Tax hike ‘hurts foreign investment’

Tax hike ‘hurts foreign investment’

Posted on Wednesday, May 16 2012 at 9:51 AM

Australia is at risk of alienating foreign property investors after the Federal Government announced plans to double taxes on investment trusts, one group has warned.

In last week’s Budget, the government
flagged an increase to the Final Withholding Tax (WHT) on managed investment
trusts from 7.5 per cent to 15 per cent.

Andrew Cannane, head of corporate client
services at The Trust Company, said the move was concerning.

In 2007, the WHT was lowered to its current
level. According to research by Colliers International, foreign investment in
property increased from $1.2 billion in 2008 to $5.5 billion in 2011.

“Our clients tell us that on a relative
risk weighting, Australia is an attractive investment destination,” Cannane
says. “This is partly due to our strong economy as well as the relative
strength of the Australian dollar.

“Changes to the rate undermine the
confidence of foreign investors to invest into Australia with certainty.”

As part of the Budget, capital gains tax
discounts for non-residents were also scrapped.

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