r/fiaustralia

The CGT set to a minimum of 30% only taxes wealthy Australians. The bottom 60% of Australians have less then 1% of their wealth in shares with most of it being in cash or super (which has different tax rules). The wealthiest 10% of Australians own almost 50% of all shares, so this tax is mainly going to effect them. The wealthiest 10% of Australians shouldn’t have to worry about being taxed without a tax free threshold, it probably makes no meaningful change to their lifestyle.

Personally I think wealth created passively should be taxed at the highest income tax bracket. No worker should be taxed more for their work than some wealthy person doing nothing to generate income.

Negative Gearing is also only done by the wealthy with 20% of Australians owning an investment property. It is fair to grandfather this change as people have made many financial decisions based on the current system however that is still only helping the wealthiest 20% of Australians. It would be more equitable to remove it without grand fathering it.

Finally, the median wage for all Australian workers is $74,000 p.a. Imagine complaining about paying more tax when your investment property or share portfolio brings in more income then 7 million working Australians make from working.

This sub is out of touch and needs to remember how privileged and wealthy we are compared to the median Australian who has no savings and lives pay-check to pay-check.

I'm 34 and just started getting serious about investing in Jan this year. I have a BGBL/A200, BGEM & AVSV positions for myself and a separate DHHF for my 8 month old son. The plan was simple, just DCA every month for 20 - 30 years and let it grow into something meaningful for him and my family.

Now the 50% CGT discount is gone and gets replaced with an inflation indexation model plus a 30% minimum tax. From everything I've read, if your investments perform well over a long time horizon, you will almost certainly pay more tax under the new system than the old one....waht the actual fuck?

The thing that frustrates me most is that this was sold as targeting property investors. But the CGT change hits shares just as hard. My son's ETF portfolio is just a boring long term buy and hold. It's not a tax dodge.

And honestly even setting aside whether the new rules are better or worse, the fact that this is the second complete reversal of the CGT framework in under 30 years makes it really hard to plan with any confidence. Howard scrapped indexation for the 50% discount in 1999 and now Labor has just flipped it back. What's to say it doesn't change again before any of us actually sell? For better or worse?

Just feeling disheartened. Is anyone else rethinking their approach or is the consensus just to stay the course and accept the uncertainty? I've seen some great posts on here about the reality of the situation of FIRE etc and it seems like generally we now need 2 - 3 years of investing to achieve that. Absolutely gutted.

EDIT: Sorry I also wanted to ask the question, is it even worth doing this strategy now for myself? Should I just keep DHHF for my son and focus on voluntary super contributions?

More like many cents. I have a fair grasp on numbers, but I am not an expert. So, please correct me if I am wrong.

• Buying the most expensive house you can afford seems like the best option now. Then, you live in it forever and downsize it tax free.
• Super is a big winner. It still has low tax rates. And you can still transfer tax free to pension mode.
• Dividends investing is more attractive now. It has franking credits which can offset a huge chunk from the marginal tax rate.
• If you already have an IP, congratulations. Hold onto it forever. Never move in. Never sell. Keep refinancing to keep the negative gear. EDIT: Refinanced fund can only be used on the same property, so it has limited usage especially for units.
• High yield IPs are still a thing. So, units, old or new are still attractive.
• Houses as IPs are basically limited to new builds. That severely limits options.
• Growth investors are screwed. Good bye FIRE. Barista FIRE might be better. You work a minimum wage job and supplement by drawing down investments.
• Trusts are also screwed. It's higher costs for not much tax benefits. Still viable for ultra rich or complicated family structure.

Feel free to add. Or, correct me. Thanks for reading!

The big change is that Australia is effectively abolishing the current 50% capital gains tax (CGT) discount for most investors from 1 July 2027 and replacing it with inflation indexation plus a new 30% minimum tax on real capital gains. This applies broadly to shares, ETFs and other CGT assets held by individuals, trusts and partnerships. Right now, if you hold shares or ETFs for more than 12 months, you usually get a 50% CGT discount. Under the new system, instead of halving the gain, your cost base will be indexed for inflation and then the “real” gain will be taxed, with a minimum effective tax rate of 30% applying to those gains. The reforms are specifically described as applying to “all CGT assets”, which includes shares and ETFs. Existing holdings get transitional protection: only gains accruing after 1 July 2027 move to the new rules, while gains built up before that date can still use the old 50% CGT discount. Even pre-1985 assets lose their blanket exemption for future gains after that date, although gains accrued before 1 July 2027 stay exempt. For most ordinary share and ETF investors, this means long-term investing remains tax-advantaged because inflation gets stripped out, but the tax break becomes materially smaller than the current 50% discount, especially during low-inflation periods. The budget papers say the goal is to reduce tax advantages that mainly benefit higher-income investors and retirees timing asset sales in low-income years. The 30% minimum tax is aimed at stopping people from paying very low effective tax rates on large realised gains. On negative gearing, the changes are mostly about residential property, not shares or ETFs. Shares and ETFs keep current deductibility rules. The papers explicitly state that “other asset classes, such as shares, will remain subject to existing arrangements.” The new negative gearing restrictions only target established residential property purchased after Budget night on 12 May 2026, with deductions quarantined from 1 July 2027. Overall, for investors in Australian or global ETFs and shares, the main impact is the replacement of the 50% CGT discount with indexed cost bases and the new minimum tax regime from July 2027.

