Australia Postpones Capital Gains Tax Measure

by Mary Swire, Tax-News.com, Hong Kong

10 November 2006

As the Australian government delayed a Senate vote on a controversial capital gains bill, Finance Minister Nick Minchin ruled out any election year tax cuts that might "over-stimulate" the economy.

Speaking yesterday, a spokesman for the Finance Minister confirmed that the government will defer consideration of the Tax Laws Amendment (2006 Measures No.4) Bill, which was scheduled to be debated by lawmakers yesterday.

However, the spokesman added that the government had not abandoned the bill, and would reintroduce the legislation at a later date.

According to Australian media reports, the proposals would give foreign investors exemption from capital gains on certain types of income, but they were not supported by all in the Liberal/National coalition government.

One notable dissenter, National Senator Barnaby Joyce, had threatened to vote against the bill because it would discriminate against domestic investors.

"Why should someone living overseas receive an advantage over a person living in Parramatta?" he was quoted as asking by the Australian Associated Press.

Meanwhile, Minchin has ruled out any expansive tax cuts in the next budget, warning that such a policy risks destabilising the economy.

"This is not the time for us to let go of the reins on fiscal policy," Senator Minchin told The Australian.

"We have to be careful not to over-stimulate the economy in any way that would put further pressure on inflation and therefore interest rates," he concluded.

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