Well, it’s been an interesting week or so since the Federal Budget was announced!
There were big changes – namely to capital gains tax and negative gearing – and some additional surprises that weren’t leaked beforehand.
In this article, I’ll go through what’s changing, how investors are impacted, which strategies are hit the most, and where you might look at tweaking things.
A few quick caveats before we dive in:
— It still needs to pass the senate, so the changes could get harsher, weaker, or maybe not even happen at all
— These are just initial thoughts based on my current understanding. I could be wrong on some details, so please always think carefully and get tax or financial advice specific to your situation
— I use rough and rounded numbers for simplicity
As always, there’s a bonus philosophical angle to all this – and maybe even a mini rant if you’re lucky 😉
Let’s get started with what some people have described as a slap in the face.
Employees get a $1,000 instant tax deduction (up from $300), plus a $250 Working Australians Tax Offset, which works like a tiny bump to the tax-free threshold (payable in two years).
That’s… pretty much it.
Big tax changes are being made elsewhere, in the spirit of ‘balancing’ the tax scales towards assets and away from workers. All done, apparently, in the name of ‘fairness’, ‘intergenerational equity’ and helping young people get ahead to achieve the dream of home ownership.
Interestingly, despite the sizeable tax changes (increases) we’ll flesh out below, wage earners have received basically nothing. So at first glance, it’s hard not to see this as a tax grab.
And just to be clear, I’m basically unaffected by these changes. My main goal of financial independence is already achieved. I have one more property to sell in the next 6-12 months that won’t be impacted. And my investing strategy is just buy, hold and collect dividends. So while everyone is biased in some way, I do feel like a somewhat neutral third party looking in from the outside.
Maybe I’m being a little cynical – let’s take a look at the changes.
The current 50% CGT discount for holding assets longer than 12 months is being replaced with indexation.
Here’s how it’ll work:
— Gains up to July 2027 will still get the 50% discount
— Gains after that will be indexed (your cost base adjusts with inflation)
This is designed to make property investing less attractive to slow down price growth and speculation in the market. Sounds like a noble goal, but that’s only part of the picture.
They’re applying this CGT change to all assets.
Shares, crypto, commercial property, small businesses, etc. If it was truly just about housing, they wouldn’t have applied it to every asset. And it’s not like they can’t treat housing separately from other assets, because they have with negative gearing (see below).
As for indexation of gains, that doesn’t seem too bad on the surface. After all, it makes sense to pay tax on your real gains after inflation. Except they snuck something else in there too.
A minimum tax of 30% will apply to your indexed gains.
So, if you sell in a low income year (or you’re not working due to job loss, parenting or retirement), you’re paying a minimum of 30%. One exception is if you’re on centrelink or a pension at the time – where you’re expected to be exempt.
But if the goal is to ‘even things out’ between investments and wages, this actually goes further than that. And if the goal is housing, why not just focus on that?
Skepticism level increasing…
People on high incomes will be paying 30% anyway, so it doesn’t change much for them. And the ultra wealthy typically own things through companies, so they’d normally pay 30% too.
But for other people, those lower brackets can no longer be applied for capital gains. At that point, it becomes hard to believe all this is to benefit young people and housing affordability. Especially when you consider how increasingly common it is for younger people to invest in shares, ETFs and crypto first. For many, they see investing as their only way of not being priced out of the market.
From July 2027, negative gearing on residential property will be limited to new builds.
Now, this should funnel some investors towards new builds rather than established properties. So that could take some of the pressure off prices – which aligns with the stated goal and is easy enough to get behind.
Where it gets funny though is this…
Existing held properties are fully grandfathered.
Everyone who already owns can keep negative gearing as before. Future established rental properties which make a cashflow loss – that loss can be carried forward and offset against future profits or gains.
I don’t have any major problem with the idea behind this. But it also doesn’t exactly ‘level the playing field’ as it’s being spun. It basically means they don’t get the same incentives that older/existing investors did. Especially considering many younger people buy a rental property first to get into the market, as it’s far more affordable than buying their desired home.
Other notable points to mention:
— Shares can still be negatively geared (this means margin loans and debt recycling are business as usual)
— Commercial property is unaffected (negative gearing is rare anyway)
— Your PPOR can later be turned into a rental and negatively geared if you already own
What could the outcome of this be?
The traditional low yield high growth model of property investing is hurt in two ways: no negative gearing benefit, plus the capital gain is taxed more harshly.
So, people may pivot towards higher yielding properties. You’d get lower growth, but that growth would also be taxed at a very low rate given it’s closer to CPI. Negative gearing applies, as does high depreciation. Then in retirement, you can simply live off the income instead of a sell-down strategy with higher CGT.
This comes with its own drawbacks, but it could change the culture of property investing. But if rental yields increase as expected, then it’s probably just going to end up being business as usual – where established properties become affordable to hold as rentals once again.
Demand for new builds could simply push those prices higher, negating much of the benefit. In any case, deep pocketed investors could still afford to accumulate low yield higher growth properties and carry the loss forward to offset future gains.
From July 2028, discretionary trusts will face a 30% minimum tax on their income.
This means income splitting through trusts is severely impacted.
Quick example: Imagine a couple with $1m in shares in a trust earning $40k in dividends they were hoping to live off. Splitting $20k each used to mean zero tax. Now it means $12k in tax. Ouch.
For anyone who owns assets in a trust and wants to live off them later, this is a massive hit. You get a credit for tax paid, but this is ‘non refundable’, unlike franking credits – meaning the minimum 30% applies.
If you’ve got a bucket company, it looks like you don’t even get the tax credit. Which could mean 55-60% tax overall. I’m not sure if that was an oversight, or they’re deliberately trying to kill off bucket companies.
For small and family businesses, the ability to spread income across the family efficiently based on yearly earnings is largely gone.
It looks like you get 3 years to restructure into a company or ‘fixed trust’ – without triggering CGT. But it doesn’t look like you can move assets into personal names without CGT.
Definitely get advice in this area if this affects you – there are big numbers at play here. And you probably want to do it soon (I imagine planners and accountants are going to be extremely busy!).
OK so let’s zoom out for a moment. What does all this mean for how you invest?
To be clear, I am NOT saying you should change anything. These new tax rules aren’t even in place yet (and they may be watered down, scrapped altogether, or reversed by a new government).
A few thoughts on strategy in no particular order…
1- High growth strategies become less appealing. If you were planning to sell down high-growth assets in retirement (say US/global shares or residential property), you lose access to the 0% and 15% brackets for capital gains.
