Full Discussion with Billy Norman FP on the proposed Budget changes impacting shares in particular!

Added: 2026-05-27

[00:00:00]that this is just a proposal at the moment. Budget is just a proposal. And it's going to essentially get introduced into Parliament this Thursday.

[00:00:11]And we're expecting a lot of changes.

[00:00:13]But I'm not sure if you heard the news this morning that there's been an official complaint made to ACCC.

[00:00:21]Um and one of the instigators of this or one of the complainants is Paul Fletcher.

[00:00:27]And what they're saying is that um basically they're saying that it's forcing portfolio owners to go into one managed fund.

[00:00:37]Rather than just diversifying. So, what's what's your take on this? I see.

[00:00:43]So, no, I haven't read this news. So, this is the ACCC.

[00:00:46]Yes, they've actually um there's apparently 1,000 um fund managers that have come forward and they're lodging the complaint. I believe that their complaint's going to be lodged today.

[00:01:00]Okay. So, what what's the detail or what's the nature of it?

[00:01:03]They're saying that >> Who's the complaint against? Uh a- against the government for the I know, it's crazy. Anti-competitive behavior forcing portfolio owners to go into one managed fund only. Um rather than being able to control uh the shares themselves.

[00:01:21]Yes. Yeah, it makes sense. Um And you know, looking at the budget overall, you definitely feel like I don't know. I mean, at what what point is it a conspiracy theory? It it feels like it will funnel people into yeah, a single ATF or into the superannuation system, right into industry super.

[00:01:42]Um cuz a lot of these tax rules don't leave you many places to hide.

[00:01:48]And >> exactly what this complaint is about.

[00:01:51]That's what they're saying. They're you're losing the competition to be able to go and control it yourself.

[00:01:59]Yeah, exactly. So, in terms of why why they're saying this, um there was a good example in the AFR, and essentially they've looked at an investor who has a handful of individual shareholdings.

[00:02:13]Yes. And what they found is that that sort of investor, let's say you have five different stocks in your portfolio.

[00:02:20]You hold them for a number of years.

[00:02:22]You've got one big winner that makes a big gain. Mhm.

[00:02:25]>> the other stocks, you've got a handful of like mediocre performance or a loss in there.

[00:02:31]When you then sell the whole portfolio, the real capital gain tax rate could be 50 to 100%.

[00:02:40]And the reason is the way this this rule is structured or was proposed in the budget, the gains you have in you can use indexation on the cost base for the gain, but you can't apply any any indexation on the loss.

[00:02:55]So.

[00:02:56]>> So, effectively you don't get to actually claim, like use all the losses to offset the gain.

[00:03:03]Um and so, if that investor, instead of buying individual stocks, if they simply put all their money into one managed fund or one exchange-traded fund, all the gains and losses are offset internally within the fund.

[00:03:16]And then when they sell that ETF, it's the net overall gain that they get to report for tax purposes.

[00:03:25]Wow. And So, essentially they're saying you'd be way better off just buying an ETF Yeah, so >> buying a handful of different individual stocks, cuz then you don't get to use all the losses properly.

[00:03:35]Okay, so there's no choice then, there's no control. So, if for the individual investor that is out there and and wants to have control over their portfolio, that's gone.

[00:03:47]Yeah, I mean, it would make it really complex, right? Like if you've let's say you've got 10 different shareholdings, every time you want to make adjustments or sell something, you you'd have to like run all these you'd have to run all these scenarios to see if you're going to screw yourself over for tax purposes or not. So, instead of making the best investment decisions, you'll be so driven by what's this going to do to my capital gains tax bill. Yeah, there was one particular investor who had $400,000 worth of shares and that was in that AFR article and again in news.com today stating that he's basically going to sell. He's going to sell out because it's not going to be worth it to him.

[00:04:28]That's $400,000 worth of shares. This is crazy. So, private hedge fund hedge fund manager and former New South Wales government economist Derek Francis said he had sold $400,000 of dollars worth of shares in the last few days after realizing the full implications of the government's capital gains tax overhaul for the share market.

