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Australia is two weeks removed from Jim Chalmers and Labor dropping their huge new Budget, and there’s been a lot of reactions — good and bad — since then. The update’s headliners included everything from negative gearing for built properties, the 50% capital gains tax, and a $1K tax deduction.
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But, the biggest change has “easily been the capital gains changes,” HotCopper editor Isaac McIntyre pointed out. What it all boils down to, he explained, is that “more high-growth assets [will equal a] bigger tax bill” for investors.
“It’s clearly something Canberra has decided it wants, despite promising there wouldn’t be changes to CGT and negative gearing,” Jonathon Davidson, the other HotCopper Wire podcasting host, added on the topic.
The whole thing has absolutely “pissed a lot of people off,” the pair agreed — but figuring out why, exactly, takes a little more diving into the weeds.
“To be frank, I support the negative gearing on properties part,” Davidson said. “Housing is obviously a generational issue in Australia; I’m a millennial, so there’s my bias.”
But, McIntyre explained, the changes go well beyond just the property sphere (which he agreed needed to be updated) and hit stocks — especially smallcap companies that HotCopper users love to play around with.
“I don’t understand why they’re meddling in the share market,” JD said.
“It’s not really how Australia’s rich get rich; we don’t have an overpowered elite share market class, that’s kind of the ASX’s big problem. We’re a property country, and we need to make sure everyone can participate.
“For the share market, we’re already fairly second-rate. We’ve been losing more companies than adding lately. ASIC recently pointed out we need a robust market, we want to be investable, and while we might have the world’s biggest miner and the world’s most expensive bank, we need more.
“Where are my gains?” he joked. “The only people who win from this… are accountants; the indexation element seems needlessly complex.”
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Disclaimer, as spoken by Isaac McIntyre in the HotCopper Wire episode: Any information or advice in this HotCopper podcast recording is intended for education and entertainment purposes. Any advice is general in nature and does not take into consideration your objectives, financial situation or needs. Before acting on general advice, you should consider whether it is relevant to your needs and read the relevant Product Disclosure Statement. And if you are unsure, please speak to a financial professional.
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