Further changes to negative gearing rules and tax rules on geared equity investments could penalise investors, especially younger investors on lower marginal tax rates, according to the Stockbrokers Association of Australia.
The association’s chief executive, Andrew Green, said research showed gearing boosts investment returns over the long-term.
“For example, the after tax return for an investor on the lowest marginal tax rate was higher for a geared share portfolio compared with geared residential property over 10 years,” he said, citing the ASX 2015 Long-Term Investing Report.
A geared equity investment can keep younger people ahead of property price inflation, Green argued.
“Public policy should be about encouraging Australians to invest for their future, not making changes on-the-run which undermine confidence in our markets.”
The current rules were important for market liquidity for Australian listed investments and companies, which maintains confidence and capital for the local market, Green added.
