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Negative gearing: separating fact from fiction


Negative gearing is commonly understood among the wider public to mean a concession in the tax law that allows a taxpayer to deduct a loss made on a geared residential rental property against other income, thereby reducing the taxpayer’s tax exposure. However, as practitioners, we know that this understanding is misconceived. It also misses the broader policy context within which negative gearing exists. The poor quality of the discourse on negative gearing in the lead up to last year’s election was disappointing. It was apparent that it had been an unexamined subject for so long that myths had solidified into truths in the minds of both defenders and detractors. While the re-election of the government means there will be no changes to negative gearing for now, it is clear that the subject is not going to go away. This article examines the various claims made about one of the most controversial tax policies in Australia’s history, and in doing so, reveals an opportunity for a value-added client service.

Author profile

David Montani CTA
David is Nexia Australia’s National Tax Director, providing tax technical and strategic support to Nexia offices across Australia. Prior to commencing this role in 2019, David had 26 years of experience in taxation and business advisory, with the last 15 years in specialist taxation consulting, leading Nexia Perth's Tax Consulting Division. Particular areas of specialty include business restructures, property transactions, Capital Gains Tax, Division 7A and business sales. David's approach is to deliver solutions-based outcomes that assist clients in making important decisions concerning their businesses. - Current at 22 October 2020
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