By John Mikkelsen
While Labor’s Federal Budget has copped a lot of flak from investors and potential property buyers including young people it is supposed to help, it may have created a new defence loophole in legal cases it was never designed to influence.
Anyone facing charges of perjury for lying in evidence, which can carry prison terms ranging from around 10 to 15 years – or even life if the lie is intended to get someone convicted of a serious crime – could now plead the equivalent of the US Fifth Amendment.
Let’s call it the Albo First Amendment: “I didn’t lie Your Honour, I just changed my position…”
Turn the clock back a few decades and even a US President facing impeachment over charges of having an inappropriate relationship with a young female intern could place his hand on the Bible and state “ I did not have sex with that woman, I just changed my position..” Case dismissed, you’re in the clear, Bill.
Seriously, none of this is too far-fetched in light of the Prime Minister Anthony Albanese and Treasurer Jim Chalmers back-tracking on repeated promises made before the last election that they would not change the existing rules on Capital Gains Tax (CGT) and negative gearing.
Reporter: “Can you just be really clear — can you rule out any changes to negative gearing and capital gains tax settings if re-elected?”
Albanese: “Yes. How hard is it? For the 50th time.”
But then they did, and in a big way. But they deny they lied, they just “changed their position”. This “new position” has been dissected many times. It “grandfathers” existing tax arrangements but limits negative gearing to new builds and introduces a new complicated option for capital gains linked to a minimum of 30 percent plus inflation.
Naturally Labor politicians including “My word is my bond” Albo and many of his Ministers, some of whom own multiple properties, will be exempt from the new rules. But young people hoping to gain a foothold on the property ladder will be caught in the new net.
It should be obvious to all that the term “lie” or “lied” could be applied to the broken promise on the eve of the 2025 election, no matter the motive. But not according to the supreme overlord in the House of Reps where the Speaker, Milton Dick, ruled the term out of order when the Opposition fired up in the wake of the Budget delivery.
Well Mr Dick, my response would be if it looks like a duck and quacks like a duck it’s a duck!
Meanwhile when it comes to property investment, my wife and I have some skin in the game dating back many years and we can attest that it might not be for the faint-hearted.
Rewards can be real, but just like a roller-coaster, it has its ups and downs and the tax man is always waiting at the bottom of the ride to grab a big slice of any profits.
We started from scratch after we were first married with me on a pittance as a junior journo, and a wife who fell pregnant after just three months having to quit her nursing job (no parental leave back then).
Anyway we have experienced the lot, from a dodgy solicitor, to dodgy real estate agents, dodgy builders, dodgy buyers, termite infestations, land subsidence causing damage not covered by insurance – you name it, we’ve seen it and dealt with it.
But somehow through good luck and minor miracles and maybe the old mantra of position, position, position, we’ve always come out on top, paid our share of capital gains where appropriate on investment properties purchased after 1985 and with no reliance on negative gearing.
We sold our last investment property before we moved to the beautiful Sunshine Coast more than a decade ago and based on our experiences I think property investors deserve a medal, not a kick in the backside, as it can all go downhill in a flash.
Our first home was a dilapidated one bedroom fibro beach shack on a big block at Bargara, which we renovated, added a bedroom and then subdivided the allotment before selling. We planned to build our dream home in Rum City so we bought an allotment there, but rather than renting while waiting on a builder, we bought another home and sold that after making a few improvements.
We then moved in with my in-laws who lived nearby and I saved part of the contract cost by working as the on-site painter with early morning starts before ducking back for a feed and a shower before heading off for the night shift as a reporter with the Bundaberg News-Mail. Whew! Paint brush and sander replaced by notebook and typewriter.
Some years later we sold the house (which my wife had designed) and moved away when I obtained my first promotion as a regional newspaper editor. But even after the buyers had moved in, weeks dragged by without any settlement cash reaching our account.
Frequent calls to the solicitor who handled the sale were met with “Sorry, he’s out of the office, I will get him to return your call..” He never did.
Finally I jumped in our car, drove a few hundred km and knocked on the door of our former home one Friday evening.
A mid-level public servant and a decent bloke, he was surprised to see me and was even more surprised when I asked why we hadn’t received his settlement for the house.
“We paid that before we moved in! Don’t worry I’ll go and see the solicitor on Monday and get it sorted).
