Tax Policy Assignment - Reforming Negative Gearing and Capital Gains Discount

TAX POLICY ASSIGNMENT

TABLE OF CONTENTS
Task 1.........................................................................................................................................3
Task 2.........................................................................................................................................3
Task 3.........................................................................................................................................4
Task 4.........................................................................................................................................4
Task 5.........................................................................................................................................5
References..................................................................................................................................7

TASK 1
The tax policy which is being specified is significant because the main objective of this tax
policy is reforming negative gearing and capital gains discount in order to make sure that the
present tax system is justifiable, sustainable and assist in targets jobs supported by growth
(“Careful but bold” Labor tax policies”,2016.). Negative gearing can be defined as the
practice of investing borrowed funds in such a manner which eventually leads to result in a
loss that can be proclaimed like a tax deduction (Blunden, 2016). Further, it is a type of
financial leverage in which an investor scrounges funds in order to obtain an income-
producing investment along with the gross income created through the investment, is less
than cost of owning and running the investment, comprising depreciation as well as the
interest of loan, not including capital requirements (Cho, Li and Uren, 2017). Hence, from the
above facts, it can be assessed that tax policy is significant from the perspective of evaluation
of adequate income tax liability.
TASK 2
Primary stakeholders have a significant interest in the success of a proposed project or
proposed law policy as the outcome of the same affect them directly. As per the assertions of
Andriof, Waddock, Husted and Rahman (2017), the one who initiates the law and end users
are considered as a key stakeholder as they are the one which is affected in a significant
manner in case the proposed labour policy is implemented as law. The key stakeholders for
the Australian Labor Party Policy Proposal are labours, community and tax department. The
manner in which this policy will influence them is stated below:
Labour: A general method of which was applied by labours through passing the constraints
on property losses by adjusting income from labour was to transform such income in another
form by the utilization of partnerships and other legal mechanisms. The policy will have a
negative impact on labour as they will be restricted to take undue advantage of taxation
provision. Thus, labour will not be able to take the advantages of tax provisions which they
were taking prior to this policy in case policy is converted into law. However, labour will be
able to adjust the net rental loss against their wage income, but the loss which is relating to
the newly constructed building will be eligible for adjustment.
Tax department: The provision of Australian taxation enables the application of property
losses occurring from the negative gearing against other kinds of income for example wage or
business revenue, with only a few constraints. Furthermore, negative gearing by property