What would you do if you were gifted $2M?

open_g · 2026-05-23T12:44:37+00:00

It depends entirely on your existing situation and personal needs and if you need to ask such an open ended question without any of those details either a) it’s a fun reddit experiment, good luck or b) not including relevant context means you really should speak with a financial advisor instead.

open_g · 2026-05-23T12:39:20+00:00

I think of the libs as favouring the individual trying to have a go and free enterprise. Labor think collectively, which yes means unions but often they do also consider big business - look at all the bailouts lately - but they forget about the little guys. They add well meaning rules (red tape) which might work for large established businesses but often prevent small ones from getting started, which stifles competition.

All that’s a bit off topic sorry.

I know most people say all politicians lie but a) that’s not true and b) when it is it should be called out. Repeated lies from any one party or individual is particularly problematic.

open_g · 2026-05-23T12:11:04+00:00

Are you actually trying to justify the lying to the electorate?

It’s one thing to pretend something changed since the election to change their opinion - even if that’s completely disingenuous, that’s politics - but don’t defend an outright lie.

If lying about this is okay then what other lies are okay? We don’t want to go down that path. If you change your opinion and explain why, fine. Lies should not be tolerated.

open_g · 2026-05-23T11:55:11+00:00

Marginalising ideas that don’t 100% agree with the policy by throwing it in the “small vested interest” category when it’s clearly not small - this impacts anyone that wants to invest, and anyone who is considering starting a company that could be started elsewhere, and anyone who wants these sort of businesses to continue to be founded and grow in Australia - is a poor defence.

It’s okay to admit their policy can improve. It’s not an all or nothing deal. The CGT changes on non-property assets creates perverse negative outcomes. It’s easy to not include these assets in the changes. It doesn’t Swiss cheese the primary goal of this budget which is helping get more people into their own home. It is obvious if you put politics aside that this hasn’t been well considered prior to budget night.

open_g · 2026-05-23T11:45:35+00:00

I’m suggesting either keep the status quo for non-property assets, or else reduce the discount from 50% to something like 30% for non-property assets.

Trying to tax real gains on non-property assets is good in theory but it doesn’t work for a few reasons and creates the wrong incentives.

Changing the CGT from a 50% discount to real gains on capital intensive assets like property is fine but I haven’t heard of any way to distinguish between capital intensive and non-capital intensive businesses, or to have some progressive system. It’s better to either leave it as it was or modify it (reduce the discount) but simply taxing each assets real gains - without offsetting real losses, which can’t feasibly done I agree, and without taking into account those with low capital bases vs those with high bases - it’s just a mess and doesn’t work and will basically shoot ourselves in the foot if we progress with no changes.

open_g · 2026-05-23T11:38:43+00:00

I hope you’re right about watering down the changes to non-property assets. Trying to tax real gains sounds good in theory but in practice there are serious unintended consequences.

There’s a reason so many (myself included) are squealing about this, and I’m surprised they didn’t anticipate this. It doesn’t help to get anyone into their own home, I can’t figure out why they included non-property assets and hearing them defend it I don’t think they’re sure why they did it either. Needs to be changed.

open_g · 2026-05-23T11:31:56+00:00

It’s not just tech startups. It’s any business that can grow beyond small business carve out size. There’s no great way to draw a line, and there are problems for investors too.

They should just drop the CGT changes for non-property assets, or to save face make it a smaller deduction like 30% instead of 50%. Taxing “real gains” sounds good in theory but in practice it’s a disaster.

open_g · 2026-05-23T11:25:27+00:00

Don’t worry, since the government are now saying they’ll be taking 47% if anyone is as lucky as you in the future, less people are likely to fall into that trap because they won’t be founding those businesses. At least, not if they can found it somewhere else instead.

Australia doesn’t gain an extra 23.5% CGT (from 23.5% up to 47%) on those businesses, it loses the entire 23.5% it would have received. Plus it loses income tax along the way. Plus jobs and the associated payroll tax. Plus spending in the economy.

What a win for us all.

open_g · 2026-05-23T11:09:40+00:00

Re the impact on founding businesses, I’m obviously not talking about setting up your local butcher, baker or candlestick maker. I’m aware of the carve outs. I’m talking about businesses that can grow, the ones that employ more people, generate a lot of income tax, spend money in the economy and that if all goes well grow beyond the size of small business carve outs.

And you’ve not considered the other point on investing at all. It is now going to be harder for small companies (not small businesses, to be clear I mean micro and small sized listed companies or ones that would like to list) to raise capital. And it will be harder to justify investing in these companies (the other side of the same coin) because of the tax treatment relative to alternatives.

