Unlikely political alliance forms to axe widows’ tax
The Coalition has teamed up with independent Senator David Pocock to introduce a law that would remove the so-called widows’ tax.
Nationals leader Matt Canavan and Liberal deputy leader Jane Hume announced their intention to pass changes to protect joint owners of investment properties, who would lose exemptions from Labor’s tax changes in the event of death or divorce, this sitting fortnight.
Nationals leader Senator Matt Canavan, Senator David Pocock and Deputy Liberal leader Senator Jane Hume. Alex Ellinghausen
They were joined by Pocock, who raised the issue before parliament went on winter break in June and said it would disproportionately impact women.
Canavan acknowledged that it was an unlikely alliance.
“Jane and I will have different views with David on some issues, but we are united on the principle that we should try and help people,” he said.
The widows’ tax affects joint owners of investment properties that are exempt or grandfathered from the changes to negative gearing and the capital gains tax.
When the property is fully transferred to one of the co-owners in the event of death or a relationship ending, including when domestic violence is involved, it is considered an ownership change and therefore loses its tax exemptions.
Chalmers has released the draft legislation for the next tranche of tax reform laws, with consultation to run until August 21 – the day after the sitting fortnight ends.
It includes an amendment to protect spouses who acquire property on the death or divorce of their partner.
Labor said it would ensure protections for widows and divorcees. iStock
But the Coalition and Pocock raised the issue of urgency to stamp out the widows’ tax this fortnight.
“This legislation has affected widows. It’s affected those that are fleeing domestic violence. It’s affecting those that are getting divorced,” Hume said.
“There are people in this situation right now that need the clarity from the parliament, the clarity to lenders, and the clarity to families out there who are going through a tough time,” Pocock said.
Pocock highlighted the timeliness of the matter after he was contacted by a woman divorcing her abusive partner and rejected by four different lenders in her attempt to refinance their joint property so she could wholly own it.
“The issue raised by lenders has been the application of negative gearing reforms and the way they are now being factored into lending assessments for loan serviceability,” he wrote in a letter to Treasurer Jim Chalmers last week.
The Coalition’s bill will need the support of either the Greens or Labor to pass the parliament this fortnight. One Nation leader Pauline Hanson also backed the move to rush through a law.
Pocock was confident the bill would have the numbers to pass, while Canavan called on Labor to step up.
“The Labor Party could support this legislation, and it would fly through the parliament,” Canavan said.
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