The changes to employment tax that every Australian needs to know about

The Albanian government will take steps to curb negative gearing as part of a major tax overhaul to be unveiled in next week’s federal budget.

Under the proposed changes, investors who already own property will retain their current negative gearing arrangements.

Anyone who buys new-build homes after the reforms come into effect can still deduct rental losses from other income.

The government’s aim is to focus investor demand on boosting housing supply, rather than driving up prices for existing homes.

The precise design of the changes is still unknown.

The Australian Financial Review reports that one option being considered would phase out negative gearing for multi-property investors, while concessions would be at least partially retained for smaller landlords.

In addition to negative gearing, the government plans to revise capital gains tax.

The Budget is expected to abolish the 50 percent capital gains tax credit for assets held for more than 12 months and replace it with the pre-1999 system of taxing real gains after adjusting for inflation over the life of the investment.

The Albanian government will revive most of Labor’s policies after the 2019 election (Anthony Albanese is pictured on Monday)

The eastern suburbs of Sydney are depicted

The change would apply to all asset classes.

New construction would again receive preferential treatment.

Investors in new-build homes are expected to be given the choice between maintaining the existing 50 percent discount or opting for the inflation-indexed model, a move aimed at further stimulating construction.

Existing investments would be partially preserved under the current rules.

Capital gains accrued before the start of the reforms would still receive a 50 percent discount under the new system, while profits earned afterward would be taxed under the new system.

The Treasury Department plans to distribute the gains over time to avoid massive asset revaluations.

The tax package also includes a crackdown on trusts.

Labor is also expected to introduce a minimum 30 percent tax rate on trust distributions, targeting income-sharing schemes used by people on high incomes.

Shadow Treasurer Tim Wilson (pictured) called the tax reforms ‘unfair’

Farmers and standard estate planning structures will likely be excluded.

The government is also considering a one-off income tax offset of up to $300 for employees, partly funded by tougher treatment of trusts and investors.

First reported by The Australian, the compensation will only apply to income earned through work, excluding investment income, and would be limited to the current financial year.

The cabinet met earlier this week to finalize the package.

Almost all of Labour’s abandoned 2019 tax platform will return, with one major exception: changes to the franking of credit refunds on shareholdings, a policy widely blamed within the party for that year’s shock election defeat.

The coalition has since accused Labor of breaching its election promises.

“Before the last election the Prime Minister was very clear that there would be no new increased taxes on property, on trusts, on negative gearing,” shadow treasurer Tim Wilson told the Today Show on Tuesday.

‘They are clearly laying the groundwork, not only for these changes, but possibly going after the family home later on. They say this will help young Australians get into homes. We know very well that this is unfair.’

The federal budget will be presented next Tuesday.