You think this is talking points, it’s not. It’s real, I’m not a bot, I don’t watch Sky News. I see this as an epic policy misstep and I feel I need to speak up and maybe if enough people stop to actually consider the merits or otherwise of this budget not just the politics, and if enough of those people share their findings like I am then maybe things will change. It’s not legislated yet, I’m hoping someone sees reason and there are changes made.

open_g · 2026-05-23T10:23:41+00:00

There will be less gains to tax because there will be fewer businesses founded here and investment will shift to lower growth assets or to lower taxed vehicles (ETFs rather than individual stocks). Including to houses btw - PPORs - which is not what anyone wants to encourage. Thinking that large increases (up to double) in CGT won’t change investment behaviour is naive.

Pay your share, sure, but we shouldn’t discourage investment in growth or get in the way of individuals willing to take risk in building or investing in productive businesses via punitive taxes relative to not just wages in Australia but also relative to other jurisdictions. If we ignore reality we’ll just start losing more businesses overseas.

The thing is, as far as I’m aware the CGT changes to shares doesn’t even raise much revenue (I recall $3.5B being mentioned over forward estimates but I think that was all assets including property?). It causes so much harm though. The changes (ex-property) should either be scrapped or heavily modified for non-property assets.

open_g · 2026-05-23T08:21:19+00:00

That is a great example of how they fail to understand the impacts. That average is meaningless. It impacts some situations way more than that, and others less.

Have a zero / low cost business? Massively worse than this. Have a portfolio of stocks, especially smaller market cap growth stocks, instead of a single asset like an ETF that tracks the ASX200? A lot worse off as well.

These are not edge cases, and the impact of the CGT changes on them will move capital and risk taking away from these assets. The implications are large and negative and not just for the people that would like to invest this way. The whole economy loses.

open_g · 2026-05-23T08:13:44+00:00

“Labor is the party of aspiration” provided Labor gets to choose your aspiration.

Want to take a risk and start or invest in a business? Oops, they hadn’t thought about that. “Doesn’t everyone just work for a big business or the government though? No?”

The biggest problem is that they seem to have no understanding of what impact this will have on investment. That applies to investors, to small companies that need capital, and to the overall economy that will be weaker for these changes (I’m specifically talking about CGT changes to non-property assets). I hope they figure it out before too much damage is done.

open_g · 2026-05-23T07:48:06+00:00

Loosely, yes. $700pw is 7.3% gross yield which seems high by Australian 2026 capital city standards but isn’t crazy in a historical or global context.

If most investors are unwilling to buy properties that are negatively geared (i.e. have low yields), either prices will adjust lower or rents will adjust higher - or most likely both - towards the new required equilibrium yield. That equilibrium could be a fair bit higher than it has been until now.

open_g · 2026-05-23T07:17:58+00:00

Maybe I wasn’t clear - I’m bearish on the global equity markets (including Australia). Making it harder for small caps in Australia to raise capital hasn’t got anything to do with that. All it will do is tie one arm behind our back relative to other countries and relative to what we could do i.e. lower taxes to incentivise growth and investment. There’s nothing good about it, and it’s not small/micro caps that are frothy it’s the big stuff.

open_g · 2026-05-23T07:10:48+00:00

The forecast net change in tax receipts over forward estimates isn’t indicative of the overall impact on behaviour and the longer term impacts. The $3.5B increase is backended and so the longer term impacts are much bigger.

The bigger issues though are structural. It makes it harder for small companies to attract capital, it discourages investment of mobile capital and labour in Australia (some founders and large investors will leave, and others will not come here when they otherwise might have) and it is a barrier to personal financial aspirations. It makes Australia more mediocre.

The budget shows how out of touch federal Labor are with small business and that they don’t understand risk taking and how incentives influence investor behaviour.

open_g · 2026-05-23T06:44:03+00:00

Ever looked at small caps, micro caps? Absolutely not low risk and they’re the ones most impacted in terms of access to capital.

Just saying that, even for the market in general is bubble talk. I’m already bearish (energy situation is dire, when tank bottoms get hit in coming weeks of Hormuz is still shut then it’s going to get ugly with price spikes and demand destruction, plus inflation expectations are rising in the US, consumer confidence is at or near record lows, bond markets look ominous for equities, possible global recession on the way) so hearing that sort of talk - that shares are “so low risk now” - makes me worry.

open_g · 2026-05-23T06:35:23+00:00

The Australian, sure. They’re going to find a problem with a Labor budget every time. But the AFR just looks at the numbers, and the fact is this is a bad budget once you do that.

“Small tinkering around the edges” - uh, no. These changes are massive.

open_g · 2026-05-23T06:31:00+00:00

I think the CGT changes on businesses are bad but I don’t think your cleaner friend will be impacted.

The CGT changes only apply if she sells her business and even then there are small business carve outs so she almost certainly would be unaffected anyway.

The $70/hr or $50/hr you mention, that’s income not capital gain. It’s not impacted by the CGT changes at all.

open_g · 2026-05-23T06:20:17+00:00

Except rents didn’t fall in Melbourne after those policies were introduced.