[00:04:48]Firstly, we've got to just make sure that this disclaimer is put out there.

[00:04:53]This is this is just a proposal.

[00:04:55]Nothing's gone through, so we don't want people to make any massive or any financial decisions yet until we see the end game. So, it's got started off in Parliament, going to be introduced into Parliament on Thursday and then of course once it passes there which we expect it to do so because they got full control of the lower house, but then it's got to go through the Senate. The interesting thing is when it's actually um going into Parliament, it's tied in with a $250 waito working Australian tax offset and the $1,000 automatic deduction. So, they're tying everything together. Negative gearing changes, CGT changes, the lot.

[00:05:37]But, this is just crazy stuff. So, if you put on that tin foil hat of yours, you were saying before what is the end game? Like what what is the reason for this?

[00:05:49]It's hard to tell, Belinda, whether they just haven't considered all of these nuances Yeah. or they don't care about the nuances Yeah. because they're just trying to effectively like close [snorts] loopholes as I see it, like close all these tax loopholes that the wealthy use and they don't really care about the collateral damage.

[00:06:11]I'm not >> To me to me that's what it sounds more like they're doing. And I said this on budget night on our or it might have been one of my videos after. It's basically they've had in a room and I I believe a lot of this came from the economic round table last August. So, in a room, somebody's just taking notes of everything, every loophole that there is and they're basically going along and okay, yeah, let's add this, let's add this, let's add this. And they've just listened to too many people at once.

[00:06:37]Rather than there being an actual reason behind it.

[00:06:42]Well, that's what I'd like to think. I think it's just a mistake.

[00:06:47]Yeah, it's so it started out as like we're going to fix the housing issue or do something to fix the housing issue and now it's all of a sudden come budget night, it's like we're going to close all the loopholes that the wealthy use.

[00:07:00]Um but it's odd because it doesn't really have a big impact on the wealthy. It's >> No, no. It impacts on young people who are trying to invest and trying to build something.

[00:07:10]I mean, this was this was the goal. So, this was the goal.

[00:07:14]Initially when we look at they're saying now that the information's come from that economic round table back in August. And that one that goal there was to raise $70 billion. So, every everything was on the table. They had they said the greatest minds in the country all throwing out ideas. And at that they were talking about consumption tax. They were talking about changing GST. They were talking about giving out $3,300 per Aussie and lifting the GST to 15%. Then they threw in the table capital gains tax. They threw negative gearing. They even at one stage were talking about removing the main residence exemption for the house, which who who would you do that? That's crazy.

[00:07:58]Then when we get to the end of that back then in November, all of a sudden the Greens were given this Senate inquiry into capital gains tax and its impact the capital gains tax discount and negative gearing as well. And I said that from the start, don't forget negative gearing and its impact on the housing crisis.

[00:08:18]So obviously, there must have been a deal done earlier on like during the election and deals get done all the time, but what my question is at the end of the day, if this is all about intergenerational equity, I don't think we're actually helping the young people.

[00:08:37]That's my fear.

[00:08:39]Because when young people can't actually afford a house, they go straight to shares. And when pressed the other day, we had the Treasurer Jim Chalmers was asked what the percentage of share of, you know, the younger generation of holding shares and he got that absolutely wrong. And he's being roasted by it. So they are going in with ETFs, they're going in with shares, they're going in rent vesting, all of that. And none of this is going to fix it.

[00:09:09]And we've got nothing in the budget to actually fix the housing supply.

[00:09:14]I don't think there's anyone in this country that would say, "No, this next generation doesn't need help." We all agree that they need help. We all want every generation to have the same um you know, basic situation and the same ability that we had. But how is all of this going to fix it? And you said yourself the wealth this is not hitting the wealthy at all.

[00:09:37]They know what the difference is.

[00:09:39]I mean, how's it going to hit the wealthy? Yes, the wealth the wealthy often have family trusts and trusts, and there might be times where they're able to make distributions to younger family members and save a few thousand bucks in tax here and there.

[00:09:54]Um so, yeah, they might pay a little bit more, but it's not But, all the negative gearing and CGT is all grandfathered anyway.

