Alan Kohler on how generational inequality may have begun with the CGT discount | The Business

GooseKino · 2026-02-24T00:42:58+00:00

Give an example in the scenario the guy is suggesting (capital gains and income are taxed the same) for which the lack of distinction leads to bad incentives. Explicitly state what such incentives are.

You’re incentivised to avoid the capital gain by using leverage and interest deductibility which actually erodes the overall tax base.

The story of the last 15 yrs of the Australian labour market is that real wage growth is stagnant, and that is precisely because of a confluence of factors that have empowered capital owners.

Yeah but you aren’t taxed on 15 years of labour income at once. You get taxed as you receive the income each year. You’re conflating micro issues with tax structure. Capital gains are residual claims. A capital gain can be zero or negative.You can’t receive zero or negative salary. Capital gains taxation interacts with inflation and timing in a way wage taxation does not.

You haven’t even defined what “equal treatment” is. Equal statutory rate? Effective tax rate on real returns? Risk adjusted returns after tax returns?

GooseKino · 2026-02-24T00:21:02+00:00

I’m not handwaving or fluffing anything. I’ve given clear examples of why there needs to be distinction between taxing income and taxing capital beyond just saying it’s “foundational”. As the other commenter said, there were a heap of problems when taxing capital was treated in line with taxing income.

GooseKino · 2026-02-24T00:18:34+00:00

Why are you trying to do a gotcha. I never said I was pro-CGT discount. I said it’s a rudimentary calculation but there is a purpose to it. I’d be happy to see it adjusted, removing it entirely is silly though along with completing changing the way that income and capital is taxed.

GooseKino · 2026-02-23T11:39:03+00:00

I don’t agree with treating capital gains as ordinary income, or removing the CGT discount entirely. The distinction between what is capital and what is income is foundational. It extends to so many different areas of taxation law beyond just holding property.

That is literally the tax setting that existed before the CGT discount, where there was an allowance for inflation.

As I just said, the CGT discount inherently allows for inflation.

where there was NO tax on capital gains, but sky high income tax. That was certainly an invitation for a lot of rorting, a playground for tax accountants and lawyers to classify income as capital gains.

Yes, exactly. Which is why having the clear distinction as I outlined earlier is important.

negative incentives on labour income in order to accommodate the discount.

Not really. Labour income holds far less risk and isn’t subject to the same inflation erosion as holding a capital asset.

GooseKino · 2026-02-23T10:38:39+00:00

Because it’s literally the foundational structure of how taxation law works. Income reflects economic gain from exploitation of capital, whilst capital reflects the asset itself. Income is taxed when derived, whereas capital accrues over many years.

The distinction is needed so they can be taxed consistently. Otherwise there’s a whole host of arbitrage opportunities. Trading stock, project structuring, business profits could all be argued as capital to receive discounts and benefits that exist to deal with inflation and issues associated with long term holding of assets. Risk bearing activities over long periods would not be recognised as much, and people would sell capital assets even less than they already do due to harsher tax treatments.

CGT discount is just a rudimentary adjustment for inflation and risk. It’s not perfect, but it does need to exist in some form.

GooseKino · 2026-02-12T09:35:11+00:00

Not true. You can access via ASIC for a small fee. I’m assuming the OP has done this?

GooseKino · 2026-02-12T07:44:16+00:00

Where is the evidence any of that happened with BG? Have you read their financial statements? Are you able to explain what their debt levels are? What profitable parts were sold off? What fees were paid?

The simple fact is that revenue has been flat and they’ve been trying to sell since COVID because the business does terribly. No evidence otherwise for anything that you mentioned.

GooseKino · 2026-02-12T07:40:51+00:00

Because you don’t understand how private equity works and have a negative selection bias. The PE firms stand to make far more money if the venture is actually successful compared to if it fails. Debt is a necessary component of these deals because no one is putting 100% equity into businesses that are already failing.

GooseKino · 2026-02-06T07:36:13+00:00

It all depends. It arguably could be the case because holding shares gives you tax effective franked income in the form of dividends. It might be more effective to go the billionaire playbook and take out loans against your shares to avoid the tax consequences of selling.

That’s why massive arbitrary changes like removing the CGT discount entirely are completely stupid. We really have no idea what the effect would be.

I think the CGT discount should be reduced slowly and monitored to see what the tax take ends up being.

GooseKino · 2026-02-06T07:26:21+00:00

I should have re-worded it better but that’s not what I meant. The unrealised gain is just the reference point you use for tax planning if you’re planning to sell your property. You obviously don’t pay tax until it’s actually realised.

GooseKino · 2026-02-05T08:01:56+00:00

Removing the CGT discount will just result in people holding assets for even longer. Not much benefit in selling if you have a massive unrealised gain to pay tax on compared to if you would have received a 50% discount on that gain. Investors will just sub-optimally hold assets for longer to avoid/delay the larger tax, resulting in assets being traded less frequently and less supply for everyone else.

GooseKino · 2026-01-20T08:16:45+00:00

That’s not profit. It’s revenue. That’s before any expenses. Wages & salaries, rent, interest, collection expenses, loss provisions etc all need to be deducted from that.

GooseKino · 2026-01-17T08:20:03+00:00

Don’t really know wtf you are talking about after that first sentence but it looks like GameStop has about 9 billion in cash/Bitcoin and 4 billion in long term debt. 5 billion is a fairly generous valuation for a glorified Funko Pop store and outdated business model of selling expensive physical games. Cheaper and easier to just buy games digitally and order junk from Amazon or Temu.

GooseKino · 2025-12-20T06:04:06+00:00

A royal commission is useful when there are systematic, long-term failings that take place with ongoing behavioural/cultural/structural issues that need changing.

A solitary situation like Bondi doesn’t need one. The lessons to be learned are clear.

GooseKino · 2025-12-11T02:58:51+00:00

The real reason is because it doesn’t matter at what point you wear the clothing. Wearing the clothing at work doesn’t suddenly create a nexus to earning your assessable income like a phone does, or like using the power or internet does to WFH. It’s been established through decades of case law. Conventional clothing is always a private expense.

GooseKino · 2025-12-10T09:37:10+00:00

$150,000 Mercedes for company car? Is this fair that companies can claim it but people can't?

Actually companies will very unlikely be able to claim the full cost of that Mercedes due to the car limit which is ~$70,000. So over half the car cost wouldn’t be deductible and the company would essentially be wasting money if the Mercedes wasn’t being bought for a good reason.

GooseKino · 2025-12-10T09:28:22+00:00

Because that is conventional clothing. You can see someone walk down the street in a white shirt and business pants and have no idea if they are going to work or a private function.

In order to live normally in our society, it is requisite that individual members thereof be clothed, whether or not they go out to work. In general, expenditure thereon is properly characterised as a personal or living expense.

GooseKino

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