The money arrived in our account early the next week and the solicitor made some half-hearted excuse for the “oversight” while the cash obviously had sat undisturbed in his interest bearing account, but we were a bit older and wiser after that.
I could fill a book on some other pitfalls in the property market but another that stands out involves a real estate agent who sold us an investment property in Brisbane with two of our sons also on the deed. This smooth operator said he was a former bank manager and he seemed on the level, but when he showed us through the property he said he couldn’t access a locked room behind the garage because the absent owners had some valuables stored there.
Maybe we should have seen the red flag when he also advised us to forgo a building inspection. “It’s a solid brick build, why not save some money, what could go wrong?”
One word – termites – with an obvious infestation in the door frame inside the locked room, which we only discovered after settlement.
Fortunately the house had a hardwood frame and the little pests were confined to that one limited area so the fix was relatively easy but no one would have known that.
Termites were also found gnawing on wooden garden sleepers in another investment home we bought so I got a pest controller to treat them. No obvious signs of infestation inside the house but when it came to the roof void he said he was practically retired and there was no way he was going to crawl around up there.
“I’m too old, you can borrow my gear if you want to”.
So that was how I got to be crawling around with a headlamp and a cylinder and pump squirting termite treatment in a dark confined space on a sweltering summer day…
We sold that house before any possible future termites showed their hungry little heads, which I hope they never did.
As I said, we didn’t rely on negative gearing but that was personal choice, not government policy.
I’m not always a fan of popular finance columnist and lifestyle guru The Barefoot Investor, Scott Pape, but he had a big swipe at an investor (Terry) bemoaning Labor’s negative gearing changes in a recent column. I’m not saying he’s right but somehow it’s worked for us.
“Hi Terry,
“I’m not sure if you’re from the housing lobby, the Liberal Party, or if you’ve just stumbled onto my column for the first time in 22 years and haven’t worked out that I’ve spent the better part of two decades arguing against negative gearing and every other form of taxpayer-funded landlord welfare.
“For far too long, first home buyers have had the footprints of investors on their backs.
“‘A toxic mix of pain and devastation’? Please.
“If that’s what happens to your investment portfolio after a few tax tweaks, you’ve got bigger problems than I can help with….”
“As for the figure of ‘9% of mortgage holders at risk of defaulting if there were one or two more rate hikes’ … well, I have a few things to say about that.
“First, if they’re that skint, they should sell their homes immediately and get out of the market while they still can. They don’t own their home. The bank does.
“Second, these people most certainly are not my readers. We’re way too smart for that…”
Gee Scott, tell him what you really think!
Anyway Opposition Leader Angus Taylor came out with his own Budget reply speech which I personally think was a big step forward for the Coalition as it finally shows a stark difference between them and Labor in many areas, including energy (dumping net zero and removing the ban on nuclear power) housing, CGT, negative gearing, immigration and taxation.
There has been criticism that it was taken from the One Nation songbook and a big attack from Labor on the cost of tax indexation which will avoid bracket creep pushing wage earners into higher tax brackets.
Chalmers and Albanese claim this will cost a bomb, shock horror! But as one of my regular email contacts, a former top federal public servant, has rightly pointed out:
“The ALP have put their collective ‘foot in the mouth’ by estimating and banging on about tax revenue reduction from the LNP policy of indexation at $250 billion. As pointed out by Taylor, the mirror image is that this is tax revenue that Chalmers wants to hold onto, by ignoring bracket creep, as well as higher taxes from CGT, trusts etc. What a treasure trove to drive more spending in the future. Diabolical! Anyway, the bell has been rung…”
Labor, let’s hope it tolls for thee!
But if all else fails, Jimbo and Albo could also take heed of George Harrison and The Beatles’ 1966 hit, The Taxman: https://www.youtube.com/watch?v=l0zaebtU-CA
If you drive a car, I’ll tax the street
If you try to sit, sit I’ll tax your seat
If you get too cold, cold I’ll tax the heat
If you take a walk, walk I’ll tax your feet
Yeah, I’m the Taxman!…
How prophetic.
John Mikkelsen is a former editor of three Queensland regional newspapers, columnist, freelance writer and author of the Amazon Books Memoir, Don’t Call Me Nev. (https://www.amazon.com.au/Dont-Call-Nev-John-Mikkelsen/dp/B09S244GP1/ref=tmm_pap_swatch_0?