I know many of us are quite unhappy with the proposed changes from tonight’s budget.

It’s worth noting that the people this reform was supposedly designed to help — lower income Australians who can’t afford property and are building wealth through ETFs — arguably get hit hardest by the 30% minimum CGT floor. For someone on $45k, that minimum exceeds their normal marginal rate. The irony is significant.

That said, I’d strongly advise against throwing in the towel on your ETF strategy tonight:

1. Budget announcements regularly get watered down before passing as legislation. The government has explicitly flagged further stakeholder consultation — that’s where carve-outs get negotiated.

2. Strong political pushback is already forming from the startup sector, crossbenchers, and industry super funds — particularly around the regressive impact on ordinary investors.

3. Shares don’t compete with first home buyers for housing stock. There’s no clear policy rationale for treating ETFs the same as investment properties, which makes a carve-out politically viable.

Be optimistic and don’t do anything rash one night after a budget announcement. Have a good night everyone!

Did some math on the impact of the new 30% minimum floor (which I think is wild), plus CGT based on inflation (which I think is fairer) and the impact it will have on investing issue of super v outside of super.

Let’s assume one wants to invest 30k in one single year on a salary of 100k.

Outside of super

To do this outside of super, you'd pay about 14k in income tax (30% plus 2% Medicare levy) to earn this 30k portion. So an effective pre-tax value around 44k.

Investing this for 15 years outside (assume 7% growth, 2.5% inflation) grows to 83k on which you'd need to pay roughly a 12k exit tax on the capital gain with the new 30% tax.

This leaves you with around 71k in future dollars (or 49k in today's dollars)

So you’d be paying roughly 26k in tax (mix of today and future $) and 30k capital cost, to "make" a real return of $19k over 15 years.

Compare this to inside super.

Inside Super

One would need to salary sacrifice or contribute 44k pre tax which would be the equivalent impact of 30k reduction in take home pay. Assume you have built up unused cap space or invest over financial year cutoffs.

15% tax on that upon investing in super means roughly 37k invested.

After 15 years that grows to 103k. No sales tax on exit.

This is about 72k in today's dollars.

The difference

19k return for 30k capital and 15 years v 42k return for 30k capital investment.

Crazy difference.

With the old rules there would be practically zero tax paid (maybe 1-2k, or zero if split between a couple) on the outside of super amount (if retired with no income) making it basically equivalent.

Now it's half as viable.

Hi all, after going over the proposed federal budget, I can't help but feel getting screwed over in regards to the minimum 30% CGT applied to shares.

I'm all for tax reform by removing negative gearing and CGT discount, but applying a minimum 30% CGT to shares is going a step too far.

This screws over young people way more than it helps them, as investing in shares is one of the most powerful investment vehicle in helping them get ahead. This change penalises diligent young people trying to get ahead by investing in shares. Why can't a simple CGT that is added into the taxable income be done rather than this convoluted 30% minimum CGT?

In an effort to address the property price issue, shares investing is caught in the blast radius.

I'm thinking of writing to my local MP to raise awareness of this concern. This is my first time writing to a MP, so would appreciate any tips from you guys. I'll post a draft tomorrow for everyone here in case they also like to write to their local MP.

EDIT: I have written to my local MP. Here's what I've written. Feel free to use this if you'd like to write to your local MP too.

Dear [MP’s Name],

I am writing to you as a constituent of [Your Suburb/Electorate] to express my strong opposition to the tax measures announced in the 2026-27 Federal Budget, specifically the introduction of a 30% minimum tax floor on capital gains that is applied to shares.