[00:10:01]Um so, yeah, it's not really going to affect people that have already accumulated a lot of wealth and assets.

[00:10:08]Uh it affects anyone who's early in their journey.

[00:10:12]And you must have been happy to see that negative gearing was continuing at this stage to be allowed with investing with shares rather than property that still there's no changes there.

[00:10:22]Yeah, this is what I thought. Like, I'm pleased that the negative gearing thing is only on existing properties. That makes sense. But, the CGT changes mean you you know, you're going to struggle to make a good case for negative gearing into into shares.

[00:10:37]Uh cuz you're going to get hit with these big CGT issues when you go and sell down the track.

[00:10:43]Um that's that's the problem. Yeah, it And none of it makes sense. Like, how they've actually carved out this CGT I think that's their biggest issue. They they brought small business into it.

[00:10:56]They brought pre-existing assets pre-1985 into it. And it's a bit of a dog's breakfast when you look at the actual shares themselves. So, could you explain how that actually works? Cuz many years ago, it was more of a situation that you would purchase like a share or shares, and that would be a one-off transaction, and that's easy to manage. What are people doing now? I'm hearing that people are putting a certain amount of money every single week. How does that get tracked?

[00:11:27]How does How does it help people in generally investing now? Yes.

[00:11:31]Yeah, so it's winning So I started I started my career in the early 2000s.

[00:11:37]Um and I was working for an accounting firm actually that did financial advice as well. And every all the investing then was just buying individual stocks and it was usually blue chip stocks, right? Like the big four banks, BHP, Woodside Petroleum, uh Telstra, etc. So people would just accumulate individual shareholdings, build them up over time. They loved the dividends.

[00:11:59]Um and then one day down the track they'll sell them.

[00:12:02]That evolved because online trading like CommSec led the way. Like online trading became accessible.

[00:12:09]Um and it was easy and cheap for people to just buy and sell shares using an online brokerage account.

[00:12:15]Uh then we had ETFs come along. So essentially managed funds, which is like a like a basket of shares, and you can buy them through your online trading account. So now you didn't need to pick stocks anymore. You could just buy an Australian share ETF and sort of get exposure to the whole market.

[00:12:33]So then that took off.

[00:12:36]Um and so direct share investing is is a lot less popular than it was.

[00:12:43]Yeah, so these days and then of course Sorry, and then to continue that. So then smartphones took off. So now you can do it on your phone. I mean you can just buy and sell ETFs in 2 seconds.

[00:12:52]Brokerage went to almost zero. Uh so these days people just use an app, right? And they might might be investing 20 bucks a week or something. Um and very low cost and just accumulating uh ETFs. And so how is that like if we've got the indexation method moving forward from 1st to the 7th, 2027, how's that going to impact the basically the accounting of it? Is it Is that going to be a bit of a nightmare?

[00:13:18]Yeah, I'm struggling to even picture how it works cuz I mean you you would know more than me around this cuz you're actually processing the the tax returns and looking at the tax statements. Uh when you buy ETFs or use a trading account, you'll get like a tax statement, right at the end of the year.

[00:13:34]And the thing with ETFs is you when you're reporting it for tax purposes, a lot of what you're putting in there is dividends, right? Income. And the treatment of those isn't changing, really, from this budget.

[00:13:48]Um but ETFs will also distribute will often distribute a capital gain as well each year. Yes. Uh so when you complete your tax return, you're putting in the accumulated dividends of all the underlying shares in that ETF, but also within the ETF, they're buying and selling shares throughout the year. So they might have triggered a capital gain as well.

[00:14:09]Um so how how's that going to work with indexation? It's going to be I'm not sure. I guess the ETF providers will have to figure it out and And then that's going to bump up their fees, though, wouldn't that? You would think because it's not going to be an easy situation. And then if we've got that discrimination between you actually being controlling your portfolio and going with one managed fund, that's not fair. That's what we were saying before. And if you are controlling your own portfolio, how do you then work it out with the indexation method? It's a lot Everything's just up in the air. Just It adds a lot more complexity and we already have a vast amount of complexity in our tax system.