2- Dividends become more attractive to live off. Lower brackets still apply, plus you get franking credits on Aussie shares. If you do sell, the lower growth rate of those assets will be closer to CPI meaning less tax.
3- Semi-FI looks more efficient if you have growth assets. If you’re earning $45k+ from part-time work, you’re in the 30% bracket, so harvesting capital gains won’t come at a penalty (up to $135k).
4- Living off rent is unaffected. So higher yield residential, commercial property, peer-to-peer lending or other income-focused investments could work well.
5- PPOR is now more attractive. A few ways people could play that:
— Maximise home value > downsize tax-free later
— Maximise home value > keep it > get the pension
— Maximise home value > surplus cashflow into super + debt recycle into shares
6- You could buy a PPOR, move out, and turn it into an IP, keeping the 6-year CGT exemption. No gearing benefit unless new, but could save a lot on capital gains.
7- Super becomes more appealing. Which is exactly why we should probably expect it to get targeted again (unrealised gains tax, anyone?).
8- Company structures look better. Flat 30% tax means at least you know your maximum. Investment bonds now look better too in some cases.
9- All this is going to be a nightmare to calculate. Imagine all your share purchases and DRPs over the years, some indexed, some discount method. Might have to buy a stake in an accounting firm!
Short answer: potentially yes, but it depends on your strategy.
If you were planning to just accumulate shares and live off the dividends or a paid off rental property, then no.
If your goal was heavily focused on a tax optimised approach of high growth shares (or leveraged property) and selling these to live off later when in low tax brackets, then yes.
In a few rough scenarios I’ve done/seen, you’re likely looking at potentially an extra year or two of work (depending on several factors).
Here’s what it looks like in practice…
Say you’ve got a $1m portfolio which pays $20k in dividends.
You also sell $20k of shares to create $40k per year total to spend.
Assume your shares are sold for 100% profit ($10k cost base, $10k capital gain).
Under the old system:
— $10,000 gain, 50% discount = $5,000 taxable. This will go in the 14% bracket = $700 tax
Under the new system (10 years in, after inflation indexing):
— Real gain shrinks to about $6,650 after indexation. 30% minimum tax = around $2,000
So you’re roughly $1,300 worse off each year. Double it for a couple with $2m.
If your dividends are less and you’re selling more (or gains are higher), the outcome is worse. The reverse is also true.
See below. Plus here’s a link to a calculator that Hayden from Pearler made to play around with:
The effect is that you may need a slightly bigger portfolio to compensate, or a strategy less reliant on selling down. I don’t want to speak concretely because the actual impact depends on your asset mix, dividend level, capital gains embedded, and whether you have any other income.
Where it hurts more is when you’re following a two phase strategy…
Selling down large chunks outside super, before getting to 60 to tap into your super savings. That’s when the extra tax ends up being $5,000 or more.
Definitely play around with the calculator to get a feel for the changes because it varies a lot. There are cases where selling off assets that have had lower growth actually saves you tax. So it’s not always worse.
For those of you who’ve accumulated up until now, your existing gains will be taxed under the discount model. Your new gains from 2027 will be taxed under the indexation model with the 30% floor.
I believe it could also impact ETF investors with a tax bracket under 30% even if they aren’t selling. Why? Well, when there is turnover inside the fund – which happens even for funds like VAS – capital gains are passed through as distributions. The new indexation method and 30% tax floor will apply to those.
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The FIRE community is almost the perfect target for these changes.
You’re building self sufficiency, and many of you are semi-wealthy, but not what most could consider rich.
Despite the rhetoric, the mega wealthy will be largely unaffected. For multiple reasons:
— They often invest through corporate entities
— They’re mostly already paying 30% due to wealth/income level
— They’re typically not buying negatively geared rentals in their personal name
— They can easily just borrow against their assets and never sell (private banking)
The poor are also unaffected. They own little assets, and likely never will (regardless of tax policy), so nothing changes for them.
It’s middle class investors and aspirational young people that this impacts most. People building shares as a house deposit. People starting or building businesses. And people investing to become financially independent so they are self-funded for 30-50 years.
When I zoom out, I’m left thinking it’s just a tax grab because of the following:
— It applies to all assets, not just housing
— Trusts are also targeted (nothing to do with housing)
— Minimum tax rate on CG rather than personal brackets
— It’s grandfathered, which doesn’t help anyone trying to get in now
— No real tax cut or correction for bracket creep (or increase in tax-free threshold)
— Most appealing assets are higher growth which are taxed higher under indexation vs discount
“This is to reduce reliance on personal income tax and help shift the burden away from workers”
Then why do the budget papers state that personal income tax will actually increase as a percentage of government revenue over the forward estimates? Average tax rates paid by workers will actually go up – on an individual level and a system-wide level.
There are more questions than answers right now. It’s not clear what’s going to play out, so acting on anything now is premature.
We’ve just recorded a podcast on this topic (Spotify, Apple), fleshing out what’s in this article, with another one coming out this weekend unpacking more details and ideas around possible strategy tweaks etc.
Here’s some initial thoughts…
On property:
If your goal is to eventually own a PPOR, it might be easier to save cash and buy rather than investing first. This basically increases the return needed to justify the risk due to the higher tax when selling. Buying a bigger PPOR than you need and downsizing later is more appealing than it was (though having a big personal mortgage would annoy me).
If you want to invest in property, higher yield assets look a bit better. You won’t need to exit to reinvest later as you typically would with low yield property, plus you get the tax benefits (if new). There’s also a borrowing power benefit if buying new, since tax benefits are built into servicing calculators.
Be careful though. New property is often in high supply areas which don’t perform well, and you could easily end up paying a premium for sub-par assets.
On shares:
Having a more balanced portfolio of income and growth (Aussie and global) will be more efficient for living off later. Ideally you want a strategy that is diversified yet isn’t heavily reliant on selling down and high capital growth.
Between dividends, franking, and a little bit of harvesting, you should still be able to eke out a decent amount of cashflow without too much tax.
Debt recycling still works. Maybe you take equity from your home to invest in shares rather than use as a deposit on another property.
Nah. As mentioned, I’m basically unaffected by all this.
My share portfolio is already somewhat balanced and not reliant on selling. It still leans more towards income than most people (currently 60/40 Aus/Global.
On the property side, we’re still selling our final rental in the next 12 months if the market is still decent (Perth). Even if it falls into the 2027-28 tax year, it will make basically no difference.
