Investors face double-whammy in tax proposals

While the TWG recommends against a comprehensive capital gains tax, it proposes axing depreciation deductions for buildings where evidence shows they don't decline in value, and a new risk-free rate of return method for imputing income from rental housing.

The TWG estimates that axing depreciation on buildings that don't depreciate would produce $1.3 billion in new tax revenue every year, while a risk-free rate of return approach to rental income would raise around $850 million, wiping out the $150 million of tax losses currently recorded and adding $700 million to the national bottom line.

However, fears that the TWG would target loss attributing qualifying companies, through which many investors put their rental income and expenses, were unfounded.

"LAQC's are a red herring," said PricewaterhouseCoopers country chair and TWG member John Shewan.