What do people usually mean when they refer to negative gearing?
The opening post and subsequent posts call for an end to negative gearing and the removal of negative gearing. Another refers to negative gearing as a sham and a rort. In that sense, the posters and the Get UP Campaign, are clearly meaning to refer to the tax situation which allows people to claim losses (in excess of income on income earning assets like rental properties) against other personal income. I too use the expression "negative gearing" in that sense because it has become the common usage. When I refer to negative gearing I am usually referring to the personal tax situation in which losses are not quarantined. I think most people adopt the same usage.
However, strictly speaking, negative gearing refers only to cash-flow loss making investments in which expenses exceed income. Strictly, the term negative gearing says nothing about the tax treatment. If we all adopt this strict meaning (which Rastus2 wishes to adopt) then there are some serious implications.
Firstly there can be no calls to "end" "remove" or "abolish" negative gearing. That wouldn't make sense with the strict meaning of the expression. No one can be prevented by law from making an investment which makes a loss. The only way to end negative gearing in the strict sense would be by a legal ban on loss making investments - which would be absurd.
Secondly, it makes no sense to call for the end of a law or its abolition which allows excess losses to be set against other income. There is no such law. The natural assumption in the Oz law is and always has been that excess losses CAN be set against other income of an individual. In 1985 when what people refer to as the ending of negative gearing occurred, there was no scrapping of any law. A new law had to be introduced to enforce quarantining of losses. No law was scrapped - a new law was introduced. This new law was then scrapped in 1987. If it is again deemed that quarantining is to be introduced then a new law will have to be introduced.
So what does all this "end negative gearing" really mean? Ban loss making investments? Or introduce quarantining of losses?
What do people usually mean when they refer to negative gearing?
The opening post and subsequent posts call for an end to negative gearing and the removal of negative gearing. Another refers to negative gearing as a sham and a rort. In that sense, the posters and the Get UP Campaign, are clearly meaning to refer to the tax situation which allows people to claim losses (in excess of income on income earning assets like rental properties) against other personal income. I too use the expression "negative gearing" in that sense because it has become the common usage. When I refer to negative gearing I am usually referring to the personal tax situation in which losses are not quarantined. I think most people adopt the same usage.
However, strictly speaking, negative gearing refers only to cash-flow loss making investments in which expenses exceed income. Strictly, the term negative gearing says nothing about the tax treatment. If we all adopt this strict meaning (which Rastus2 wishes to adopt) then there are some serious implications.
Firstly there can be no calls to "end" "remove" or "abolish" negative gearing. That wouldn't make sense with the strict meaning of the expression. No one can be prevented by law from making an investment which makes a loss. The only way to end negative gearing in the strict sense would be by a legal ban on loss making investments - which would be absurd.
Secondly, it makes no sense to call for the end of a law or its abolition which allows excess losses to be set against other income. There is no such law. The natural assumption in the Oz law is and always has been that excess losses CAN be set against other income of an individual. In 1985 when what people refer to as the ending of negative gearing occurred, there was no scrapping of any law. A new law had to be introduced to enforce quarantining of losses. No law was scrapped - a new law was introduced. This new law was then scrapped in 1987. If it is again deemed that quarantining is to be introduced then a new law will have to be introduced.
So what does all this "end negative gearing" really mean? Ban loss making investments? Or introduce quarantining of losses?
You make a good point strindberg, thankyou for agreeing.
The specifics of what we are talking about need to be identified or people just pull number out of the internet and it does not match other numbers that people used.. All sourced, but all talking about diff. Things.
I am not against -ve gearing completly these days, but when people talk about the numbers, i want them to include either all the numbers, or specify what subset they are choosing to talk about.. Otherwise the numbers mean nothing... This upset you before but i am sure you appreciate that the real cost of any tax benifit is the total, not any subset...
Some seem to think that property is special, so it should be treated differently.. Ie have special rules that reduce/remove any -ve gearing on them to a diff. Extent to shares etc... Thus, in theory, pushing investors out, and allowing OO's into the market more.
Others agree that property is special, but feel that investment should be encourages to house the poor, so special negative gearing rules should apply... Thus, OO's would have to compete with investors, but housing stocks are better repleneshed and improved by continued investment.
Both have merits, but both assume a lot when it comes to the real and imagined outcomes of the slant of taxation...
Well it isn't possible to ban loss making investments. Many investments are purchased with the sole intent of making a profit. It may then turn bad and losses are made, so banning them really means also banning failure, which clearly is ridiculous.
