The impact of Australia's "negative gearing" on investments, and housing under review. Negative gearing is under the spotlight because of rising house prices, and the rental crises. Yunho Cho, Shuyun Li and Lawrence Uren propose changing negative gearing from full deductibility of expenses to partial deductibility of housing expenses for the purpose of welfare gain from less deductions being claimed. This is a tax system adopted in many countries like the US, France, Germany and Japan. Although Cho et al states that there is "a significant amount of risk in the Australian housing market' and there could be shocks to the value of housing and to the rental crises, depending on the tax reform to negative gearing. In an academic paper: a. In Australia, what is the tax effect of negative gearing to investors, federal government and its role in the availability of rental properties? b. How can negative gearing be reformed? Discuss possible tax reform of negative gearing, (by choosing one of the above countries listed) and discuss the tax policy adopted and its impact on the housing market.

Applied Tax Page 3 of 3 c. What does the literature suggest will be the tax effect and consequences to the housing market, investors and to the federal government if negative gearing is reformed in Australia