If I was starting fresh today, I’d do much the same thing with a mix of Aussie and global shares. I’ve said before I’d consider one property – that would more likely be a cash-cow type property under the new rules (not necessarily new). Because holding a leveraged ‘growth’ property, selling it later when leaving work and reinvesting into shares is now fairly inefficient.
A few broader observations I feel are worth making.
When you tax investments more, you discourage people from investing – which is the exact opposite of what you should want your population to do (become less reliant on the government).
There are tax incentives to save and invest for retirement via super, where the government realises it’s better if people self sufficient. But when you do that outside super, you must be a rich grifter looking for loopholes 😂
You want to encourage business formation and attract capital and job creators. Ideas, capital and talent can easily just go where their efforts are best rewarded. Higher taxes in this area makes us less competitive and does the opposite (which then means future jobs and taxes foregone).
I’m of the unpopular view that business and investing should be taxed less than wages. Because you WANT people to take risk, invest, and become increasingly self sufficient, funding their own retirement.
These people are large net payers of tax over their lifetimes, whereas a large percentage of the populace (60%+) are net takers. They receive more from the government than they pay in tax over their lives. Even with a lower tax rate paid by investors and wealthy people, the dollar amounts are far higher.
Some of these people will then just say “Fuck it, I’ll take my money overseas. Or maybe I’ll just spend this from 50-65 and then chill on the pension for the next 30 years.” Long term, that’s worse for everyone.
Aussies need to decide if this is the direction we want to continue heading in. Ever-expanding government, more taxes, less personal responsibility, and a population leaning more and more on the state.
Side note: government spending (and tax) was less than 10% of the economy 100 years ago. Now it’s 40%.
We seem to have developed a desire for governments to ‘help’ in almost every area of society, and in our personal lives. And that means they’ll need to raise more and more taxes to do so.
To counteract what I just said, there are also people being too dramatic about this.
Speaking like it’s the end of the world, and how they’re going to immediately pivot to something else. But I don’t think they’ve thought it all the way through.
Every strategy is at risk of being affected at some point. Here are some other tax/policy risks worth keeping in mind that could change:
— Super access age / pension age
— Super tax rate increases (again)
— Negative gearing on shares / debt recycling
— Franking credits, especially refunds
— Inheritance tax
— Unrealised capital gains in super (or outside super)
— PPOR value limit for pension eligibility
— Indexation removed for capital gains (if it passes)
— Minimum taxes for dividends, rent and ‘non labour’ income
— PPOR CGT exemption removed (the final boss)
I’m sure they’ve sat around and whiteboarded almost all these ideas. Odds are a couple get serious consideration in the next decade (they have already). It just seems like a big cookie jar and the government can’t resist reaching their hand in.
The idea of pivoting and magically bulletproofing yourself sounds great in theory, but is unlikely to work in practice. If the government wants more money – which they clearly do – they’ll just look for the next best thing to tax.
You’re going to be playing an ongoing game of cat and mouse, as long as the populace is happy moving towards a high tax society (which is inevitable if we keep demanding more and more from the government).
Let’s round this off with a few things to remember.
— Don’t build your portfolio around one specific tax rule. Franking, negative gearing, CGT discounts, etc – anything can change.
— Expect more tax increases for anyone with assets. The trend is clear. Plan accordingly.
— Diversification still makes sense, and so does having cushion built into your plans to account for future unknowns
If you’re an investor or business owner, you might feel frustrated. But building wealth is still the best path to the life you want, and the only way to be truly independent.
So that’s the budget! Some pretty big changes, which may or may not come into effect – and may be reversed by future governments.
It’s worth spending some time seeing how this will impact your plans, and how you might tweak things to lessen the future impact.
But whatever you do, don’t panic or abandon your plans. The recipe for financial independence is still the same.
The math still works. The principles still work. The path is just a little less optimised than before.
Stay committed, stay invested, and keep growing – not just your wealth, but the life you’re working towards.
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Great article Dave! Thanks for taking the time to provide several viewpoints and considerations. We can cross our fingers hoping that maybe some exemptions come into play for shares CGT like a “tax-free threshold” perhaps. Here’s to hoping but in any case, I’ll still be compounding. 🙂
Thanks! Yeah let’s see how it unfolds. It’s all pretty unpredictable at this stage. That’s the way – eyes on the prize 😉
To live in Australia now, you are legally required to pay a minimum of 30% tax. If you earn under $45,000 you cannot survive in this high cost environment. Anything above $45,000 you are taxed above 30%.
If you want to set up any structures, Trusts or Companies, you will be hit with a minimum of 30%.
Starting a business? years of overtime and sacrifice with no pay and when you do make it, the government takes 47%. No one will ever want to do business again in Australia.
The funny thing is, the government claimed this is to help young people when it is IMO doing the opposite, it is taking away their ability to compound and save for a future.
Subsidizing new builds will end UGLY in my view, there will be dodgy builders building ASAP, as cheap as possible and sell these to owner occupiers or investors. Which will be a nightmare for whoever purchasing as the building will fall apart within a decade.
If labor is reelected, which is likely given the stupidity of people in this country, Australia will be on a path of no return.
It does look like an overall aim to have minimum taxes apply to all asset based earnings/growth, with these measures and previous attempts (unrealised gains).
Anything people do to optimise is basically going to be targeted in future as the next honeypot to tax.
You make a good point on building – often when there’s a rush into something it leads to cowboys trying to make a quick buck off it.
The sky is falling!! Ha SMA is this the guy you were saying was being over dramatic?
Most of the time, the people I see who are most passionate about this topic tend to be looking at the larger context, and it’s more directional frustration around Australia’s focus (raising more tax, rather than productivity and competitiveness).
Great overview! Now it’s a game of wait and see, I hope the legislation doesn’t go through. Will keep investing and stay the course as they say don’t let the tax tail wag the investing dog.
Totally agree – glad you enjoyed the read.
I’ve seen a few people suggest switching focus to income-producing shares during the accumulation phase. But while I’m still working, the dividends will just get chewed up in my marginal tax rate. There must be a tipping point where it is better to go hard on high-growth shares now and take the tax hit selling them out and buying up Austrlian shares when I leave work/full-time work?
Franking credits will cover a lot of the tax, but yeah I’m not sure it makes sense to switch focus based on this.
