The recent federal budget marks a massive structural shift in how our nation taxes wealth.
The government is moving its tax focus away from earned income and squarely onto investment assets and structures. If you use discretionary trusts, negative gearing or hold capital-appreciating assets, your financial plan likely needs a review before new rules phase in.
Four major proposals stand out:
- Negative gearing curbs: restricting tax offsets on established properties bought after budget night.
- Capital Gains Tax (CGT) overhaul: replacing the 50 per cent CGT discount with cost-base indexation and a 30 per cent minimum tax rate.
- Trust taxation (excluding Testamentary Trusts):Â enforcing a strict 30 per cent minimum tax rate on discretionary trust incomes.
- The pre-CGT asset shock:Â in a major shift for older investors, assets acquired before September 20, 1985, will lose their full exemption status. Capital gains built up after July 1, 2027, will now be taxed.
It is vital to note that these measures are not yet law. The legislation is before parliament and undergoing intense debate and adjustments, meaning details could still change.
However, we cannot wait until the ink is dry to prepare. Relying on smart asset structuring to protect your portfolio is now more critical than ever.
Mandy Newman, Director, AJN Financial, 15/13 Poinciana Avenue, Tewantin, 1300 55 90 70, ajnfinancial.com.au.
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