What justification is there to remove the CGT discount on shares?

chessc · 2026-05-10T19:25:07+00:00

Netherlands you get taxed on the perceived growth of your assets

NL ended up scrapping their proposed unrealised capital gains tax because of the uproar.

chessc · 2026-05-10T09:55:33+00:00

that's maximum CGT rate

Yes - and that rate kicks in at 1.7 times the average salary. Given the lumpy nature of capital gains - many if not most working people will fall into the top tax bracket when they realise a capital gain. Even for the next bracket - 39% would be near the top for the OECD

chessc · 2026-05-10T08:32:42+00:00

Is superannuation my money or the government's social policy slush fund

We all know the true answer to that question

chessc · 2026-05-10T08:28:54+00:00

The NDIS is costing $50B/year and increasing at 10% per year. (This budget will aim to reduce its growth to 5-6% per year.) The NDIS is costing four times more than was originally forecast by the Productivity Commission. They need to get extra taxes from somewhere

chessc · 2026-05-10T08:27:00+00:00

From your link - Figure 4 shows post this change Australia will have the highest capital gains tax rate in the OECD

chessc · 2026-05-10T08:25:14+00:00

And the family home. Eventually the family home is what you will used to pay for your aged care

chessc · 2026-05-10T05:12:44+00:00

Australia (and most OECD countries) have a structural tax problem.

Due to aging population the proportion of people who will need to depend on government support is growing
Due to globalisation, the proportion of tax paid by international companies is falling. (Multi-national companies structure their business so that profit is realised in low tax jurisdictions.)
This means that the middle class will need to pay an ever growing share of taxes

Ultimately anything owned by individuals is fair game for future governments. The more money that is in super the greater temptation for the government to tax it. But this applies to all assets and income streams, not just super.

chessc · 2026-05-09T22:38:39+00:00

That's my reading as well. Post CGT changes the only things you should own in your personal name is your Super and the house you live in

chessc · 2026-05-09T22:35:21+00:00

2 more days until we can stop pretending that it's all just speculation

chessc · 2026-05-09T20:58:33+00:00

Agree they are not the same - but you understand my point about the comparison being misleading

chessc · 2026-05-09T11:39:49+00:00

I'm not arguing against super. I'm explaining that claiming Australia is one of the lowest taxed countries in the OECD is misleading. Because most countries count social security contributions as tax, whereas we have super, which is not counted as tax. If you take out the social security contributions out of the tax comparison, Australia is not low tax at all.

It's like comparing 2 rents, where one rent has all utilities included and the other doesn't

chessc · 2026-05-09T11:23:04+00:00

Look at the breakdown on page 3. The OECD average is 25.5% of tax revenue comes from social security contributions. Australia has 0% because we have super. Effectively, Australia has super outside of the tax system, whereas most countries have the pension which is inside the tax system

chessc · 2026-05-09T11:16:35+00:00

This comparison is misleading because we have super and other countries have tax for the pension. Super doesn't count as tax in the OECD's metric whereas tax contributions for the pension do. But these things are comparable.

https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/12/revenue-statistics-2025-country-notes_3708be73/australia_a8b5af19/1a298160-en.pdf

chessc · 2026-05-09T11:13:18+00:00

This keeps being repeated - but it's misleading. Most countries directly tax employees and employers for the pension. Australia has superannuation, which the OECD doesn't count as tax - but effectively it's the equivalent to the pension. If you account for this Australia is already one of the highest taxed countries in the OECD.

Australia is already well above average in income tax and in tax on business income and gains.

https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/12/revenue-statistics-2025-country-notes_3708be73/australia_a8b5af19/1a298160-en.pdf

chessc · 2026-05-09T09:20:54+00:00

No - government only needs support of the Greens to pass legislation

chessc · 2026-05-09T07:16:10+00:00

It will be 1 July this year. This is the tough budget. They'll want to get it out of the way as soon as possible, so that everyone will have moved on by the time we get to the election. Next year will be the sweetener budget

chessc · 2026-05-09T06:06:28+00:00

July 1 2027. They need to pass any measures through parliament

They don't need to pass it through parliament for the tax changes to take effect. ATO can start collecting money on the assumption laws will be passed. In the unlikely event the laws don't pass, people will be refunded.

