Moves by ASIC to review stamp duty reporting requirements for superannuation funds investing in Australian real estate could spark a massive investment into housing.
The review will focus on requirements to disclose stamp duty payments in Regulatory Guide 97 Disclosing fees and costs in PDSs and periodic statements (RG 97).
ASIC noted that concerns have been raised that the disclosure impacts performance test results and discourages investment in property by superannuation funds.
The Property Council has long underscored that the stamp duty disclosure requirement under RG 97 has discouraged investment into the delivery of new city assets because of the disproportionate impact those unavoidable taxes have on the reported fees and costs of funds.
A simple and zero-cost change to stamp duty reporting requirements under RG 97 could see close to $10 billion flow towards new supply within a few years.
That means up to 35,000 additional new homes for Australians to own and rent over the next five years, at zero cost to government.
ASIC chair Joe Longo said the agency was responding to recent feedback from stakeholders.
“This is exactly the sort of actionable idea to address regulatory issues ASIC is open to testing,” Joe said.
“If the review finds appropriate changes will deliver benefits without undermining disclosures, then ASIC will act.
“We want to ensure red tape isn’t unnecessarily holding back investments.
“A significant portion of Australia’s $4 trillion superannuation system already invests in property assets, but we have heard there is appetite for more.
“This review will allow us to look at the way our regulations govern the calculation of fee-adjusted returns and encourage transparency and investment in our economy.”
Treasurer Jim Chalmers said the review “has the potential to be a really important change”.
“The reason this matters, is because the Property Council has said, that if this requirement was eased it could mean an extra 35,000 homes built by institutional investors over the course of the next five years,” he said.
Property Council chief executive Mike Zorbas welcomed the strong progress through the government’s Economic Reform Roundtable framework.
“The announcement shows the government’s productivity drive is going to help housing by driving zero-cost, high-benefit improvements to regulation,” Mike said.
“Critically, and rarely amongst federal politicians, the Minister for Housing and Cities understands the importance of institutional investment into the work of Australian companies building and shaping our cities, to give us the housing, offices, industrial parks or shopping centres our growing cities need.
“This is especially important at a time when state governments are carrying heavy debts around the country.
“Currently, superannuation funds are being penalised for investing our money in Australian housing, offices, industrial parks and shopping malls – all vital to world-class, productive cities.
“ASIC is to be commended for reviewing the current rules, which make super funds’ housing investments look more expensive than they are. It creates an uneven playing field.
“Changing RG 97 won’t cost the Budget a cent, but it can help deliver 35,000 additional new homes for Australians over five years.
“We can hope too, that the government takes this mindset into improving the investment pathways for institutions wanting to co-invest with Australian companies through the FIRB process, which has slowed down in recent years”, Mike said.
The Property Council made clear that stamp duty should still be reported. However, to improve comparability between assets, it should be reported separately as the unavoidable tax it is, rather than a fee.
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