[00:14:52]We We both know they should be aiming to simplify things where possible, not make it more complicated. And initially we went to the 50% discount method because it was more difficult.

[00:15:04]But the the thing is as well, Billy, is that when we did have this indexation method prior to 1999, we had a five-year average. Yes.

[00:15:14]>> That That was part of that indexation method calculation. That's not included in this. And also what wasn't included before was a minimum 30%.

[00:15:25]So if we're if they're saying, "Well, we're taking a step back and doing it the way it was intended."

[00:15:32]Why isn't it back the way it was with that 5-year average? The minimum 30% is wild cuz I I think like tell me if you agree or not. It feels like they're trying to cuz they're trying to close loopholes, right? And a common theme is that let's say boomers they'll buy one or more investment properties and then they'll wait until they're retired to sell those properties cuz once they're retired, they've no salary and no other taxable income. So, they can sell the property and then that will help control the capital gains tax bill.

[00:16:06]So, by putting in a minimum 30%, they're saying, "Well, even if you're retired, you're going to pay at least 30%."

[00:16:12]But we're also >> what they're trying to do. But there's also discrimination >> low-income Yes. and low-asset households, either retirees or let's say students or whatever uh who have no income but also don't have a lot of assets and now they're going to pay at least 30%.

[00:16:29]Exactly. So, we've got it's a triple-edged sword basically.

[00:16:34]Like you said, you've got the boomers, you've got those that are retiring. What about women that uh take maternity leave and they're either selling so they could be an employee with employee share schemes and that's when they selling it or they selling um a property that they own or it could just be managed funds and they're timing that so then they've got that income coming in.

[00:16:56]So, that's not fair on families. And I read another article and there was the example of you know, a young investor and he was in his 20s. And what he's saying is, "If I earn 20,000, I'm going to be taxed at 30% whereas someone working uh a retail job or any job at 20,000, they're going to get basically that tax free.

[00:17:19]So, where is where is the sense in that?

[00:17:22]It's basically all in all being discriminated. Because the younger generations are the one that are more innovative than us, let's be honest. They're the ones that are finding different ways um and good on them, different ways to build wealth cuz they need to. Like they're they're playing by the rules.

[00:17:41]Like previous generations, everybody played by the tax rules at the time. So, they're going, "Okay, well, I found this way. I can actually make wealth. I can build wealth from this." And then all of a sudden, they're the ones being hit with that 30%. And that's not fair. So, it doesn't seem to be just about and this is going to be controversial. It doesn't just seem to be about how you accumulate that income, whether it's wealth, it just appears to be working or wealth. So, it's not a generation thing, it's purely how you earn your income. So, if you're earning your income through work, traditional work, they'll tax you less. If you're earning your income through wealth, doesn't matter your age, you will get taxed higher.

[00:18:28]Controversial opinion, yes, but this is this is what this budget proposal is saying.

[00:18:33]Yeah, it's like, well, and it's sort of demonizing the idea of creating wealth at all.

[00:18:40]Yes.

[00:18:40]>> like, if you're young and you're thinking about your future, one day you want to retire, you want to have a family, you want to help kids, like, how are you how are you going to do it? You can use property, okay, they want to stamp that out. Or you can use the stock market. You don't really have many other options.

[00:18:57]No. Um so, why yeah, why disincentivize all those things? Cuz then you're saying that don't don't do any of those things, just go to work.

[00:19:07]Exactly. And how is that Like I've said many times, when we look at the previous generations, and let's talk boomers because they've got that bigger wealth, they've attained a bigger wealth than previous generations like the silent generation. They didn't have the same accumulated wealth as the boomers do. And we're going to have that wealth transfer as they get older because some boomers are, you know, turning 80.

[00:19:33]But, the thing is they took advantage of the tax concessions available to them, and they took advantage of what was building their wealth at the time. So, now we have a generation where we look at the younger millennials, and we look at Gen Z, and we say, "Okay, so you're taking advantage of this wealth creation and this big new world that we've got to invest in, but all of a sudden the government's saying, 'No, I'm going to tax you differently because you're not traditionally working.'"

