LEGL 602 TAXATION LAWAssignment: Semester 1/2017ASSIGNMENT 2DUE DATE: FRIDAY 5 OCTOBER XXXXXXXXXXPMTHIS IS AN INDIVIDUAL ASSIGNMENTTHE ASSIGNMENT MUST BE LODGED THROUGH TURNITIN BYINSTRUCTIONS1....

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LEGL 602 TAXATION LAWAssignment: Semester 1/2017ASSIGNMENT 2DUE DATE: FRIDAY 5 OCTOBER 2018 5 PMTHIS IS AN INDIVIDUAL ASSIGNMENTTHE ASSIGNMENT MUST BE LODGED THROUGH TURNITIN BYINSTRUCTIONS1. Please answer all parts of the question2. All work presented for assessment in this course must comply with theformat outlined in the University's Presentation of Academic Workpublication.3. All essays must be accompanied by a signed official cover sheet ('Plagiarism Declaration Form').4. You MUST reference in the body of the essay every time you use information from other people. This requires you to keep a track of where you are taking information from and then writing the reference up. You should use the Harvard/APA style; and use the University’s new Presentation of Academic Work. The Library’s website also has a citation style guide site. If you plagiarise (intentionally OR unintentionally) you will be given zero.5. The assignment should be 2,500 words plus or minus 10%6. The assignment is worth 25%.ASSIGNMENT QUESTIONNEGATIVE GEARING AND CAPITAL GAINSBelow is the Australian Labor Party’s policy proposal taken from their website(https://www.alp.org.au/negativegearing).The questions that you must address in relation to this policy proposal are shown at theend of this document.Labor’s Proposal Labor will reform negative gearing and the capital gains tax discountto ensure that our tax system is fair, sustainable and targets jobs and growth. Negativegearing Labor will limit negative gearing to new housing from a yet-to-be-determineddate after the next election. All investments made before this date will not be affected bythis change and will be fully grandfathered. This will mean that taxpayers will continue tobe able to deduct net rental losses against their wage income, providing the lossescome from newly constructed housing. From a yet-to-be-determined date after the nextelection losses from new investments in shares and existing properties can still be usedto offset investment income tax liabilities. These losses can also continue to be carriedforward to offset the final capital gain on the investment. Capital gains tax Labor willhalve the capital gains discount for all assets purchased after a yet-to-be-determineddate after the next election. This will reduce the capital gains tax discount for assets thatare held longer than 12 months from the current 50 per cent to 25 per cent. Allinvestments made before this date will not be affected by this change and will be fullygrandfathered. This policy change will also not affect investments made bysuperannuation funds. The CGT discount will not change for small business assets.This will ensure that no small businesses are worse off under these changes. Labor willconsult with industry, relevant stakeholders and State governments on further designand implementation details ahead of the start date for both these proposals.YOUR ASSIGNMENT TASK:In relation to the tax policy issue shown above, answer the following questions:1. Why is this tax policy issue significant? (200 words)2. Who are the key stakeholders and how does this policy affect them? (400 words)3. Who are the winners and losers in relation to this tax policy, i.e. what are its pros andcons from the point of view of the stakeholders identified in relation to question 2? (800words)4. Assuming that you work for an accounting/tax practice, what would be implication foryour firm and its clients if the tax policy becomes law? (500 words)5. Assuming that you work for the Australian Tax Office, what impact would the taxpolicy have on compliance work of the ATO? (600 words)REQUIREMENTS AND EXPECTATIONS:You must provide a critical analysis in response to question 2 and 3. Simply statingwhat the policy is and how it might work will result in the requirements of thisassignment not being met. It is also not sufficient to quote the work/opinions of otherauthors. You must analyse the issues raised by the chosen tax policy and provide yourthoughts/analysis based on what you have read, and learnt from the course.Full and accurate references should be provided for any sources that you cite within thebody of the assignment. Which referencing system you use (i.e. Harvard, etc) is notimportant as long as you are consistent. Please refer to the Rubric for the gradingschema. If you have any questions, please about the requirements of this assignmentask.
Answered Same DaySep 12, 2020LEGL602Australian Catholic University

Answer To: LEGL 602 TAXATION LAWAssignment: Semester 1/2017ASSIGNMENT 2DUE DATE: FRIDAY 5 OCTOBER...

