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Friday, 10 December 1965

Mr MCIVOR (GELLIBRAND, VICTORIA) r asked the Treasurer, upon notice -

1.   How many individuals and companies were recorded with the Taxation Branch at the close of t!ic last financial year as dealers in real estate with particular reference to (a) existing housing, (b) new housing and (c) residential vacant land?

2.   Is he able to say what aggregate amounts of profit were recorded by these individuals and companies as derived from transactions in existing houses, new houses and vacant land resulting from the apportionment of annual capital profits to the year of income and interest recorded in the year of income as having been paid and received by these dealers?

3.   Do these dealer type transactions create inflationary influences in relation to costs of housing, in particular to existing housing?

4.   If so, will the Government give consideration to making an investigation of these matters with a view to taking action which will subdue these influences?

5.   ls it a fact that interest payments made by dealers on money borrowed by them to finance the purchase and resale of existing housing are allowable as income tax deductions?

6.   Is it a fact that persons who purchase such homes from these dealers for their own occupation are not allowed to claim as deductions for income tax purposes the interest payments on their home purchase?

7.   Will he take steps to co-ordinate interest rates charged by lenders who operate under State housing and land jurisdiction with the rates charged by banks operating under Federal housing jurisdiction?

Mr Harold Holt - The answers to the honorable member's questions are as follows - 1 and 2. Available taxation statistics do not indicate the number of taxpayers dealing in real estate and specific statistics are not maintained in relation to the profit of real estate dealers. 3 and 4. I have no evidence that the activities of dealers in real estate adversely affect the general level of housing costs.

5.   A taxpayer is subject to tax on his taxable income, that is, his assessable income less allowable deductions. The Income Tax Assessment Act provides that all losses or outgoings, to the extent to which they are incurred in gaining or producing assessable income, or are necessarily incurred in carrying on a business for the purpose of producing such income, shall be allowable deductions except to the extent to which they are of a private or domestic nature. Interest incurred by a dealer in real estate which meets the requirment of these provisions qualifies for deduction in determining the dealer's taxable income.

6.   Interest paid by a taxpayer in respect of the purchase of a house for his own occupation is not incurred in gaining or producing assessable income and is, in any event, an outgoing of a private nature. It is not, therefore, an allowable deduction for income tax purposes.

7.   This suggestion raises legal and policy issues which it is not the practice to discuss in answers to Parliamentary questions.

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