[00:20:04]That just makes no sense to me.

[00:20:07]Yeah, and the only thing So, you've only got two places left to build wealth. One is the family home, and the other is superannuation.

[00:20:15]And >> But, they I don't know what I mean, they're both good things, right? But, why why are we shutting off every other alternative? I'm not sure. But, if I'm 25 right now, I wish, and I'm sitting here saying, "Okay, superannuation, I'm not going to be able to touch this until I'm over 60 or not working full-time." So, I'm saying that's at least 35 years away, and the chances of me even getting my home is nothing.

[00:20:41]That's where I don't understand because this is just forcing the younger generation into traditional working roles. And that's not what we should be doing at the moment. We should be letting them have ambition and aspire to something better.

[00:20:56]Absolutely, yeah. So, it's Yeah, investing in stocks, starting a business, like they're all they're good things that we want people to do.

[00:21:03]But, it just doesn't make sense. And then we think about division 296 and how much of a ruckus that caused last year.

[00:21:09]So, division 296 was um the extra tax on superannuation over $3 million and there was no indexation applied for that as part of last year's rulings.

[00:21:20]And then everybody jumped up and down and that was changed. So, if we're funneling everybody into super and we're funneling everyone just into standard employment, what hope have we got?

[00:21:33]Well, you know, yeah, I don't think this is a conspiracy. If we're funneling everyone into standard employment and build up your super and if you're lucky enough to afford a house, good on you, but a lot of people can't.

[00:21:45]Um that that amount of money that's in the superannuation system in Australia, what is it now? $4 trillion? Yes. $4 trillion?

[00:21:53]It's huge. It's bigger than the share market.

[00:21:56]Uh that number's going to continue to balloon and that's the only that's the only low tax environment we have left.

[00:22:03]So, our future the future governments are not going to be able to restrain themselves at some point.

[00:22:10]>> You know, so those tax rates are way too low. So, No, and and then everyone will be stuck with some big super balances and and that's it. They'll jack up the tax rates there, as well.

[00:22:20]It's just it's insane and I think the good thing is is that people are jumping up and down. So, whilst we do remind people that this is still just a budget proposal, we've got all of the stages that it's going through, but if we don't noise right now and if tax professionals, finance professionals, brokers, real estate professionals, if the whole and the legal profession don't stand up, jump up and down now and say, "Look, this isn't fair."

[00:22:50]we're never going to make a change. And I always say it is policy over party.

[00:22:56]So, we are not attacking the Labor Party. We're not attacking the government. We're attacking their policy. We're questioning their policy and saying it does not make sense. It's not going to do what you're claiming it's going to do.

[00:23:11]It's actually going to make it harder.

[00:23:13]No, and Belinda, like I, you know, I'm not opposed in general to hitting negative gearing and CGT on houses. Mhm. Um but the idea was that that was supposed to be offset with lower income tax rates for workers.

[00:23:29]>> Exactly. Exactly. 250 bucks is It's >> [laughter] >> It's It's nothing. It's absolutely pathetic. So, it's like If we don't look at it that way >> because that's rebalancing the tax system, right? If you want to increase CGT or remove negative gearing and then reduce income tax, that's a rebalance, but in this case, there's no there's no balance happening at all, unfortunately.

[00:23:52]And if we go back to conspiracy theories, let's just delve into that for a second cuz we all love this. If we go back into conspiracy theories and say, "Hey, if we're pushing everyone into just employment, at the moment, over 52% of all taxes paid to the federal government comes from individual income.

[00:24:12]It is ever reliant on this and it's getting worse. So, you keep pushing into everybody into that bracket and saying, "Okay, we want you to make income just from work." That reliance is ever going to grow. So, people are just going to continue losing their money to this. So, we're just going to keep handing over more and more of our money straight to the federal government. So, one thing that they have to address is the income brackets. They need to be indexed in line with inflation. Definitely, bracket creep needs to go.

