As a negative gearing frenzy grips the property market landlords are claiming $11 billion in tax deductions a year.
The richest potential deduction for individuals is about four times the amount claimed 10 years ago.
The Herald Sun has revealed that more than half of Australian companies pay less than 5 per cent tax. Treasury figures have also revealed that only a quarter of companies or about 92,000 businesses, pay more than 15 per cent tax on their total earnings.
If a property investors interest bills exceeds the rent on their investment they are allowed to use the losses to reduce their tax.
Deductions by individual property investors hit $11.7 billion in 2007-2008 up from 3.1 billion in 1999- 2000. That amount is more than double 5.2 billion taxable capital gain reported by the same group.
The new tax figures provided to a Senate committee, paint a staggering picture of top-end tax lurks used by individuals and companies. The corporate tax rate is 30 per cent, yet 182,000 companies pay less than 5 cents in the dollar on their total earnings, and thousands pay no tax at all.
Senator Brown stated that the Government should publish a full and open exposition of the tax deductions available to the business sector to explain these figures.
On the orders of the Rudd government Treasury Secretary Ken Henry is conducting a review of the tax system. The Business Council of Australia has argued for the business tax rates to be slashed in its submission to the review. The Government is awaiting the results of the Henry Review before considering any changes to the system.
Individuals paid $129 billion and companies paid about $78 billion with GST and sales taxes making up the difference.