The claim

Scott Morrison lambasted Labor's proposed changes to negative gearing and capital gains tax during a recent appearance on Sydney radio, using police officers as an example of those who may be affected.

"I do know that one in five police officers have an investment property," the Prime Minister said.

"And they don't have five and six and seven and all this rubbish Labor goes on with.

"They have one, and this is what they're investing in for their future."



So, do police officers who own investment properties have just "one", as the Prime Minister claimed?

RMIT ABC Fact Check investigates.

The verdict

Prime Minister Morrison's claim is a fair call.

According to the most recent Tax Office statistics, the proportion of police who owned an investment property, negatively geared or otherwise, was 26 per cent, or one in four.

The same statistics show that 21.9 per cent, or one in five, claimed negative gearing deductions.

While the Tax Office collects data on the number of investment properties people own, it's impossible to break this data down according to specific occupations.

So there is no way of knowing for certain how many properties an individual police officer may own.

Available statistics show that of all people with an interest in a rental property, 71 per cent have just one interest.

Experts said there was no reason this statistic would differ drastically for police officers.

Based on the available data, there is no way of knowing for certain how many properties an individual police officer may own. ( ABC News: Patrick Williams )

The context of the claim

Mr Morrison's claim was made during a discussion about Labor's plans to change negative gearing rules and reduce the capital gains tax discount.

According to the ATO, negative gearing occurs on an investment property "where the deductible expenses (including interest on the loan borrowed to finance the property) exceed the income earned from the property".

Labor plans to limit this tax deduction from January 1, 2020 to investments in new housing only, but pre-existing property investments would not be affected.

Labor's proposed changes to capital gains tax would also affect investment properties.

Currently, properties owned for more than 12 months are eligible for the capital gains discount when sold.

This means that only 50 per cent of the capital gain would be subject to income tax.

Should it win office, Labor says it would reduce the discount from 50 per cent to 25 per cent — so tax would be levied on 75 per cent of the capital gain.

Likewise, this would apply to investments made after January 1, 2020.



How many police own investment properties?

In an email, an unnamed spokesperson from the Prime Minister's office referred Fact Check to the 2016-17 ATO "tax stats", while also citing Treasury as a source.

The Tax Office statistics do indeed show that 21.9 per cent of police — 13,204 of 60,349 — claimed a tax deduction in 2016-17 for a "net rent loss", meaning they owned at least one negatively geared investment property.

That number did not include police officers who may own an investment property that is not negatively geared.

Meanwhile, the number of police officers claiming any sort of rental income, negatively geared or not, was 15,791 — 26 per cent.

These numbers were checked and confirmed by experts.

Investment properties not rented out

In an email, a Tax Office spokeswoman explained that some investment properties owned by police officers may be missed in the 2016-17 statistics if a rental loss or profit had not been claimed in that financial year.

"An investment property is a property other than your primary residence, purchased to generate income whether through rent or capital gains," the spokeswoman told Fact Check.

"However, not all investment properties are rented out and eligible for rental deductions."

Experts told Fact Check they were not aware of other datasets or research that contained statistics showing the number of investment properties owned but not on the rental market.

"The reality is that most people with investment properties today are negatively geared," the Grattan Institute's Brendan Coates told Fact Check.

The ATO publishes data on the number of rental properties owned by individuals, but this is not broken down by occupation. ( ABC News: Jane Cowan )

How many investment properties do individual police officers own?

A follow-up email to the Prime Minister's office requesting further detail and a source for Mr Morrison's claim that police officers only own one investment property went unanswered.

Experts told Fact Check the number of investment properties owned by police officers could not be determined by the taxation statistics data.

This was confirmed by the ATO spokeswoman.

The experts said they were not aware of any non-ATO data or research that may contain this information.

While the Tax Office publishes data on the number of rental properties owned by individuals, this is not broken down by occupation.

That data shows that in 2017 most housing investors (71 per cent) owned just one property, while 29 per cent owned more than one.

Experts told Fact Check it was unlikely this percentage would differ dramatically for police officers who had invested in property.

What the Tax Office statistics do show is that of those people with taxable incomes of up to $500,000 who invested in property, around 70 per cent owned just one property while 30 per cent owned more than one.

This income range would presumably include nearly all police officers.

A more exact comparison based on income ranges could not be made, due to different income measures being used in the different datasets.

Principal researcher: Ellen McCutchan

Sources

Australian Taxation Office, Taxation Statistics 2016-17, Individuals - Table 14, 7 January, 2019



Australian Taxation Office, Taxation Statistics, 2016-17, Individuals - Table 27, 7 January, 2019

