Fact sheet

Fact Check: Labor's capital gains changes will hurt those on less than $80,000, Josh Frydenberg says. Is that right?

Liberal Party of Australia Capital gains tax
Treasurer Josh Frydenberg says Labor's proposed 50 per cent capital gains tax increase will hit taxpayers on low-to-middle incomes. He claims that more than 60 per cent of people who declare capital gains in a given year have taxable incomes of less than $80,000. But Mr Frydenberg's claim is misleading. Taxable income is a poor indicator of household wealth. Relatively well-off individuals (and households) can reduce taxable incomes in a variety of ways: by negatively gearing investment properties, offsetting income against other business losses or transfering assets to family members, for example. Moreover, Mr Frydenberg referred to the number of taxpayers who declared a capital gain. This effectively treats small capital gains in the same way as very large capital gains. A more meaningful set of numbers is the value of capital gains declared by various income groups. Those on higher incomes are overwhelmingly the biggest beneficiaries in both dollar terms and as a proportion of the total, as analysis by RMIT ABC Fact Check confirms. But the situation is somewhat complicated because capital gains are by their nature often "lumpy". This raises the possibility that an individual who might normally have a relatively modest income could be recorded as having a high income in the year in which an asset is sold. RMIT ABC Fact Check adjusted Tax Office's sample file containing the de-identified records of about 270,000 taxpayers by removing declared net capital gains from their taxable incomes. This provided an estimate of what might be described as "normal" income. This adjustment shows a disportionately large share of total net gains is clustered in the very low income range ($6,000 or less).
Verdict: Misleading
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