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Extending the Salaries Tax Deduction for Home Loan Interest

76.      In the 1998/99 year of assessment, in order to provide relief to households heavily burdened with home mortgage payments, the Government introduced a salaries tax deduction, which may be claimed for a total of five tax years, in respect of their interest expenses.

77.      In the course of preparing this Budget, I have received suggestions from many people that the five-year limit for this tax deduction should be extended. Mortgage rates have been at a low level in recent years and there has been a 40 per cent fall in property prices since the deduction became available. These factors have helped substantially to reduce the burden of mortgage interest payments on home buyers. The average amount of deduction claimed has been decreasing and for 2002/03 stood at $30,000. The burden of home mortgage repayments on taxpayers in general is lighter now than at the time when the tax deduction was introduced. Nevertheless, after taking into account the rather heavy financial load still borne by many families, I propose to extend the limit for the deduction by a further two years, that is, from five years to seven years, with the maximum deduction in any year maintained at $100,000. This concession will take effect from the 2003/04 year of assessment, and will cost the Government $4.6 billion in tax revenue forgone over five years. I envisage that several hundred thousand taxpayers will benefit from this measure.

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2003 | Important notices
Last revision date : 10 March, 2004