Cyber Summit 2025
Date: Tuesday September 16
Location: Hilton Sydney
In-person
For more information, visit the Summit website.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
ABC News
15 hours ago
- ABC News
Federal politics live: Experts descend on parliament for three-day productivity summit
Business, union and industry groups have arrived at Parliament House ahead of the government's three-day productivity summit. Follow our live coverage below.
ABC News
5 days ago
- ABC News
As bold economic reform ideas go, an 'imputed rent' tax on home owners has precedents
As industry leaders and the federal government prepare for next week's economic summit, two economists have started a national conversation by arguing that, to make Australia's tax system fairer for all, we should consider taxing home owner-occupancy. This week, Peter Siminski from UTS Sydney and Melbourne University's Roger Wilkins said Australia's tax-free treatment of owner-occupied housing was allowing home owners to derive untaxed income from their homes, and it was an unusual privilege in our tax system. They said that, to make Australia's tax system work more fairly for everyone, we should consider taxing owner-occupied housing in some way (and cutting taxes in other areas of the economy). But how do home owners derive income from their homes? They were talking about two specific concepts: "Imputed rent " and "accrued capital gains". Imputed rent was part of Australia's income tax base from 1915 to 1923 and its reintroduction for taxation was proposed in 1975, although it didn't go ahead. What does "impute" mean? It means to assign a value to something by inference. In the case of imputed rent, that's the estimated rental value of your residential property. In 2022, the OECD published a useful paper surveying the different ways family homes were taxed in OECD countries. lt explained imputed rent this way: Part of the return to an owner-occupier housing investment accrues to the taxpayer in the form of living in the property rent-free. This in-kind return is known as imputed rent. The concept of imputed rent on owner-occupied property is motivated by the idea that the owner-occupier could rent out the property on the market to earn a rental income. However, refraining from doing so indicates that the value of the housing service to the owner-occupier must at least be equal to the forgone rent. While the property owner (making the investment) and the dweller (paying the rental income and consuming the housing service) are two separate individuals in the case of rented housing, they are one and the same person when considering owner-occupied property. Imputed rent is commonly exempt for tax purposes. This has been found to be one of the most significant drivers of the preferential tax treatment of owner-occupied housing. While mortgage interest relief for rental property allows owners [i.e landlords] to deduct costs that are associated with generating taxable rental income, mortgage interest for owner-occupiers is deducted without a corresponding taxation of imputed rental income [NB: Australia does not allow tax-deductibility of mortgage interest payments for owner-occupiers]. This generous tax treatment of owner-occupied housing results in negative marginal effective tax rates in some countries, effectively providing a tax subsidy for owner-occupied housing. To remove distortions in housing investment decisions and eliminate the homeownership bias, the taxation of imputed rents combined with mortgage interest relief has often been suggested as a 'first-best' policy approach. In practice, a range of conceptual, administrative and political considerations have made the taxation of imputed rental income difficult to implement in practice. Only four OECD countries (Denmark, Greece, the Netherlands and Switzerland) tax imputed rents, although at comparatively low rates and only under certain conditions. The OECD report shows how residential housing is taxed in different ways globally. It says property is taxed when it's purchased (acquisition of asset), when someone is living in it (holding of asset), and when it's sold (disposal of asset). All OECD countries levy recurrent taxes on immovable property. The report says owners of rental properties (that is, landlords) are taxed on their rental income, but in a minority of countries owner-occupiers are also taxed on imputed rent. Transaction taxes are commonly levied on housing purchases (eg: stamp duty). Capital gains taxes are levied on the disposal of housing (when a house is sold), although many countries (including Australia) exempt capital gains taxes on the sales of main residences. Inheritance and gift taxes may also be levied when property is transferred to heirs. The report also has a table of 38 countries that show how every country in the OECD taxes residential property (as of January 1, 2022). Here's a shorter version of the table: Of the 38 countries, only four countries tax owner-occupiers' imputed rent. They're included in the list above: Denmark, Greece, Netherlands and Switzerland. Notice how countries can use very different combinations of taxes on residential property. Professors Siminski and Wilkins did not say we should try to directly tax imputed rent in Australia. However, they said its existence, combined with the accrued capital gains that home owners receive from rising property prices, was contributing to growing inequality between renters and home owners. They said when we include owner-occupiers' imputed rental income and accrued capital gains in measures of