It would be possible to not allow losses to be offset against personal income, but they would then accumulate the losses until they would get written off against later profits as rents rose, or against any net profit made upon the sale of the property.
I can't see the difference in the end, although anyone running losses and then loses on the sale as well would fare badly, but most investors who hold for some time would break about even either way.
Really I don't care either way, it won't worry the serious investor.
It may worry the spruikers who sell units off plan with pretty brochures showing potential buyers that they profit from losses, which of course is ridiculous.
You make a good point strindberg, thankyou for agreeing.
I don't agree with you at all. I use the term negative gearing in the same sense that other posters here and the Get-up campaign use it. That is, I use it as a reference to the issue of non-quarantining of losses. When Alright Jack calls negative gearing a sham and a rort he is, like me, referring to the non-quarantining of losses - not to the mere existence of loss making investments. That is what is always central to the issue when negative gearing is discussed. The figure of $8.6b I provided on that other thread was entirely correct in the context of current negative gearing discussions which relate to the non-quarantining of losses.
If you wish to discuss the tax treatment of negatively geared investments in trusts and company structures then go ahead but I doubt you'll get much interest here for that discussion. You anyway only raised the trust and company issue as a diversionary tactic in an attempt to cover up your erroneous claim that I was wrong.
I don't agree with you at all. I use the term negative gearing in the same sense that other posters here and the Get-up campaign use it. That is, I use it as a reference to the issue of non-quarantining of losses. When Alright Jack calls negative gearing a sham and a rort he is, like me, referring to the non-quarantining of losses - not to the mere existence of loss making investments. That is what is always central to the issue when negative gearing is discussed. The figure of $8.6b I provided on that other thread was entirely correct in the context of current negative gearing discussions which relate to the non-quarantining of losses.
If you wish to discuss the tax treatment of negatively geared investments in trusts and company structures then go ahead but I doubt you'll get much interest here for that discussion. You anyway only raised the trust and company issue as a diversionary tactic in an attempt to cover up your erroneous claim that I was wrong.
Well Strindberg, you would not agree with me even if I told you your hair was on fire and you could feel the heat... that is a reality that I don't lose any sleep over.
The problem I have is that when someone else posts any number that you think is not accurate (especially if you don't feel they are acurate and they can did not cite the source), you jump on them and smash their face into the ground (metaphorically speaking) calling the liars and treating them like shit... when you do that then you damn well had better cross your t's and dot your i's because eventually, it will bite you back if your standards are lax. I don't mind being challenged, but most of us get very tired of your obscene rants very quickly.
You would NEVER accept a post like the one you did with little/no substantiation that was full of cited numbers if it had come from a bears so don't expect some kind of special privilege back.
It was only really when shadow cited your numbers as evidence that the gov. was better off for -ve gearing on property, I noticed you had little evidence posted to support your cited numbers and that shadow was using the post as some kind of evidence to hang his theory off... I asked you twice nicely to cite it, and you swore at me like a drunk sailor until, finally, you cited them in an angry rant full of abuse yet again.
I had already noticed that your claimed total amount of tax loss was not a full disclosure and thought you would clarify it at some point... none the less, your response, as usual, was a rant of swearing... and now, another swipe at me for asking us to compare apples with apples.
As for your error... It has not been me that made a big deal about it, it is yourself that was.... I was actually trying to give you a chance to clarify it before detailing it... but instead you came out swinging... I don't care about errors that people make... they get pointed out and we move on... you, however, seem fixated by them.
btw.. just because I have not highlighted all of the numbers in your post it does not mean I agree with all of them... you have not given a source of source for the tax rate that you cited
One more point that I just have to make although I was not going to bother, but after all the crap you have thrown at me I just can no longer resist.
:beer:
How many countries are in the world ? (My rough guess is about 195 ish).
How many allow "Deduction of negative gearing losses on property against income from other sources for the purpose of reducing income tax" (I am going to be generous with my next guess and not just say 9 countries that you provided evidence for, but throw in another 90 ... I'm that kind of guy.).. perhaps you can provide a more accurate guesstimate.
Now, do the maths and take a deep breath before you answer this ..
Do you think that the statement "Deduction of negative gearing losses on property against income from other sources for the purpose of reducing income tax is illegal in the vast majority of countries, the exceptions being Canada, Australia, and New Zealand." is mathematical incorrect ?
Your whole OP and thread was a failed attempt to try and state that quote was wrong... it is not.
