The REAL Reason Behind the 30% CGT Reform Targeting Retirees | Top Property Experts

Added: 2026-05-31

[00:00:00]Let's talk through CGT. The big one was this 30% on capital gains.

[00:00:05]>> Yeah, no one knew what it was. People still don't know what it is.

[00:00:08]>> Can you get your You've obviously, you know, like I said, been meeting with a lot of people over the last 24 48 hours.

[00:00:13]>> don't understand it, right?

[00:00:14]>> What is this 30% cuz cuz I'm still wrapping my head around it.

[00:00:17]>> So, there's two 30%s. You got the trust, and that's how your discretionary trust and how you distribute funds, Reece, is minimum 30%, and then you got the capital gains, which again is the minimum 30%. So, both, you know, targeting retirees, which is, you know, so we're talking about people who worked their life to build up a nest egg and now want to distribute some funds to themselves at a lower tax rate.

[00:00:38]So, a good example where it's going to hurt the retiree for the CGT is when you have held an asset, it could be shares or property. Um, let's make the example that I'm going to make $100,000 in my shares. I've held them for more than 12 months, Reece, but I'm currently on $100,000. So, if I sold them today, I'm then going to get taxed um, I'm going to get a 50% discount based on the old model. So, then that $50,000 of that $50,000 of that is tax-free. The other 50,000's going to go to my taxable income, and today I'm on 100,000, so then my taxable income goes to 150, which now pushes me into the highest tax bracket. So, my accountant may have told me, "Hey, Lachlan, how about you wait until you retire in two or three years' time, and then you're going to get that $50,000 tax-free, but then that other 50,000, you're not you're not drawing income.

[00:01:30]So, when you're not drawing income, let's have a capital gain event then.

[00:01:33]So, then you're only going to get taxed at the lower marginal rate. So, on that example then, Reece, that other $50,000, you know, your first 25K's tax-free, and then at 16%. So, instead of getting charged, you know, 16% on 25,000, I now get a minimal capital gains tax rate of 30%.

[00:01:55]So, who this hurts Remember when they lost the election? I think it was 2018 or 19.

[00:02:00]>> It was based on this dividends franking credits.

[00:02:03]And now they're taxing they're essentially taxing those that have worked, you know, years, decades to build an asset. That's who they're trying to They're trying to pretty much say anyone who's uh generated wealth um through any vehicles, be that shares or property, now minimum's going to be 30%. No one gets any less than that. So, all that strategic accounting work that and you know, a lot of financial planners do um years of preparation and planning of of this. You know, I'm working with my accountants all the time of how we plan forward tax events.

[00:02:34]Some of that goes out the window now because you're going to get taxed at the minimum rate of 30% and that's the the minimum obviously it's going to go up from there. So, that's the GST components to stop people holding on and selling to wait till they're either on a little or a lower income so then they don't have to pay as much tax.

[00:02:49]And then you've got your trust distributions is >> Your family trust Your family trust >> and distributing it a minimum now 30%.

[00:02:57]That again is a is a targeting the same demography, the older demographic that started to you know It's really and and business owners, those that earn income and distribute to their partner or their kids and I can get why you can see that as a bit of a loophole, but think of a a perfect example is mom and dad, Race. So, dad's a small builder in a little country town, does a few renovations a year. Mom was a nurse, now retired that does all the books for dad, all the quoting and invoicing. She does still does it by hand cuz dad used to use a computer.

[00:03:24]So, that business, you know, might make a $100,000 a year in a in a really good year.

[00:03:30]Um you know under the current in under the old system he could get taxed at 30% and you know the they could get taxed at at the marginal rate, the company tax rate of 30% and then they're going to have to pay top up tax, but at that level it's 30%.

[00:03:49]When they could distribute it you know, they have some poor years, they could distribute $50,000 to mom or $25,000 to mom, of which that $25,000 would be tax-free, or $50,000 and then she's at the 16% tax rate, and $50,000 to dad at the 16% tax rate. So, instead of paying 30% they have to pay now, they were paying 16%. So, do you really want to go and target the most vulnerable? Like, there's just a That's mom and dad, just good local people in the local town. And I'm sure dad's margin is not certain certainly ripping off the local demographic. And this is you know, it's really going to hurt struggling businesses or small business owners that use this discretionary uh trust scenario to distribute funds, and it's not because they're trying to get away from tax, but because that's what's fair. Mom is involved in that business and shouldn't be charged at the high tax rate, cuz she doesn't do anything else. So, that that policy was there to to enable those sorts of scenarios. And now, um mom and dad are going to get both get smacked, no matter what. If they distribute funds, $50,000 each, they're both going to get taxed. They would have paid $10,000 in tax last year, they're now going to have to pay $30,000 in tax.