You’d need to do a bunch of modelling using the calculator I mentioned and maybe a spreadsheet alongside. I would prob just build the growth allocation first then start adding the income shares later on if the rules are the same – then at the end either pivot a bit towards income or keep a blend of both. It also depends on your expected returns for both.
As a high income earner, my strategy is to debt recycle as much as possibly during the accumulation phase. But also am not pivoting to Aussie only shares, still doing growth as well.
Great article Dave, could you please elaborate though on how these changes won’t effect you…
I understand this might be the case for you right now, but wouldn’t there be a time in future when you need (or decide to) to sell down some international shares and therefore face a higher CGT implication?
Are you at all inclined to slightly pivot towards VAS for future shares purchases, or are you going to stick with your current 60/40 split? Thanks
Pretty unlikely. I’ll have enough dividends that I won’t need to sell. I don’t really see why I would need to. If I wanted to reallocate my investments I would just try to do it with new money, or via super if possible. There are definitely cases where I could be impacted, but those don’t seem likely or are workaroundable.
For future investments, I won’t be changing anything just continuing to head towards a 50/50 split as per the plan over the last 5 years or so. If I was reliant on selling down, then yes I would definitely consider going heavier on income focused investments – whether VAS or other things. But I also think it makes sense to just wait and see what happens first.
Dave, ETF’s like VAS are structured as trusts. If you look at your tax statement each year you will see that your income includes capital gains each year (your share of any gains made each year internally by VAS). So even if you don’t sell the shares, each year you will have capital gains in your tax return that will be subject to the 30% minimum tax, and anyone in that situation earning less than $45k will then be paying more tax each year.
So if that fits your scenario now it later, you will be impacted.
That presents a a difference to holding direct shares which won’t have that problem. ETF’s are great, but they will be a disadvantage under these rules for investors in retirement or low income stage.
I just did a search and it said “Yes, ETFs like VAS are legally structured as trusts, but the 2026 Federal Budget’s widely-publicised trust changes target discretionary (family) trusts, not the public managed investment trusts (AMITs) used by ETFs”. Can someone confirm this?
Lucas is more talking specifically about the capital gains paid out as part of the fund’s distributions. Not the changes to trust taxes. ETFs are not impacted by trust changes from what has been stated thus far.
That is what I was wondering too – this is from the ATO fact sheet:
“ The minimum tax will not apply to other types of trusts such as fixed and widely held trusts, complying superannuation funds, special disability trusts, deceased estates and charitable trusts.”
I reckon this may well exclude public etfs and managed funds? Perhaps Dave you could comment on that point please thanks Keith
I think that’s correct Keith. But I would take that to mean there is no blanket 30% tax on all trust income say from ETFs. That does not mean there won’t still be a 30% tax on any capital gains received from a trust, including when those gains are paid out as part of distributions (since that will fall under the CGT rule rather than the trust rule). Could be wrong, but we’ll see.
An extra thought – if it applies to the trust, the 30% tax on cgt is actually to be paid by the trustee, which would be prior to any distribution.
So if an MIT trust is exempt – then maybe this won’t impact the internal cgt that etfs and managed funds spin off. This leaves only the cgt from an individual selling mf units or etf shares, which would be caught.
If this is it then i am feeling much better, as like Dave my goal is not to sell units/shares myself.
Or maybe if it is exempt from being taxed by the trustee – the cg all then just falls to the individual and gets taxed at 30% at the end. So perhaps not so happy after all.
I don’t think that’s actually true – or at least it’s not clear at this stage. On your tax return, managed fund/ETF distributions are filled out in a totally separately section from ‘capital gains from property or shares’. Depending on the turnover inside the fund, CGT is applied, or it passes straight through as a distribution. So I would guess those payments (including gains paid out) will continue to be processed as income for the individual, not capital gains.
If you have a look at the VAS annual tax statement (now called AMIT statement), it says where to put the amounts in your tax return. Part of the income goes into your tax return as trust income, part of foreign income and part of the amount goes in as capital gains. So if you hold VAS ETF every year even if not sold you will have an amount go into your tax return as a capital gains amount.
The budget announcement is that all capital gains earned by individual (except pensioners will be subject to a minimum 30% tax. The ETF itself will not be subject to a 30% tax, the individual over of the ETF will be.
Have a look at your last tax return if it’s not clear, you will see in your tax return a capital gains amount if you owned the VAS ETF
Wow, you’re right, I misunderstood how the realised gains are taxed at the individual level. Thanks for the correction!
Hi Dave
What an accounting nightmare for the likes of sharesight
Their systems will have to be upgraded to pre and post 2027 for calculation of cgt
Wont be as simple as before
Yeah it’s gonna give them a lot of work, making a hybrid tax calculator for the before/after 2027 changes.
Does that mean then when you rebalance at the end of the year as per the amit the valuation will be reduced due to the tax changes?
Very good article – found myself agreeing with just about all your observations.
While the sky isn’t falling, I do find it all a bit depressing.
Can’t help but feel we’re being incentivised not to a) work hard for our own benefit, b) be self sufficient and c) save and invest for the future.
That said I’d have been ok with the changes if there was at least some roughly equivalent tax decrease for… Someone? … Anyone? But as you say I guess I’ll have to wait for my highly generous $250pa.
Yeah it’s a bit challenging to see the continued tax increases on investments without those tax savings leading to greatly improved tax brackets. Especially since it’s all supposed to ‘balance the tax system’…
Thanks Dave, great article as always! Given your point that governments can and do change tax settings over time, how do you think long-term investors should balance adapting to proposed policy changes versus staying committed to a durable strategy? For example, if investors restructure heavily around today’s CGT or negative gearing rules, isn’t there a risk they end up overreacting to policies that may later be softened, reversed, or replaced by a future government?
Yes 100%, there is that risk, which is why I said I don’t think it’s wise to make large changes. If the changes came through and I was a growth heavy investor, I’d likely just start allocating a bit more to income heavier investments if I was looking to retire in the following 5-10 years. It’s going to depend a lot on timeframe, risk appetite, strategy (semi FI vs full retire) and investing preferences.
Does investing through LICs aka the Thornhill method become even more appealing for the buy and hold strategy to harvest the flow of dividends through a company structure?
Good question. It does potentially, more so due to the income nature of the strategy for retirement. But keep in mind LICs pay 30% tax themselves and any money not paid out stays inside the LIC which has been taxed at 30%. So I wouldn’t say it’s necessarily better than a naturally income heavy Aussie index fund (although LICs may have a slightly higher gross yield)
Edit: Lucas has just highlighted that ETFs will be at a disadvantage under the new system if any capital gains are distributed. A smaller issue for low turnover funds like VAS for example, but still an impact for sure.