The problem I have is that when someone else posts any number that you think is not accurate (especially if you don't feel they are acurate and they can did not cite the source), you jump on them and smash their face into the ground (metaphorically speaking) calling the liars and treating them like shit...
You would NEVER accept a post like the one you did with little/no substantiation that was full of cited numbers if it had come from a bears so don't expect some kind of special privilege back.
No, I don't rail against people who post numbers without evidence. I rail against stuff that people post which I know to be wrong. If I wish to see evidence I ask for it. But I don't usually need the poster to provide evidence - I check it myself if I'm interested. My railing results from people posting false data and statements, not from lack of evidence.
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It was only really when shadow cited your numbers as evidence that the gov. was better off for -ve gearing on property, I noticed you had little evidence posted to support your cited numbers and that shadow was using the post as some kind of evidence to hang his theory off... I asked you twice nicely to cite it, and you swore at me like a drunk sailor until, finally, you cited them in an angry rant full of abuse yet again.
Well, I'm not fond of you due to your past behaviour so I'm not going to provide anything for you just because you ask nicely. I did finally substantiate all of those figures I provided but only because I enjoy rubbing your nose in it and making you look a dick.
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I had already noticed that your claimed total amount of tax loss was not a full disclosure and thought you would clarify it at some point... none the less, your response, as usual, was a rant of swearing... and now, another swipe at me for asking us to compare apples with apples.
The figure was a full disclosure in the context of the tax cost of the negative gearing issue under discussion - ie the cost of non-quarantining of losses. No issue exists or has ever been raised here regarding the tax cost of negative gearing within trusts (where losses are not claimed) and companies (where losses are not claimed against income from outside the company).
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As for your error... It has not been me that made a big deal about it, it is yourself that was.... I was actually trying to give you a chance to clarify it before detailing it... but instead you came out swinging... I don't care about errors that people make... they get pointed out and we move on... you, however, seem fixated by them.
The fixation is all yours. I provided the figures. You became fixated on them and falsely claimed them to be plucked out of the air and wrong. I knew them to be correct. Your belief they were wrong is your problem - not mine.
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btw.. just because I have not highlighted all of the numbers in your post it does not mean I agree with all of them... you have not given a source of source for the tax rate that you cited
Tough titty. Not my problem.
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How many countries are in the world ? (My rough guess is about 195 ish).
How many allow "Deduction of negative gearing losses on property against income from other sources for the purpose of reducing income tax" (I am going to be generous with my next guess and not just say 9 countries that you provided evidence for, but throw in another 90 ... I'm that kind of guy.).. perhaps you can provide a more accurate guesstimate.
The RBA looked at 10 major first world countries and found that 9 of them allowed losses to be claimed against other income. That's enough to justify the title of that thread, using the term "negative gearing" as used by the other posters here like Mahamed and Alright Jack, to refer to the non-quarantining of losses.
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Do you think that the statement "Deduction of negative gearing losses on property against income from other sources for the purpose of reducing income tax is illegal in the vast majority of countries, the exceptions being Canada, Australia, and New Zealand." is mathematical incorrect ?
I don't have the data to answer that. Do you? As I wrote, the RBA looked at 10 and found 9 allowed it. (Edit add: on second reading it is definitely wrong. The use of the words "the exceptions" says there are only 3 exceptions. So the statement is false).
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Your whole OP and thread was a failed attempt to try and state that quote was wrong... it is not.
No. My OP on that thread was entirely correct, taking the term negative gearing to be the non-quarantining of losses, as understood by the other posters here.
No, I don't rail against people who post numbers without evidence. I rail against stuff that people post which I know to be wrong. If I wish to see evidence I ask for it. But I don't usually need the poster to provide evidence - I check it myself if I'm interested. My railing results from people posting false data and statements, not from lack of evidence.
Well, I'm not fond of you due to your past behaviour so I'm not going to provide anything for you just because you ask nicely. I did finally substantiate all of those figures I provided but only because I enjoy rubbing your nose in it and making you look a dick.
The figure was a full disclosure in the context of the tax cost of the negative gearing issue under discussion - ie the cost of non-quarantining of losses. No issue exists or has ever been raised here regarding the tax cost of negative gearing within trusts (where losses are not claimed) and companies (where losses are not claimed against income from outside the company).
The fixation is all yours. I provided the figures. You became fixated on them and falsely claimed them to be plucked out of the air and wrong. I knew them to be correct. Your belief they were wrong is your problem - not mine.
