These 'perks' are among the many the reason why the wealthy are getting richer in Australia

Key Factors

The wealthiest Australians maintain 90 instances the wealth of these with the least wealth, in keeping with Anglicare.
The group additionally discovered these on low to modest incomes obtain little profit from tax breaks.
Anglicare is asking for an overhaul to capital good points tax, adverse gearing, and franking credit.

A variety of tax breaks are permitting rich Australians to get richer and construct large superannuation balances, property portfolios and investments — whereas these on low to modest incomes obtain little of the profit.

That is the discovering of a brand new report by Anglicare Australia, which is asking for an overhaul of beneficiant tax breaks equivalent to adverse gearing, capital good points tax and franking credit the organisation says is fuelling inequality in Australia.

Drawing on Australian Bureau of Statistics information on wealth inequality over the previous 20 years, the social advocacy group discovered that tax breaks for superannuation and housing investments had allowed the wealthiest Australians to carry 90 instances the wealth of these with the least.

For instance, the typical wealth of the best 20 per cent of wealth-holders was $3,240,000 as of 2019-20.

That compares to the typical wealth of the center 20 per cent — $588,000.

It is 90 instances the wealth of the bottom 20 per cent with simply $36,000.

Tax perks for housing buyers fuelling inequality

A serious reason behind Australia’s housing disaster and wealth inequality is a tax system that favours speculative funding in housing, Anglicare stated.

It factors the blame at adverse gearing and capital good points tax (CGT) concessions, which Anglicare stated entrenched wealth inequality by offering authorities assist for the rich to develop their property.

The group stated the CGT low cost of fifty per cent — which got here into impact in 1999 — disproportionately advantages wealthier Australians who can afford to carry property for lengthy durations, in addition to these with substantial investments who can scale back taxes on revenue from earnings.

Anglicare stated the CGT low cost successfully halved the tax fee on long-term investments.

To handle these points, Anglicare stated the CGT ought to be incrementally diminished over the following 10 years, whereas adverse gearing ought to be used to focus on funding in social and inexpensive housing.

Superannuation tax breaks

Anglicare additionally stated that superannuation tax perks had been too beneficiant for top incomers and inequitable for individuals on low incomes — costing taxpayers $48 billion in 2023.

For instance, it stated, a employee incomes $30,000 yearly obtained no tax assist for employer contributions whereas one other employee on $200,000 yearly saves 32 cents in tax per greenback contributed.

Anglicare stated the flat 15 per cent superannuation contributions tax ought to be changed with a “refundable rebate” that gives the identical or larger assist for every greenback of contributions for individuals with low incomes as that offered to middle- and high-income-earners.

Individually it additionally needs reforms to dividend imputations, ending the follow of paying money refunds for individuals who have managed to scale back their tax fee to zero and pay no revenue tax.

“Australia is changing into extra unfair and extra unequal,” Anglicare govt director Kasy Chambers stated.

“Individuals who earn revenue from work are paying extra tax than individuals who earn revenue from their wealth. That should change if we need to make our tax system fairer.”