household income, inequality is much higher in Australia than we think, and it's rising more strongly. They said it makes Australia's tax and transfer systems less "redistributive" than we think. For its part, the Australian Bureau of Statistics (ABS) also says that including imputed rental income in an analysis of Australian household income would allow for "more meaningful comparisons" of the income of people living in different housing tenure types. It says it would also better-capture how income levels and the distribution of income changed over time as people moved in and out of different tenure types. The ABS says net imputed rent is estimated this way: Net imputed rent is estimated as gross imputed rent less housing costs. For owner-occupiers, the housing costs subtracted are those which would normally be paid by landlords i.e. general rates, water and sewerage rates, mortgage interest, building insurance, and repairs and maintenance. When Professors Siminski and Wilkins said policymakers should consider taxing the family home to make housing more affordable and to remove the distortions in our tax system that were encouraging Australians to pour so much money into housing (which is a non-productive investment), they weren't necessarily calling for a direct tax to be whacked on residential properties. They were suggesting something more subtle. They were saying that, when we think about household income, if we make conceptual space for the existence of imputed rental income and accrued capital gains that Australia's home owners enjoy (both of which are untaxed), it would allow us to re-jig our tax system to make the system work more fairly for everyone, rather than its current heavy privileging of property owners. They said there were plenty of ways to fairly incorporate owner-occupied housing into our tax and transfer systems too, while simultaneously cutting taxes in other areas of our economy (eg: personal income tax). For example, we could use a broad-based land tax, or a broader wealth tax, or an explicit tax on owner-occupied housing wealth. And there was a "strong case" to reconsider the exemption of owner-occupied housing from pensions means tests. "We should have a national conversation on whether the current tax treatment of owner-occupied housing is sensible," they wrote. "Moving away from complete [tax] exemption would open up opportunities for reduced reliance on income taxes and more food on the table for renters and owners of modest homes."
News.com.au
5 days ago
- News.com.au
Alaska: a source of Russian imperial nostalgia
Alaska, the US state that will host the meeting between Vladimir Putin and Donald Trump on Friday, is a source of imperial nostalgia and often less-than-serious territorial claims in Russia. The territory that Russia sold to the United States in 1867 is now a symbol of the entwined history of the countries, whose relations have been severely damaged since Russia launched its offensive in Ukraine in 2022. To some experts, the summit in Alaska evoked memories of the thaw between the Soviet Union and the United States during the Cold War. "It's a classically orchestrated summit, like in the era of detente," Russian political scientist Fyodor Lukyanov said on Telegram. "Its symbolic significance is the absence of intermediaries: the powers, so to speak, decide for themselves," he added, saying that China is "not close" to Alaska and that Europe is "as far away as possible". - Fur trading hub - But beyond being a unique meeting place, Alaska also fuels Russian memories of the Tsarist empire, the historic predecessor of the Soviet Union. "For Russia, Alaska symbolises the peak of an expansion," Alexander Baunov, senior fellow at the Carnegie Russia Eurasia Center, said on the centre's website. It was "when the Russian continental empire had, for the only time, succeeded in crossing an ocean like the European empires", Baunov said. A Russian colony since the 18th century, Alaska was eventually sold to the United States for $7.2 million in 1867 by Tsar Alexander II. The remote territory was economically very difficult for the Russians to exploit and at the time its sale was welcomed by the Imperial Court as the country was struggling economically. But the transaction later came to be seen as a regrettable bargain after what formerly was a fur trading hub turned out to house crucial natural resources: gold and oil. - 'Our bears' - In recent years, the price at which Alaska was sold, considered by some to be ridiculously low, and the legal validity of the transaction have become regularly recurring debates in Russia. In July 2022, in the midst of patriotic fervour in Russia and as tensions soared between Moscow and Washington following the offensive against Ukraine, the Alaska issue resurfaced. The speaker of the Duma, the lower house of the Russian Parliament, Vyacheslav Volodin, spoke of "lands to be returned", describing Alaska as a "disputed territory". Russia's authorities are apparently not interested in reclaiming it. In 2014, Vladimir Putin, asked by a pensioner about the possibility, replied: "My dear, why do you need Alaska?" adding the territory was "too cold". Still, the idea of reclaiming Alaska is an endless source of memes widely circulating on Russian social media. One of the most famous claims that "our soul" suffered from the loss of Alaska because "it's where our bears live". The recapture of Alaska is even mentioned in a 1990s hit by a rock band Putin likes, Lyube, with the lyrics: "Stop messing around, America... And give back our Alaskan lands."
