These monies have already been taxed. The Government is double dipping – not fair, and yet people / companies earning massive amounts can avoid paying normal tax – again, not fair.

    5 REPLY
  5. No way stop picking on baby boomers start taxing the big companies and stop giving money oversee let Malcolm Turnbull sell his bloody house and give the politicians a pay cut and stop spending our money on perks

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