[00:24:47]And we need that, like you said, that lower tax model. Every time we've had tax reform, so the last one was the Ken Henry review, it was all about, "Yes, make these changes to negative gearing and CGT, but reduce income tax rates.

[00:25:03]And they were reducing it dramatically.

[00:25:06]Yes. Cuz I was looking I was listening to Belinda. I was looking back in at the '90s.

[00:25:10]Um cuz I obviously CGT was a lot higher then cuz that inflation the inflation model income tax rates were also very high. Yes. Um however, you could use family trusts and distribute to kids and there were all these other ways to avoid tax which the middle and upper class used. Yes. Um but also the '90s wasn't a great period for our economy and that's why income tax rates came down, CGT discount came in, and then Australia had a great run for a good I don't know 15 years after that, 10 15 years. Unless you've lived through it. So you need to be at least my age 50 or over to remember how bad the early '90s were. That recession was shocking. Now at the time I was only young.

[00:25:56]So back in 1991 I started at at Coles in Toronto as a checkout operator and I remember at the time the amount of middle management professionals that just lost their job overnight. That recession that we needed to have just meant they were all wiped out and they all ended up working in our store. We had 30 or 40 people come and work in our store. Professionals that you would never dream that they would be working stacking shelves, but they had to.

[00:26:25]So the interest rates were high.

[00:26:27]They were all losing their jobs. It was just a crazy time and I know in comparison the amount of the houses in comparison to their wages, yes, it was a lot smaller, but we had both parents like the both household income just gone overnight. So many people were in that situation. And I fear that we're actually in a recession now. It's not a declared recession, but from what the RBA was saying um at the last meeting, like, this is going to be horrible. And I don't think this budget's going to do anything to help.

[00:27:03]No, and well we've been in a per capita recession for a couple of years, right?

[00:27:08]Yes.

[00:27:08]>> And and people know, they can feel it.

[00:27:11]Um but the headlines don't don't state that cuz it's sort of being being hidden [snorts] with high population growth.

[00:27:17]Um but they're yeah, whacking on more taxes right now when inflation and interest rates are going up and we're already in a per capita recession.

[00:27:26]It's it doesn't feel like the the right timing.

[00:27:29]>> [laughter] >> Yeah, to just finish this up, I wanted to just get your opinion on the budget as a whole and whether you expected Did you think it was going to have this backlash?

[00:27:39]Um I Yeah, I mean, they've gone a lot further than anyone thought they would.

[00:27:45]Uh I hope it's hard to know how big the backlash is cuz you you know, you jump on social media or something and you don't know if you're in your own thought bubble or if that's what everyone's thinking. Yeah. Uh I hope there's a big backlash and I I I feel like there is. I think more people are cottoning on to that. Um and I I can't see anyone getting too excited about 250 bucks. No. And um and when they see that Well, even if house prices come off 5%, 10%, they're still not affordable for people who um like it's you know, if they come off 5%, there'll be a a small number of people at the fringe who are yes, right now I can get our way in, but for the vast majority, it's that doesn't make much difference that 5 or 10%. So, hopefully people can see through this and and realize this is not not there to help them, this budget.

[00:28:38]And the majority of people I spoke to prior to the budget coming out when there was a lot of talk that it was just going to be CGT and negative gearing purely on property. You know, most professionals in the industry, in the accounting industry, financial planning, insurance, broking, real estate industry, all said, "You know what?

[00:28:58]Let's give it a go. Let Let's try. Let's see, and we'll see if it helps, and hopefully there's something in the budget that can increase housing supply.

[00:29:07]What does it hurt to give it a go?"

[00:29:09]Majority of people were saying that to me, and you might have heard the same thing.

[00:29:14]But then when they turned around and just applied CGT to everything, every man and his dog, and as far back as pre-1985, that's when people said, "Hold Hold up a minute. This doesn't make sense."

[00:29:27]I think if they were going to do that bold reform, I think most people would have got behind just the property changes and said, "Let's just give it a go."

[00:29:35]Agree. Agree 100%. Well said.

[00:29:38]Yeah. Thank you so much for your time.