Treasurer Jim Chalmers will be given broad powers to change eligibility and exemptions to Labor's controversial tax reforms in a move experts say shows the legislation has been rushed.
The legislation gives the Treasurer powers to determine which assets could be exempt from capital gains tax concessions, according to The Australian. He will also be able to determine which individuals will be affected by both the CGT and negative gearing changes.
Unprecedented discretionary powers
Scrutiny has already intensified over the number of ministerial determinations included in the draft legislation. CPA Australia tax policy lead Jenny Wong said the volume of discretionary powers was unprecedented.
“I have never seen this many determinations in one bill and that’s before we get to trusts, which shows that this has been rushed,” Ms Wong told The Australian.
Ms Wong warned the approach reduced transparency and left open the possibility of future changes without the same level of parliamentary scrutiny.
“And given ministerial determinations don’t go through the same scrutiny, this leaves the door open for further changes and that means less certainty,” she said.
Chalmers dismisses criticism
Mr Chalmers has rejected claims the legislation gives him excessive authority, describing criticism of the powers as overblown. Asked on Tuesday whether he was effectively giving himself the ability to decide which assets qualify for capital gains tax concessions, the Treasurer dismissed the suggestion.
“Of course not. This is another beat-up, unfortunately,” he told Nine's Today show.
Mr Chalmers argued it was common for tax legislation to rely on legislative instruments to settle definitions and technical details after laws pass parliament.
“It's not unusual in tax legislation for the definitions to be settled in what's called legislative instruments,” he said. He said those instruments would still be subject to parliamentary oversight.
“Those legislative instruments are disallowable by the parliament. Tax law is full of these kinds of examples,” he said.
The Treasurer said the government had already outlined how the new rules would apply to investors purchasing newly built homes. Pressed on whether he would still retain ministerial discretion under the framework, Mr Chalmers said the powers were limited to determining legislative instruments and remained subject to parliamentary review.
“Only to the extent that we determine the legislative instrument. That's disallowable by the parliament, if the parliament doesn't like it,” he said.
Details of the tax package
Labor's package proposes replacing the existing 50 per cent capital gains tax discount with an inflation-indexed scheme, introducing a minimum 30 per cent CGT rate. The bill, which is being examined by a parliamentary inquiry, will also restrict negative gearing to new builds for investors.
Combined with planned trust reforms that are yet to be introduced, the measures are expected to generate more than $80 billion in additional revenue.
The legislation contains nine ministerial determinations, according to CPA Australia. They include determining what qualifies as a new dwelling under the government's negative gearing changes, as well as setting rules around housing-related definitions that could affect how the reforms operate in practice.
The legislation also gives scope for ministerial determinations on the application of the apportionment method used for capital gains tax calculations and on whether additional classes of assets can continue to access the 50 per cent CGT discount. Other powers cover exemptions from Labor’s proposed minimum 30 per cent capital gains tax rate for certain recipients of income support payments. A separate determination relates to the government's Working Australians Tax Offset.
Parliamentary inquiry and political response
The parliamentary inquiry examining the legislation is due to report later this month. The government has defended the broader package as a way to better align investment tax settings and improve housing affordability.
Mr Chalmers dismissed the outcry against the major tax overhaul as “lies” and scare campaigns, as Labor polling and property market indicators slid on Monday.
“Obviously, there’s a big scare campaign playing out right now. There’s a lot of lies being told. Obviously there’s a whole heap of politics around this, but we’re focused on the outcome,” he said.
“We want to make sure that more people can get a toehold in the housing market. We understand that these changes are contentious. We understand that there is a big scare campaign and a lot of lies being told about it, and so, in that context, it's not especially surprising to see the sorts of polls that we've seen overnight.
“For me, personally, I would rather get the policy right and lose a bit of skin politically than to take the easy option and leave everything as it is.”
SkyNews.com.au has contacted Mr Chalmers for further comment.
