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​‘Scheme promoters’: Banks need to take responsibility

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Australian Broker | 09 Dec 2013, 07:00 AM Agree 0
Banks are being called on to step up their game, following revelations potentially illegal loan structures are being promoted to investors.
  • Sylvia | 09 Dec 2013, 10:35 AM Agree 0
    Phil Naylor are you suggesting its fair for taxpayers to fund paying off home loans of investors by allowing them to rake up the debt on their negative geared properties creating higher tax deductions. You clearly have no idea what the issue is. Investors are lucky the Government hasn't canned negative gearing. Keep this up and they might. This part of the tax law is complex and specific. The ATO nipped this in the butt ages ago. It's old school planning. I have to wonder though which brokers know this strategy. Ex bankers who are now brokers or those who have other qualifications such as planners and accountants who are also brokers. Maybe these are the ones ATO is concerned about who should know better.
  • Johnny B | 09 Dec 2013, 11:10 AM Agree 0
    Of course brokers should be able to provide general advice to their clients about loan structure etc. But canning negative gearing altogether??? I don't think so... The government would be committing political suicide by scrapping this altogether! Clearly this Sylvia has no idea why the negative gearing tax laws are in place. Ordinary Mum's and Dad's who invest in residential property are providing housing for those who are not fortunate enough to be in a position to buy their own home, so why not give them a tax break for doing that. If there was no incentive for doing it, no one would... Typical Mum's and Dad's have no time to worry about loan structure, tax law and negative gearing. So they seek information and advice from financial experts.
    Brokers are considered by ordinary Australians as financial experts, so Brokers should be making every effort to become accredited to be able to provide their clients this type of advice. The gap between good brokers and the rest come where brokers are uneducated and basically talk to their clients about tax laws they clearly have no idea about. One of these brokers, clearly, is the lady who commented above! I am not claiming to be an expert on negative gearing tax law, however I know the reason the laws are in place, and I am making every effort to make sure I am doing the absolute best for my client and their financial well being.
  • Sylvia | 09 Dec 2013, 11:55 AM Agree 0
    Johnny B with all due respect its brokers like you and the likes of the MFAA who are uneducated to mske a call in this issue. I am degree qualified with post graduate qualification as a CPA. I have quite the knowledge and experience to comment. You clearly have no idea about this issue which questions the tax deductibility of interest for tax deductible loans. Not the validity of negative gearing. Btw I am also and investor. But if mum and dad investors keep being advised to let interest capitalize on their investment properties loans while they use all income sources to pay off their o/o home loans by using split facilities then that creates and a higher interest deduction and that is against tax law. So Johnny B if mum and dad investors continue to make unsubstantiated claims I am just saying the ATO may review negative gearing as a legitimate scheme. So instead of reaching with the limited info and knowledge you have I suggest you do some reading in this matter and then comment.
  • Johnny B | 09 Dec 2013, 07:17 PM Agree 0
    So will the ATO ever consider negative gearing as a scheme??? I think not... It takes someone very confident to call the MFAA, the industry's governing body, uneducated... Then also someone who is also very confident to think that a single CPA can also out think the likes of the ATO. You say you are also a property investor Sylvia... What do you pay down first on your loans then? Do you pay down your non tax deductible loans before your tax deductible loans? Or will you just continue to disagree with me just to try and prove a point? Any sensible person will do this strategy.
    Negative gearing is here to stay, "schemes", as they are coined here, will be around to minimise tax for everyone, not just investors. Look at NRAS... is it a scheme also??? It has tax advantages and cash in the hand for the investor... It also benefits the tenant.
    I can see there are various viewpoints on the issue, but I very very very much doubt that the government will ever discontinue negative gearing... It’s only a handful of cowboy financial professionals that cause all this trouble... the ATO, the MFAA and the banks do all that they can to eliminate these risks.
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