Good article Dave. Hopefully some of this noise gets heard and they lighten up on share investors. I have holdings in VDAL. Don’t particularly want to add more Aus other than what’s inside VDAL as it already has a fairly large position just to accumulate more dividends. Agreed that anything could happen in the future. Going to be interesting watching this play out.
Thanks Shaun. Yep best to wait and see how it all plays out first I think
Hi Shaun,
VDAL is pretty new, but most similar to DHHF which returned 7.84% p.a on capital over the last 5 years. Using Haydens calculator you pay slightly less tax with the new rules – assuming you have income over $45k that is.
I understand VDAL is more AUD heavy (both under ASX and hedging) than DHHF so if anything it should work better under the new rules.
A shortsighted poorly thought out budget. Simple facts apparent:
1. Government massive tax grab due to ongoing wasteful inefficient spending
2. I only see the two main proposals which are genuinely helpful are an adjustment of NDIS (spiralling costs) and attempted rejig of the distortion of property investing.
3. Virtually all other proposals are a kick in the groin to the working middle class. Capital gains tax changes plus reversal of trust tax rules will have immense unintended consequences and won’t be able to be addressed so quickly within 2 years (less due to nobody able to implement changes before legislation confirmed). People have played by the rules, structures implemented and retirement plans made all in good faith. The changing goal posts is put simply very unfair to everyone.
4. This government hasn’t accounted for the vast risks undertaken by small businesses which should have some form of incentives, otherwise it kills innovation and aspiration.
Great article Dave, I’m one of the many who’d messaged you. I agree on almost all points, but am willing to give more benefit of the doubt to the gov for now.
I do think changes were needed to property, and shares/ETFs were collateral damage with the 30% rule. I suspect they are out of touch with how important these are to a lot of young people, and hope for changes before legislation is finalised.
That said if the rule stands, I’m now incentivised for the first time to buy a PPOR, where before I was a happy renter. Sounds like the wrong incentive to me. Or else if I want to take some low-income years before accessing super, I could be better going overseas.
Quite a few people will be incentivised now to load up on their PPOR rather than invest. Especially if they’re anywhere near retirement. I guess we’ll see how it all plays out.
Hi dave
These proposed cgt changes will also affect anybody who has a property over 5 acres ie lifestyle blocks ,
It could affect the property market in this sector also??
How CGT Applies to SMSF AcreageBecause a super fund cannot claim a “home” exemption, the entire property is subject to Capital Gains Tax upon sale. The tax rate depends strictly on the fund’s life phase:Accumulation Phase (15% Tax Rate): If the fund is still accumulating wealth, any capital gain made on the property sale is taxed at 15%.The 12-Month SMSF Discount (10% Effective Tax Rate): If the SMSF holds the property for more than 12 months, it receives a one-third (33.33%) CGT discount. This lowers the effective tax rate on the capital gain to 10%.Retirement/Pension Phase (0% Tax Rate): If the property is sold while the SMSF is wholly in the retirement phase (paying out a pension to its members), the capital gains are considered Exempt Current Pension Income (ECPI) and are 0% tax-free
“People building shares as a house deposit.”
How will people saving for a deposit be hit? Presumably people saving for a deposit are working – so the 30% CGT floor doesn’t impact. Sure, If they are aggressively investing in US / TECH they would be hit, but if they invest in something more conservative / diversified like DHHF / VDHG / VDGR they will be better off under the changes.
And as a father, I do hope young people have to save less due to lower prices!
The indexation method works out worse than CGT discount for people investing in high growth assets – that’s how they’re affected. DHHF is most definitely high growth, not conservative. VDHG and VDGR are a bit different in that distributions tend to be higher so yes, but quite often people are aiming for high growth to try and compound capital to build their deposit over say a 5-10 year period.
DHHF is more conservative and more diversified that a purely US / Tech portfolio.
DHHF is also historically better under indexation.
By better I mean you would have paid less tax under indexation with DHHF than the 50% discount.
If you look at the historic data, only a dominate US / Tech portfolio benefits universally from the 50% discount historically, whereas portfolios with some Aussie like DHHF or 50:50 VGS/VAS would have be lower tax over most recent periods, or worst case similar in the long run.
You can look at all the scenarios here:
https://www.reddit.com/r/fiaustralia/comments/1tl3smt/backtesting_the_proposed_cgt_discount_method/
Of course it’s more conservative than US tech. But it’s not a ‘conservative’ portfolio when compared to VDGR (which has 30% bonds).
It looks to me using the calculator that under 4% growth indexing is better, at 5% it’s similar, at 6% or higher it’s worse. I would estimate DHHF and high growth/low yield assets in general are more likely to have 6% growth than 4% growth. Plus we’ve had higher inflation in the last 5 years than normal, which will skew the recent data in favour of indexing). For those two reasons, I think it’s fair to assume indexing is likely to result in a worse outcome, but it does depend on assumptions used.
Sure, people could invest in something with lower growth and higher income but that will mean more tax along the way than the old growth-heavy strategy. So there’s no magic solution there either.
Thanks Dave, I see where you are coming from using the calculator. I assume you have you left the period at the default of 10 years? So you are plugging an assumed return for the last 10 yers of inflation? Can you guess which period is the always the worst case for the index method? 🙂
I’m not sure what rates various funds will return, or what is a ‘normal’ inflation, or even what Haydens calculator is doing (with all due respect to Hayden).
I can only talk to what tax would have been paid under each method given historic inflation from the ABS and ETF buy / sell prices over the last 5 / 10 / 15 years, whilst I have run this in a program it is easy to check individual results. Unfortunately, we only have a bit of data for funds like DHHF. In that period DHHF is tax lower under indexation but as you say the inflation is high over the last 5 years.
Either way, I suspect any Aussie portfolio with a strong AU tilt is going to be fine in the long run.
Why wouldn’t they let us roll a house out of a trust into our own names. Bastards !
