How the Greens asset tax will hit you

Most media attention has been on the Greens policy to tax any net assets you have over $2 million at 2.5%. You may think you’re safe as your net assets are less than that.

Not so.

If you have any assets in a trust, then those assets will be taxed at 1.5% from the very first dollar, and even worse it will be on gross assets, not net assets.

Let’s say you have a $1.2 million house with a $1 million mortgage, and it is in your family trust. You will pay 1.5% on $1.2 million every year, which is $18,000 a year on equity of $200,000.

This asset tax will not hit the very well off. Anyone with a trust is screwed.

The median level of assets for a household in the 2nd top quintile (so 20% of households) is $920,000 and in the top quintile is $2,256,000. So if any of those household have assets in a trust, they will be paying 1.5% a year on those assets – regardless of their liabilities.

So the two important things to remember is that the Green Party policy is that if you have any assets in a trust, they will tax you on them from the first dollar, and the tax will be on gross, not net, assets.

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