Matt Comyn says scaling back CGT tax break ‘should be under consideration’
Matt Comyn (pictured), chief executive of Australia’s largest financial institution Commonwealth Bank, has become perhaps the highest profile backer of reforms to the controversial capital gains tax (CGT) discount.
Debate around the CGT discount – which gives investors a 50% discount on the capital gain applied to assets (including real estate) held for over 12 months – has reached fever pitch ahead of Labor’s highly anticipated May Budget.
Lobby groups such as the Housing Industry Association vehemently opposed changes to the CGT discount, says that it would discourage investment in to the Australian housing market, thus negatively impacting the housebuilding pipeline.
This week’s Greens-chaired senate enquiry into the CGT discount heard from high-profile figures including Treasury assistant secretary Shane Johnson and former RBA governor Bernie Fraser. Both economics are open to the idea of reducing the current concession.
They appear to have found an unlikely ally in Comyn.
“We would see (winding back the discount) as certainly something that should be under consideration,” he said on the ABC’s 7.30 program on Wednesday night.
Comyn did not advocate for a retrospective application of potential CGT changes, “but going forward, I think as part of a broader package of reforms, I think that’s certainly something that should be given careful consideration”.
Echoing comments made to MPA by AMP chief economist Shane Oliver, Comyn said any changes should be part of a wider set of tax reforms to address intergenerational inequality.
“A big part of intergenerational equity is there is too much of a burden on labour, in terms of people who are working, paying too much income tax. We’ve got to make sure that the tax system is fair,” Comyn said.
Oliver also believes that reforming the CGT discount should not be treated as a standalone measure, but as part of a broader, coherent tax reform package, including higher income tax thresholds.
Comyn’s comments did not go down well with the opposition government.
Shadow treasurer Tim Wilson suggested changes to the current CGT system would unfairly favour CBA. “So long as it’s competitive neutral, and people are still investing in housing, it’s going to have a much bigger impact, to be blunt, on his competitors,” he said.
“(CBA) has a disproportionate amount of their business in the housing book, in comparison to smaller banks, who will find it harder to get ahead,” Wilson added.
Despite the flurry of opposition to the prospect of CGT reforms, Labor has not indicated that it intends to change the current system.
Labor treasurer Jim Chalmers, when pressed by ABC Radio National this week if a CGT shake up is on the agenda, deflected.
“As you know, we’re considering other options for the budget, as we always do at this time of the year. We don’t finish the budget in February. We finish the budget in May. And any next steps in any of these areas would be a matter for cabinet in the usual way,” he said.
The Select Committee on the Operation of the Capital Gains Tax Discount is expected to publish its findings on 17 March.