Sarabjeet answered on Sep 18 2020
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NEGATIVE GEARING AND CAPITAL GAINS
NEGATIVE GEARING AND CAPITAL GAINS
NEGATIVE GEARING AND CAPITAL GAINS
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Contents
Why is this tax policy issue significant?    3
Who are the key stakeholders and how does this policy affect them? (400 words)    3
Who are the winners and losers in relation to this tax policy, i.e. what are its pros and cons from the point of view of the stakeholders identified in relation to question 2?    5
Assuming that you work for an accounting/tax practice, what would be an implicatio
n for your firm and its clients if the tax policy becomes law?    8
Assuming that you work for the Australian Tax Office, what impact would the tax policy has on compliance work of the ATO?    9
References    12
Why is this tax policy issue significant?
This tax policy issue is because negative debt is a controversial problem nowadays. The new round of the debate stems from a submission from Reserve Bank to House Economic Standing Committee on the Housing Ownership Survey. Gradually - in decade - decreasing generosity of the capital gain tax discount to 30% from 50% has little effect on the average "mum as well as dad" investors (Balli, Kalemli-Ozcan and Sørensen, 2012). The specific impact is based on income, interest rates as well as capital growth. Same apply to negative liabilities, where the housing-associated tax credit ceiling can be implemented in phases over 10 years, with the first A$20,000 ceiling decreased by around A$1,500 yearly (depending on the market condition) until it reaches A$ 5,000.
A model shows that in the initial year, there is only a negative liability limit of A$60,000, and only a 6.4% of real estate investors will be affected also. Even after ten years, only 28.6% of huge-income real estate investors pay more taxes, and most “mother moreover dad” investors no longer need to pay taxes (Coleman and Grimes, 2010). The reform will save federal administration more than the A$1.7 billion from a cost of a $3.04 billion in negative assets and liabilities. This income can be re-invested in the social or community housing. The change in stamp duty, as well as negative liabilities, must be short-period simplifications of duty stamp, which gradually evolved (over 5 to 20 years) into
oad-based property tax (Dai, Liu and Zhong, 2012).
Who are the key stakeholders and how does this policy affect them?
The Labour Party said it will consult the relevant stakeholders, industry and state government on additional design or implementation information before start dates of the two proposals. “There are more inconsistencies in this sentence. These “independent (read non-political) experts and stakeholders “if the mix includes stakeholders, it will not be independent (Eichfelder and Lau, 2014). Stakeholders actually need to be fired. It is expected that federal elections will be convened in the next 12 months. The Labour Party has proposed some controversial reforms for negative asset-liability ratios and capital gains tax discounts. A new report assesses the risks of implementing a comprehensive solution in Australia. .ALP has previously proposed to limit negative liabilities to new leased homes and halve CGT tax discounts (Getmanenko, 2011). For most young families in Australia, a dream of owning and buying a home are almost impossible. Middle-class and Working-class families are gradually more being priced outside the real estate market. The ownership rate of young people age 25-34 has also been dropped from the 61 % to 49 % in present years. A few decades ago, young people were forced to take on unimaginable debt levels.
First-time buyers only account for 7% of the total number of home purchases, and we must do better. In Australia, there have been some things about making accommodation very reasonable. These require difficult choices or line-by-line assessments of all budget requirements, rather than a simple test: Can the budget be used to promote employment and future development, can it be affordable (Guenther and Williams, 2014).
The budget is set for a
oader financial context, which must guide the overall situation (surplus/deficit) as well as the composition of budget setting. Therefore, the Labour Party’s attitude toward fiscal policy is made up of our financial priorities to promote development moreover create jobs. This is why we invest in schools or higher education, reform and promote infrastructures spending, and promote a clean energy future and a universal health care system. Funding for these priorities requires a strong lead (Jacob, 2011).
Who are the winners and losers in relation to this tax policy, i.e. what are its pros and cons from the point of view of the stakeholders identified in relation to question 2?
Negative balance sheeting is a process in which investors can use their losses to offset their taxable income when managing investment properties. It makes the price of an investment property more affordable, nevertheless it has also been criticized for a contributing to increasing home values moreover pricing probable homeowners outside the market (Jacob, 2013). Welfare analysis shows that eliminating negative liabilities will result in a 1.5% increase in overall Australian welfare, with 76% of households becoming richer. However, the welfare effects of different families are different. Renters and owner-occupiers are winners, but landlords, especially those with high incomes, lose. The negative leverage ratio allows taxpayers to subtract from the wage income tax the loss they have on the...
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