Even if they did you’d be up for stamp duty cost to transfer it. Tax rollover options to delay capital gains issues don’t mean anything to the state government who would charge stamp duty on transferring it out of the trust. People with a property in a trust where they are on a low income other than the trust income will be burnt by the 30% minimum tax payable by a trust. Picture a self funded retiree couple living off property held under a trust earning $60,000 a year. Currently paying no tax as retirees of pension age can earn around $34k each before they pay tax. Now they will be paying $18,000 a year in tax on that trust income. Crazy outcome, and to get out of it there only option is to setup a fixed trust, move the property to that and pay a pile is stamp duty
In this case if the couple want to continue with property investment they would be possibly upping the rent as much as possible to cushion the tax bill
Well. Labour appear to have kicked ‘one mighty own goal’. At this early stage, the noise (blowback/outrage) only appears to be growing. Your comments column has ‘lit up’, as a testament (no pun intended) I am really upset for the younger generations, whom I feel for; ASPIRATION in my opinion is being crushed. Thanks for your article Dave. which I will forward to my adult children as a ‘means of education’.
Glad you enjoyed the read Glenn 🙂
Dave – thanks again for your no BS budget commentary. While I feel I was less impacted (80-
% portfolio in dividends) and my IPs grandfathered, I have never felt more melancholy on the future prospects of country and what hard work really meant in my 25 years in Australia.
A fair go, aspirations and getting ahead by working hard is what really motivated me and set us apart from others and seeing the fabric of it attacked on grounds of equity is disturbing (especially been played as a fool when i did vote for Labor in the last elections after albo lied through through theirr teeth on no changes to NG or capital gains)
Anyway, I feel the damage is far greater- not a lot incentives on earning but more emphasis on trying to keep what you earn (somehow)
My biggest fears feel like coming home to roost – the intelligent, risk takers, entrepreneurs leaving the country and people forever divided and more dependent on government handouts.
Can’t help but think all the furore is a storm in a teacup. With one exception… selling a business you started and took no wage from for 10 years to try and make it a success, only to cop a massive tax bill at the end seems to be the equal but opposite of the exact thing government is trying to stop. I’m referring to realising a capital gain in a low income tax year that they’re now planning to tax 30% on. That seems contradictory and will hopefully be fixed.
Now that’s said, there’s so much to dissect here, but let’s kick off with some obvious things.
Firstly, it’s foolish to invest in shares to save for a house deposit. Second, income tax reductions will be announced in the lead up to the next election, as they always are. Third, over dramatic is an understatement. The visceral reactions I see appear to be entirely selfish and greedy in nature. If financial success in life is predicated by overly generous tax breaks, you’re a leaner not a lifter and need to remove your head from your backside. Lastly, comparisons of taxation to 100 years ago is folly. Would you also give up the health, education, transport, and welfare (mostly the pension) arrangements we have now? Yes there are inefficiencies that need fixing, but these are relatively minor compared to the incredible society we now enjoy (seemingly without even realising how good it really is).
On a more serious note, your assessment of those who live off their own investments as being lifters is fundamentally incorrect. Especially when, as much mentioned above, you need tax breaks to facilitate this lifestyle. Just because you’ve paid more tax, doesn’t mean you suddenly have the right to tax concessions. It’s a bizarre misconception of the civil society we (mostly) all want to live in.
But on the fundamental side, society needs workers. And it’s not about income tax. It’s productivity and wages. If we want our country to be productive, we need people working. Fewer workers means higher demand for labour, higher wages, and a higher cost for goods and services. This has a spiralling effect and leads to negative outcomes.
You don’t get better outcomes from people not working, unless their time is productively spent outside a traditional job. Whilst these benefits are hard to measure, I can’t imagine too many FIREd people whose non working contributions would outweigh a working person.
Not to say that I’m anti FIRE. If you can manage it, that’s great, and I too aspire to it. But it shouldn’t be predicated on a tax system that is unbalanced and doesn’t serve the national interest. Which I think the current system is.
Even the shadow treasurer Tim Wilson publicly acknowledged a few years ago that things had become unbalanced in favour of capital gains rather than labour. I trust he will support the governments efforts to correct this.
1- If timeframe is short I agree, but if it’s longer, disagree. So it’s personal choice.
2- Income tax reductions, sure, that’s the hope, but for the last couple of years it’s just been an assorted mix of extra taxes.
3- I think much of the pushback is directional as much as it is self interest. There’s self interest on every single side – it’s an undeniable nature of human existence.
4- On tax concessions, I never said they should be a ‘right’ – I’m saying there’s two sides to it, which nobody talks about. Someone who’s self sufficient actually saves the government money (the average retiree costs the govt 600-800k in total) while also being part of the group that pays far more than they get back. I’m pointing out the ignorance of assuming the wealthy and self funded are some burden on society that do nothing but take.
5- Productivity – it’s been strongly argued that our current tax system could be greatly improved for productivity specifically by reducing taxes (for wages and companies). So if this budget was brought as a package for true reform, that would be great, but it was clearly just a bunch of tax increases with no counterbalancing mechanism.
6- How do you measure the value of a human life? It’s contribution to the economy? That’s a disgustingly narrow and slave minded position to hold. It’s telling you said “get better outcomes from people” and not “for people”
7- I would agree the current tax system could and should be a lot better. I’m all for reform if it was actual reform – but this clearly isn’t it. Only like 3 things out of the 100 odd recommendations from the big tax review in 2010 have been implemented, which is pretty sad for all flavours of government.
Todd, the sheer cognitive dissonance in your rant is breathtaking. You cry a river for the founder getting slaughtered by the new 30% CGT floor, then immediately turn around and call the investors who fund those exact businesses ‘selfish leaners.’
How is someone who risks their own post-tax capital to ensure they never draw a single cent of a government pension a ‘leaner’? They are the exact opposite, they are completely removing themselves as a burden on the state. Labor without capital allocation is just digging holes with spoons; productivity needs both, not just warm bodies grinding a 9 to 5 until they’re 70.
You claim you aspire to FIRE, yet you’re bootlicking a punitive tax overhaul explicitly designed to trap you in the labor market forever. Absolute clown logic.
If people don’t like these changes, and they would like marginal income tax rates to be indexed to inflation, they should vote for the opposition at the next election. They have promised to fight these changes, repeal them if they’ve been implemented, and legislate a policy that indexes marginal tax rates to inflation.
I can already hear the objection that you can’t trust them, which might be right, but it’s clear the government’s every Instinct is to tax and spend. You’d be mad to vote for them.
I did see that proposal, I think that’ll get a lot of support. I don’t remember it even being proposed by any govt before this, so it would definitely be a big step in the right direction.