Tough titty. Not my problem.
The RBA looked at 10 major first world countries and found that 9 of them allowed losses to be claimed against other income. That's enough to justify the title of that thread, using the term "negative gearing" as used by the other posters here like Mahamed and Alright Jack, to refer to the non-quarantining of losses.
I don't have the data to answer that. Do you? As I wrote, the RBA looked at 10 and found 9 allowed it.
No. My OP on that thread was entirely correct, taking the term negative gearing to be the non-quarantining of losses, as understood by the other posters here.
So , we agree that you can not prove that the statement "Deduction of negative gearing losses on property against income from other sources for the purpose of reducing income tax is illegal in the vast majority of countries, the exceptions being Canada, Australia, and New Zealand." is mathematically incorrect..
So, your OP intent of making the quote look wrong is flawed and thus, failed.
btw: The RBA did not attempt to prove or disprove the quote you intended to show as wrong (as evidenced by them only looking at 10 countries and not all, or even most other countries) (I note that your OP did not use the words 'major 1st world countries'.. your only throwing that in now to try and rewrite history of your post .. lol
fact: -ve gearing as allowed in Australia is not the same as -ve gearing in most of those other 9 countries the document cites... there are many limits that make it a very different burden on governments tax stream.
It is a document that was not written to highlight pros or cons of -ve gearing, which, I assume , did not give any of the important details about how simply ticking the -ve gearing box was not adequate reflection of the very different limits of -ve gearing across those countries...
Do you seriously consider a tax system that allows you to -ve gear an almost unlimited amount of income should be compared to tax systems that set strict limits much lower ?
So , we agree that you can not prove that the statement "Deduction of negative gearing losses on property against income from other sources for the purpose of reducing income tax is illegal in the vast majority of countries, the exceptions being Canada, Australia, and New Zealand." is mathematically incorrect..
So, your OP intent of making the quote look wrong is flawed and thus, failed.
How could my OP, posted 10 days ago, have had the "intent" of making a quote, which you invented today, look wrong? Have you gone cuckoo?
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btw: The RBA did not attempt to prove or disprove the quote you intended to show as wrong (as evidenced by them only looking at 10 countries and not all, or even most other countries)
I agree that the RBA did not attempt to prove or disprove that quote which you invented today. You really have gone cuckoo. Are you posting from the funny farm?
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(I note that your OP did not use the words 'major 1st world countries'.. your only throwing that in now to try and rewrite history of your post .. lol
I often add further information where relevant. You should try it yourself sometime.
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fact: -ve gearing as allowed in Australia is not the same as -ve gearing in most of those other 9 countries the document cites... there are many limits that make it a very different burden on governments tax stream.
Did I claim otherwise? No, I didn't. My OP was correct.
How could my OP, posted 10 days ago, have had the "intent" of making a quote, which you invented today, look wrong? Have you gone cuckoo?
I agree that the RBA did not attempt to prove or disprove that quote which you invented today. You really have gone cuckoo. Are you posting from the funny farm?
I often add further information where relevant. You should try it yourself sometime.
Did I claim otherwise? No, I didn't. My OP was correct.
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How could my OP, posted 10 days ago, have had the "intent" of making a quote, which you invented today, look wrong? Have you gone cuckoo?
omg.. you really have lost the plot...
I cut and pasted the quote from YOUR openibg post to the thread Here (the OP of that thread you created).
In the OP you quoted the wiki page yourself and proceeded to say how the person you were quoting was incorrect because of the document and table you included.
Now you are saying I just invented the quote myself today ?
Wow... amazing.. so.. does any of that come back to you yet ?
I cut and pasted the quote from YOUR openibg post to the thread Here (the OP of that thread you created).
In the OP you quoted the wiki page yourself and proceeded to say how the person you were quoting was incorrect because of the document and table you included.
Now you are saying I just invented the quote myself today ?
Wow... amazing.. so.. does any of that come back to you yet ?
On re-reading the quote I see that it is definitely false. It states "THE exceptions....". Those are not "THE" exceptions, they are only three of the exceptions. There are many more. Another issue with the quote is that it uses the inappropriate emotive term "illegal". My OP is correct. Many countries allow negative gearing in the sense of allowing losses to be deducted from other income for tax purposes. The RBA found that 9 out of the 10 1st world countries (representing a huge proportion of the world's economy) it reported on allowed such deductions to be made against other income. It seems likely therefore that the part of the quote referring to "vast majority" is also false.
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