- Explanatory Material - PDF 142KB
- Explanatory Material - DOCX 175KB
- Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 2) Bill 2017 – Exposure Draft - PDF 315KB
- Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 2) Bill 2017 – Exposure Draft - DOC 120KB
- Income Tax (Managed Investment Trust Withholding Tax) Amendment Bill 2017 – Exposure Draft - PDF 257KB
- Income Tax (Managed Investment Trust Withholding Tax) Amendment Bill 2017 – Exposure Draft - DOC 227KB
Increasing the supply of Affordable Housing – Treasurers media release
As part of the 2017-18 Budget, the Government announced it would be providing tax incentives to increase private and institutional investment in affordable housing.
Additional 10 per cent capital gains discount for investments in affordable housing
From 1 January 2018, the Government is encouraging increased investment in affordable rental housing by enabling resident investors in qualifying affordable housing to obtain a capital gains discount of up to 60 per cent.
To qualify, the investment property must be an eligible dwelling that is managed through a registered community housing provider and provided as affordable housing for at least three years. Individual investors may invest by holding an ownership interest in affordable housing directly or through certain trusts, such as holding units within a MIT.
Affordable housing through managed investment trusts (MITs)
The exposure draft will also amend the income tax law to encourage MITs to invest in affordable housing.
The exposure draft provides that MITs can hold affordable housing for the purpose of deriving long-term rent, provided any other income of the MIT is derived from eligible investment business. These changes will apply for income years commencing on or after 1 July 2017. Consistent with current MIT withholding tax rules, eligible foreign resident investors residing in countries with which Australia has a recognised exchange of information arrangement will generally be subject to a concessional withholding tax rate of 15 per cent to investment returns, including income from capital gains derived from affordable housing held for rent for at least 10 years.
The exposure draft also amends the income tax law to clarify MITs cannot acquire investments in residential property, except where it is affordable housing. This will prevent MITs from investing in houses, units and apartments to hold for long term rent (other than affordable housing). A 10 year transitional arrangements will apply to existing residential property assets held by MITs.
The Government has released exposure draft legislation and explanatory material for amendments to give effect to the Budget announcements outlined above.
Public consultation on the exposure draft legislation and explanatory material will close on Thursday, 28 September 2017. The purpose of public consultation is to seek stakeholder views on the exposure draft legislation and explanatory material.
For enquiries related to a specific issue, please contact:
- Ruth Gabbitas (Affordable housing through MITs) +61 2 6263 4154
- Kirsten Embery (Additional Capital Gains discount) +61 2 6263 2727
You can submit responses to this consultation up until 28 September 2017.
Interested parties are invited to comment on this consultation.
While submissions may be lodged electronically or by post, electronic lodgement is preferred. For accessibility reasons, please submit responses sent via email in a Word or RTF format. An additional PDF version may also be submitted.
All information (including name and address details) contained in submissions will be made available to the public on the Treasury website unless you indicate that you would like all or part of your submission to remain in confidence. Automatically generated confidentiality statements in emails do not suffice for this purpose. Respondents who would like part of their submission to remain in confidence should provide this information marked as such in a separate attachment.
Legal requirements, such as those imposed by the Freedom of Information Act 1982, may affect the confidentiality of your submission.
How to respond
Address written submissions to:
Financial Services Taxation Unit
Corporate and International Tax Division
PARKES ACT 2600