The Fraser government implemented tax bracket indexation in the 1970s, and then delayed indexation a couple of years later before abandoning it entirely. Unfortunately it is great policy but bad politics. The government taking advantage of bracket creep gets to appear generous by handing a little back, whilst the government indexing brackets gets no credit and has to fight harder to find ways to balance the budget.
Negative gearing and existing CGT rules are maintained for superfunds – this is deliberate. The long-term govt (ALP) aim seems to be to shift people away from individually controlled wealth and into superfunds (ideally one of the seven mega industry superfunds – in effect controlled by the union movement).
Governments have to make changes . Why didnt they take these major changes to the last election or to the next and face the voters. At least Howard went to the polls with Gst .
Because they know they will lose badly if they do!
Hi Dave, I have been around a long time. Generally, governments that give with one hand will be replaced by governments that take with the other. Countless examples of this over the journey. This Budget is no exception. I think you have articulated the likely impacts very well. This is not tax reform. Reform involves broadening the tax base so as to lessen the reliance on the personal income tax as a source for government revenue. Hawke & Keating did it in 1985. Howard & Costello did it in 2000. This Budget does neither.
And I think that’s where they’ve lost people and this hasn’t received support like they expected. It’s a whole lot of sweet sounding words that amount to little.
Thanks Dave. Clear and objective.
Cheers James 🙂
Dave I think the solution is using investment bonds for high growth EFTs moving forward. An investment bond is taxed internally at 30%. Once you make your initial investment you can contribute 125% of the original amount moving forward yearly. As this is an insurance product it is not impacted by the budget. One the investment hits the 10-year mark you can simply cash this out tax free. When you did fire and chill with Pat you did an episode on these. Despite the higher fees of this, to me It looks like the tax changes make holding high growth EFTs in this structure viable moving forward.
Yeah potentially. If they work within someone’s situation it can work given the 30% tax. But I’m not sure these changes will even get through let alone stand beyond the next election. So it would be premature to switch to a product which is locking in those taxes now, versus a typical high growth ETF which will delay that tax indefinitely (until sold, or potentially forever).
Folks – these proposed changes are not yet law. If you disagree with them, or think something needs to be tweaked, contact your local member: https://www.aph.gov.au/Senators_and_Members/Contacting_Senators_and_Members
Or better yet, email Jim Chalmers: [email protected]
Whining about it online will achieve nothing.
do you seriously think that Jim Chalmers, or even your local member, bothers to read the 10,000 emails they probably get each week, or care at all about what is written in them ?
Dave, are you across the commentary about how indexation will work in calculating real gains when you look across all your assets collectively in a portfolio, not individually? Chris Brycki has written about it (https://blog.stockspot.com.au/why-the-proposed-cgt-changes-could-favour-etfs-over-direct-shares/). Most notably, if it is going back to the pre-1999 settings then only actual losses can offset gains. The implication is that minimum effective CGT may be considerably higher than 30%.
Example: You invest $100k each in 3 shares and hold them for say 15 years before liquidating the portfolio. Inflation has lifted the cost base of each to $150k. Share A has gone gangbusters, and is now $450k – so a $300k real gain after inflation. Share B has held steady at $100k, so a nominal loss of $50k, but no actual loss. Share C has halved to $50k, so an actual loss of $50k. The actual loss on C offsets $50k of A’s gains, so the total taxable gain across the three shares is $250k.
BUT, the actual portfolio gain is less than that – considering the portfolio as a whole, the total value of the shares is $600k ($450k + $100k + $50k), and the adjusted cost base is $450k (3*150k) – a taxable gain of only $150k.
So, even if you assume the tax rate is “only” 30%, it is charged on the overstated gain of $250k. This is an effective tax rate of 50% on the “real” gain of $150k.
I’ll take a look at that, thank you for sharing Ed
I have unsubscribed from SMA and related podcasts after following SMA, fire and chill and Aussie fire pod for years. I love the lifestyle stuff, but this is simply too political and partisan.
I have already tried to engage a couple of times but just get dismissed, so i am doubtful that Dave or majority of commentators here care, but I can give a few examples:
e.g. 1
[Dave Gow] “Income tax reductions, sure, that’s the hope, but for the last couple of years it’s just been an assorted mix of extra taxes.”
Seriously? The last tax cuts are still filtering through. Some this year and next, but on top of the other massive cuts over the last few years – my cut in 2024: $4,529 pa.
If inflation comes down, there will be a tax cut before the election. Would be crazy to add more tax cuts right now as the RBA would simply raise rates to counteract.
e.g. 2
Saying that indexation being applied to shares is a tax grab. As Chalmers says “a comparison of the average impact of the current arrangement versus that of the new arrangement in the last 20 years, investors in shares would have been equal to or a bit better off with a discount based on indexation compared to the existing policy.”.
So…. a tax grab that raises less money???
The 50% discount on shares raised more tax than the index method would have because Australian shares get penalised under the 50% CGT discount. Perversely, the 50% CGT discount works against the franking credit system.
Yes, people investing in the US lose a sizeable tax discount. Yes, it sucks to have to pay the same tax rate as everyone else, but come on – what benefit exactly does the typical Aussie taxpayer get for subsidising our US investments?
Finally,
Yes the 30% minimum CGT sucks. I may decide to work a bit to soak up the tax-free threshold. What a terrible outcome for Australia.
And yes, the CGT on startups / small businesses may suck – I dare say they will fix this aspect based on the noise.
I’m not sure how you make a budget/tax/policy article non political, so that’s basically an unwinnable battle. We’ve been discussing this already, I’m not dismissing anything – we may just have differing of opinions and things just end up in a circular conversation about what’s reasonable, what the benefits or drawbacks of various ideas are etc.
It could just be me – I see debating as a genuine waste of time as nobody changes their mind. So I think it’s most efficient if everyone just shares their view and then each party goes away to think about it some more, rather than a back and forth – these go nowhere on the internet. Like I’ve said elsewhere in the comments and content, I think a lot of the pushback is more directional than anything.
But if you feel that strongly about it, which you certainly seem to, that’s okay. Hope you got value over the years, genuinely. All the best.
I’m usually an optimistic person and have a sense of hope for this country and then I see people like you matt and I just sigh…..
How is Dave stating facts about the budget political ? do you live in the real world or are you a politician that is going to milk the people dry and go on the pension that is supported by our tax dollars ?
your
Eg 1. Mr Albo promised he will not touch the stage 3 tax cuts proposed by the liberals, yet, he comes into the office and changed it. last year, he promised for the 50th time that he will not make any changes to the tax system, yet, just 9 months later, he changed everything. politics aside, policies aside…Is this the sort of person you are willing to trust ? he has proven time and time again to be a liar.
