Capital gains tax and negative gearing concessions overwhelmingly benefit the wealthiest Australians, with more than half of the capital gains tax (CGT) discount flowing to the top 1% of income earners, according to the most recent data from the Australian Treasury.
Budget Changes Target Tax Breaks
This year's federal budget includes modifications to negative gearing, the CGT discount, and discretionary trust tax concessions. Critics argue these policies fuel housing speculation and disproportionately enrich the highest earners.
Figures in the budget reveal that the top 1% of lifetime earners receive over $700,000 in tax concessions from these three measures over their working lives.
Who Benefits from CGT and Negative Gearing?
In 2022-23, the top 10% of income earners received 83% of the benefit from the capital gains tax concession and 37% from negative gearing. The vast majority of both benefits went to individuals earning above the then median income of $58,216.
Capital gains tax is levied on profits from selling assets such as property. Since 1999, investors have enjoyed a 50% discount on CGT if they hold the asset for more than a year.
Negative gearing, or rental loss, occurs when an investment property generates a loss, and that loss is deductible against the landlord's other income.
Inequality Even Among the Wealthy
Of the more than 1 million tax filers in 2022-23, only 71% actually benefited from the CGT discount. Nearly all of that benefit—95%—went to Australians earning above the median income. However, even among higher earners, inequality is stark: more than half of the CGT benefit went to the top 1% of income earners.
These figures underscore the concentration of tax concessions at the very top of the income distribution, raising questions about the equity of current housing and tax policies.
