Home owners, property investors

If you own your own home and/or a rental property you would have to pay the Comprehensive Capital Tax (CCT).

The CCT is an annual charge calculated by applying the flat tax rate to a ‘minimum required return’ from real assets less interest costs (the minimum required return is set by government but 6% was assumed in the Big Kahuna). The CCT applies to real assets such as land and housing.

If you own a home worth $400,000 (this value includes home and land) and have annual interest costs of $20,000 the CCT you would pay is 30% of (0.06 x $400.000 less $20,000) = $1,200.

If your interest costs are higher than the minimum required return, you don’t pay any tax and have a tax credit which you can carry forward until such time as your interest costs fall below the minimum required return.

The Big Kahuna was first published in 2011, some figures mentioned on this website may have changed. The Morgan Foundation will be releasing a new report with updated figures in the middle of 2016