In 15 years ago, the top marginal tax bracket kicks in at around 180K, today it starts at 190K. so you are paying roughly the same amount of tax on your income. Yet, how much are houses back then ? how much is a loaf of bread, a bottle of milk or a litre of fuel back then ? Use your brain and think MATT….. they are robbing us by inflation…
On top of the high tax we already pay today, everytime we fuel up, there is the fuel levy, everytime you shop, there is 10% GST… every housing transaction has stamp duty and so does all insurance policies…
Do you even live in Australia Mate…..? or are you blind ?
Eg 2.
This again shows your ignorance…. Jim Chalmers also said 5% deposit scheme will have no impact on housing, he also said removal of NG will have $2 a week effect on rent…. Albo also said for the 50th time he will not change the tax system… they also promised to build 1 million houses….
So are you deaf or blind or just plain stupid…. how can you trust anything they say ?
fuck it…. its just a waste of time replying to you
Great article
Very deep analysis
I am on the way to 🔥
The new policy is impacting my thoughts
Thinking of keep less portion of IVV and VEU
Thanks Serena!
I’m on the 45% marginal tax rate. Have been investing 60:40 in VGS:VAS outside of super over the past 6 years in my non-working wife’s name to utilise her tax free threshold now and going forward. Have the same ratios in her and my Super also for equivalent ETFs.
My thinking now is to sell the VGS and buy VAS with the proceeds. The VAS distributions being high ~75%+ dividend which would be tax free (for now) up to $18,200 per year (long way off that) both now and going forward into retirement pre-60 years old. At the same time, plan to change her Super to 100% VGS-equivalent to get the growth and international exposure we would like, but in a more effective tax environment/structure for capital gains.
I think a lot of people will be thinking along the same lines as you Jason, that would certainly be a more efficient approach if the new rules pass as is.
That’s a very good article Dave, yeah. But regarding the point about overseas employment, I feel Australia is no longer really worth it. It may be better to move to another country where achieving financial independence feels more realistic and attainable.
It’s tricky because Australia still has high wages relative to other countries. But if equal earning opportunities can be found elsewhere in lower cost countries, then that can definitely work (like remote jobs for example).
SMSF seem to be the winner
In regards to ETFs being favourable instead of holding multiple direct stocks in a portfolio, what about if you’re holding multiple ETFs where some are going up while others are going down?
I know we don’t know the answer to this, but just food for thought
That’s a good point. You would generally want to not sell the one that’s fallen though, and if anything, trim the one that’s up to buy more of the lower one.
I’ve started buying more Sol Patterson shares good long-term growth and dividends there.
Nice. I do like Soul Patts as an investment company, used to follow it years ago. A friend of mine is heavily invested in it.
Really does feel like a kick in the teeth for us young people, my partner and I (22 & 23) have just bought our first home and are using the rent vesting strategy for the first 12 months (fortunately grandfathered), before we move to share investing with debt recycling.
It really feels like we are being punished for trying to be self sufficient rather than relying on government support in retirement. I am trying to find a silver lining and keep my opinions on the future of the country as positive as possible. But the odds so seem to be ever more difficult to deal with.
In a country that used to give everyone a fair go, I get more and more discouraged as getting ahead gets tougher and tougher.
Yeah I hear you mate. People are just clinging to the hope that all this will have a marginal impact on housing. Though given low rates of building relative to population growth (and the huge increase in building costs), I don’t think much is going to improve. Prices are still expected to grow, just slightly less quickly.
Others are just happy that this hurts people with assets/investments, which still doesn’t benefit them, but satisfies some of the pent up anger in society for a while.
Great post Dave. Well written. You did better than I would remaining calm in the comments.
Fwiw I think the negative gearing changes on existing houses is a great idea, but 30% minimum CGT is wild.
I’ve been really surprised at the ferocity of some in supporting anything the Labor party proposes, especially in the fire community. I attempted to post something in the Aussie firebug FB group comparing total tax rates from income, showing that you need to earn ~$225k a year to have a 30% total tax rate and someone with $10k of CG and no other income will be taxed at the same 30% rate. And it wasn’t approved. A little disheartening.
Keep up the good work.
Thanks Andrew, appreciate the support. It’s certainly been a relatively emotional and spirited debate in the finance community that’s for sure. Which makes boring investing a bit more interesting for a while!
The most recent taxation statistics reveal that just 0.6 per cent of people aged 15-24 earn capital gains and 1.3 per cent of those aged 24-29.
For those who earn up to $150,000 – only 1% of income comes from capital gains
These changes don’t affect this demographic or income bracket as much as some actually think
Those tax stats would be showing how many of those individuals declared a capital gain in a given year, right? It wouldn’t actually be those individuals across a 15 year period or from say age 20-35. Which means it’s not even close to an accurate representation of the lived experience of a young person who may invest and not buy a house until they’re in their 30s.
How many young people sold shares? Obviously very few – they are buying. Various stats show there are well over a million people from 18-35 who are investing (most likely 2-3m). The fact that the govt is parroting the ATO figures and assuming that tells the story is concerning (cynics would say misleading given the logical fallacy I just described of year-by-year vs 15 year window).
People need to think a bit more instead of just swallowing what they are told. In any case, a policy that is supposed to help these people should not detriment them whatsoever, and should be carefully designed as such.
I have thought about it — and over a 15-year horizon most people in that cohort will be in the ~30% tax bracket by the time they actually realise these gains
If savings rate and income matter more than investment returns early on—as is often pointed out here—then wage policy and labour market settings arguably matter a lot more than they’re given credit for. That naturally raises the question of which political approach is more supportive of stronger wage growth over time.
The issue for those people is not the income bracket, but indexation. The investment strategy that is most popular is high growth shares as they goal is to compound their capital. This specifically is taxed more harshly under indexation than the CGT method.
And yes, savings matter more than returns when you’re younger. For that reason, I think most people would be on board with increasing tax on investments to reduce tax on wages. It’s unfortunate that’s not what was proposed.
This article sums up my thoughts exactly. This is all just an elaborate tax grab by the Labour government.
Here is a petition that opposes the new rules. Signatures close on 01/07. https://www.aph.gov.au/e-petitions/petition/EN10049/sign
I implore anyone that feels passionate about these proposed changed to sign this petition and show the government what the people think.