This week on Money and Investing, Mitch Olarenshaw and I break down the latest Australian federal budget — cutting through the noise to highlight what actually matters for investors, property owners, and everyday Australians.
1. Negative Gearing Changes
Negative gearing stays intact for existing properties but is being removed for new builds. The hosts warn this could backfire: landlords may hike rents to offset lost tax benefits, and developers face greater risk in an already constrained construction market — ultimately slowing housing supply rather than improving affordability for first home buyers.
2. Capital Gains Tax Overhaul
The long-standing 50% CGT discount for assets held over 12 months is gone, replaced by an inflation-linked model. Beyond property, this hits stock market investors and startup founders hard. With no CGT relief, entrepreneurs may choose to build their businesses in more tax-friendly jurisdictions — risking a serious brain drain from Australia’s innovation sector.
3. Trust Distribution & the “Death Tax”
Changes to discretionary trust distributions now impose a flat 30% tax where families previously could distribute income to lower-earning members. This affects not just high-net-worth families but working professionals — such as medical specialists — who use trusts for legitimate asset protection.
4. Bracket Creep — The Overlooked Problem
As wages rise with inflation, more Australians are pushed into higher tax brackets without any real increase in purchasing power. The hosts call out the budget’s failure to index tax thresholds to inflation — a move that quietly increases the government’s tax take at the expense of middle-income earners.
5. The RBA vs. Government Disconnect
Perhaps the most alarming takeaway: the fractured relationship between the Reserve Bank and Treasury. With the RBA needing to raise rates to curb inflation while government spending continues to fuel it, the hosts argue this policy misalignment poses a serious risk to economic stability — and is unlike anything they’ve seen in their careers.
6. Action Steps for Investors
With CGT changes making capital gains strategies less attractive, income-focused approaches — such as cash-flow-driven investments taxed at income rates rather than capital gains — now hold a structural advantage. The hosts recommend letting the dust settle before restructuring, but stress the importance of getting professional advice to adapt to the new landscape.
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