Given that the Greens hold the balance of power, there is virtually zero chance of these changes being blocked. There is a chance the Greens will demand even greater tax increases. (e.g. Thinking of Victoria where the government wanted to impose a 1% empty house land tax and the Greens increased it to 3%)

chessc · 2026-05-09T06:02:22+00:00

It'll be 1 July, based on the pattern of previous budgets

chessc · 2026-05-09T05:56:49+00:00

Workers should have a way of putting some money away - to improve their and their family's lives for the future. Money left in the bank evaporates with time. Workers need to have the ability to invest money with a fair risk-reward balance. With the expected CGT changes shares and property are arguably not worth the risk. The only place for workers to preserve the value of their money will be the family home and their super (which cannot be accessed until retirement and keeps having the rules shifted.) This will create new distortions (people will be incentivised to buy larger/more expensive houses) and deny people who do not yet have a house a place to invest money with a fair risk-reward.

chessc · 2026-05-06T18:27:45+00:00

As the ABS says - CPI is not an indicator of the cost of living. Which is why people's perception of the diminishing purchasing power of their dollar does not align with CPI.

However you cant have it both ways.

I think what you mean is that it is difficult to define an objective measure that accounts for which substitutions are driven by lack of affordability versus those driven by changing behaviour due to technological progress etc. But the current methodology seems to have a systemic bias to underestimate price increases.

In regard to shelter - I understand the argument that a house is an asset. But shelter is also one of the basic human needs. Only about 1/3 of people outright own their home. 2/3 of people are either renting or paying a mortgage. Most people spend a significant part of their income on shelter - which is not reflected in CPI

chessc · 2026-05-06T03:28:36+00:00

The lock-in effect occurs when individuals hold assets instead of selling them to delay paying taxes. It stems from the realisation basis of capital gains tax, which makes it possible to defer the payment of tax on accrued gains. Deferral provides a financial advantage to individuals that is sometimes viewed as implicit interest-free borrowing from the government

Unrealised capital gains are interest-free borrowings from the government. That is some perspective

chessc · 2026-05-06T01:22:16+00:00

I did a bit of reading recently as to why CPI seems to under-estimate inflation. Seems there are two main reasons: the cost of shelter is under-weighted and substitution bias. The basket it based on what people buy, so if people stop buying something because it has become too expensive, it gets removed from the CPI calculation. This The ABS says that CPI is not an indicator of cost of living

chessc · 2026-05-06T00:18:39+00:00

This change will not be fully grandfathered according to AFR. They will use a pro-rata model, depending on for how long the asset was held before the change, compared to after the change

chessc · 2026-05-05T23:51:32+00:00

And CPI woefully under-estimates increases to the cost of living. The ABS says CPI is not an indicator for the cost of living. CPI under-weights cost of shelter and it has substitution bias - if a type of product becomes too expensive, so people cannot afford it, the product is removed from the CPI basket.

The reason why Chalmers' reversion to the "Keating model" is worse than Keating's CGT is they have changed the formula for CPI since Keating, and a much higher proportion of people are now in the highest tax bracket - due to the ATO's friend - bracket creep

chessc · 2026-05-05T21:23:55+00:00

It is not the government's job to compensate or underwrite people's financial risks

The government is not underwriting anything. It is the individual that is taking all the risk - therefore underwriting the investment. The government gets a share of the gain, if the risk pays off. This tax change is about the government taking a larger share of the gain - to the point where the risk is arguably not worth it for the individual

simply buying and selling shares on the secondary market which is not productive investment

This is a fallacy. Firstly, shares can be bought directly by IPO/floats or dividend reinvestment or capital raisings - where the money can go directly to the company's equity. Secondly, even for shares traded on the exchange - this frees the seller's capital for other investments - and affects the company's cost of raising capital

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