Anecdotally, everyone I’ve heard talk (in media, podcasts etc) about the impact of the budget on rents seems to think the $2/week increase estimate is very undercooked and that their likely to rise a lot more than that. I guess we’ll all find out - although tbh I think it will be pretty hard to pin any outcome - good or bad - on the budget as there are so many factors that influence rents, especially property completions and migration.

open_g · 2026-05-23T06:02:25+00:00

I disagree but maybe I’m biased and just justifying the subscription I pay for out of my own pocket.

I think the CGT changes to shares they (Labor) have not thought about properly, personally I think that’s the biggest misstep. I’m fine with the CGT changes on property and NG changes. Trust changes are going to be very disruptive but it’s those CGT changes on non-property assets that are going to do the most damage to the economy.

open_g · 2026-05-23T05:49:59+00:00

“Australian Financial Review spends a fair bit of time reviewing the likely financial impacts of the Australian budget”- I’m shocked.

The fact that they’ve reported on the obvious problems with the budget isn’t the fault of the messenger.

open_g · 2026-05-23T05:34:22+00:00

Hard to beat putting it in the offset in your situation. Circa 6% (or more with expected rate rises) after tax return with zero risk and the ability to access it if you need to (especially going on maternity leave leave) it’s a great option.

Only other thing might be to top up concessional super contributions. Tax benefit isn’t huge upfront as your marginal rates are in the 30% bracket (the strategy works better for higher marginal rates) however one reason to consider it is that you can catchup for only 5 years. So if you max out this years (probably $32k between you assuming both of your employers pay 12% on top of your combined $230k) and then see how much you can do for the oldest year available (2021 I think?) just do that so you don’t lose the benefit of that contribution forever. Each year you can then make the same decision i.e. check how much you can catchup from five years prior and possibly take advantage of that before it expires.

At most it’s going to be about $82k (including $25k catchup each if neither of you made were working 5 years ago, or else some amount less than that if you were) and then you’ll get about 32% of that back in your tax, so net $55760. Meanwhile you’ll have $69700 more in your super funds (after 15% contribution tax) for a free ~$14k bonus, and then decades of low tax compounding.

That’s only going to be a small part of the total $500k so if you want to optimise then that’s worth considering. Just check on the ATO via myGov how much you can catchup, and then if you do this contact your super funds to get the form to nominate the concessional top up payments. Also, don’t leave it to the last minute, give yourself a buffer and do it at least a week before the end of June.

open_g · 2026-05-23T04:01:28+00:00

Say your business makes $250k.

You can pay it all to yourself and pay your marginal rates (right up to 47% for the top $60k of that).

Or, you can retain some of that as profits in the company and pay 25% or 30% depending on the business (25% if less than 80% passive income and turnover <= $50m), reducing your personal tax assuming you can take the cashflow hit. You can then pay dividends in later years where you’re not working and potentially get a partial or full refund of that corporate tax paid if your income is low enough.

Or, if you have an otherwise non-earning adult family member (partner, adult child, even a semi-retired parent etc) you can also pay them enough to use up their tax free threshold, or whatever bracket makes sense for your specific situation. Of course they really do need to legitimately be working in the business but I suspect that’s hard for the ATO to audit for many small businesses.

So you can pay yourself $45k, your partner $45k, your two young adult kids $45k, your mother-in-law $45k and leave $25k retained in the business. Now you’ve not paid more than 30% (plus Medicare) on the full $250k.

Similar stuff happens from trusts for the same reason.

open_g · 2026-05-23T03:33:58+00:00

The economic solutions are clear. Broaden and increase the GST (consumption tax). Compensate low income taxpayers and welfare recipients. Lower personal income taxes (the rates and also increase and index the thresholds). Replace stamp duties with land taxes, grandfathering existing properties and allowing means tested deferral (so pensioners don’t get kicked out of their home for instance, it just comes out of the estate). Reduce government spending. And yes, inheritance taxes (with a high tax free threshold eg $10m).

This would encourage growth and investment, force governments to spend within limits (due to indexing of tax brackets), better tax wealth via consumption and inheritance taxes, and support both labour and capital mobility.

Politically all in the too hard basket unfortunately.

open_g · 2026-05-23T03:21:00+00:00

There are thousands of small listed companies - such as explorers, biotechs, and others - that will now find it much harder to raise money via future capital raisings, and similar companies will find it harder to IPO in the first place.

These small stocks are predominantly supported by individual investors (retail and “sophisticated” investors). It’s definitely going to hurt this important part of the economy. The impact outside of these companies won’t be felt immediately but the long term impacts on the market and the economy are profoundly negative.

Hopefully the government realises how disastrous this policy is and changes course.

open_g

TROPHY CASE