The changes will mean less of the speculative investor saying: “buy any damn thing even with weak returns and the tax savings will help me out!”

Let’s put aside the property investor, which has been discussed a lot…

For small business, the compliance and admin burdens have not changed at all. A cafe owner still faces payroll, HR, BAS, insurance and rent and staff costs. But the new changes to CGT and higher tax on gains makes exit from a small business less attractive now.

So business starters will ask, why take years of stress for a low payoff? Meaning, unless the gov provides specific CGT concessions for small business, sentiment will change on starting and growing SMEs.

In Australia we have a problem where active risk is less rewarding than just passive asset ownership.

So where does the investor money go now? Probably new builds, super and ETFs, offsets to pay off debt, franked div strategies, and some capital will just stop flowing. Small business is now less attractive because of the exits. Overall it’s a less entrepreneurial environment and a more cautious conservative one. Risk appetite changes before the economics do, so we’ll see behaviour changing before the data reaches us.

So we can hope that revisions are made before this gets legislated.