I understand the government's objective to ensure "real" gains are taxed through the return of cost-base indexation and address the issue of housing affordability. While I am supportive of the removal of negative gearing and CGT discounts for a fairer taxation of earnings through capital gains and income, the 30% floor is a regressive measure that unfairly targets low-to-middle income Australians trying to build wealth through shares and ETFs. The proposed 30% minimum tax floor penalises young people for trying to get ahead by being financially savvy, working harder, trying to improve their income levels, and investing their hard-earned savings into shares and ETFs.

Under the current system, an investor in a low tax bracket benefits from a system that reflects their actual income level. By mandating a 30% floor, the government is effectively imposing a flat tax that ignores the progressive nature of the Australian tax system.

I am a young middle-income constituent with no investment property, and I am the kind of person this policy is supposedly designed to help; working hard and trying to stay financially responsible, trying to build wealth through shares and ETFs. The reform hits people like me the hardest. It raises the cost of the one wealth building option still available to me while getting locked out of the property market.

I urge you to raise these concerns within the party room and advocate for the removal 30% floor, and tax capital gains fairly as income.

I look forward to hearing your position on this matter and how you intend to represent the interests of your constituents during the upcoming legislative debate.

Yours sincerely,

[Your Name][Your Address]

I know many people here are unhappy with changes to the taxation in recent budget. These changes have been announced in budget but they have not been legislated yet. There will be discussion on them in the parliament before approval. In order to influence those discussions and so your MPs represent your interests in those discussions please contact your MP and let them know which parts of tax reform is bad for you.

Here is an example email that represents my views. Please feel free to use this or change this email to reflect your views and send it to your MP. If you don't know who is your MP, google something like "who is MP for <your suburb name> and what is their email address". This should give you their name and email.

If you are not good at writing, copy below email draft into chatgpt and write your views there and ask chatgpt to modify the email so it reflects your views before sending it to your MP.

We live in a democracy and have a say in government decisions and this is how we exercise that right.

Good luck!

Subject: Concerns Regarding Minimum 30% CGT in Budget 2026

Dear <MP Name>,

I am writing to express my concern regarding the recent Budget 2026 changes to capital gains tax, specifically the introduction of a minimum 30% CGT rate.

While I support the government’s move toward indexation-based capital gains tax calculations and the removal of negative gearing concessions, I believe the minimum 30% CGT rate is unfair and regressive for Australians who are trying to achieve financial independence outside the traditional retirement system.

This policy does not primarily affect wealthy retirees living off superannuation, as superannuation already receives preferential tax treatment and is largely unaffected. Instead, it disproportionately impacts people who are building investments outside super in order to create flexibility and security earlier in life.

Many Australians today are trying to save and invest so they can step away from stressful jobs before the age of 60, reduce working hours, recover from burnout, survive periods of unemployment, or take career breaks to care for children or elderly parents. These are not speculative investors looking for loopholes — they are ordinary people trying to build resilience and independence without relying on government support.

Personally, I have spent years saving and investing carefully with the goal of creating financial security for myself and my family outside the superannuation system. Like many others, I want the option to retire early, reduce work due to stress and burnout, or protect myself against layoffs and economic uncertainty. The new minimum 30% CGT rate makes this significantly harder, even for people with relatively modest living expenses and incomes.

A flat minimum tax on capital gains ignores individual circumstances and creates a situation where someone taking time away from paid work for caregiving, maternity leave, or health reasons could still face a disproportionately high tax burden despite having little or no employment income.

I respectfully ask that the government reconsider the minimum 30% CGT provision or introduce exemptions and lower rates for lower-income individuals who are not yet eligible for superannuation access but are relying on long-term investments to support themselves responsibly and independently.

Thank you for taking the time to consider my concerns.

Kind regards,

[Your Name]

As in title, around 20 years old and feeling a bit unsure from last night’s budget.

Recently I’ve shifted my attention to ETFs to get the ball rolling for FIRE. Moderate degree of ethical concerns (negative screen sin stocks desired) so have started with around 1.6k in DZZF. After learning more about how it’s less diversified and doesn’t track the general market, I was ready to start implementing a new 70%:30% VESG:VETH allocation for new contributions.

But the budget last night has rattled me a little. It’s my first major tax reform as an investor so I’m sure that’s to be expected. I understand the government’s intention with helping first home buyers, but was struggling to see how CGT on equities should relate to that. I’m honestly not too sure how to continue from here, and see so many different opinions of people in panic on this subreddit. Should I continue my VESG:VETH plan, or is it sub-optimal now? Just looking for a sensible course of action that’s not hasty.

Thankfully I’ve managed to save up enough for a house deposit once I’m out of uni as a safety net, so hopefully that shouldn’t be an issue, especially if 5% scheme remains. I’ve locked this money away in a HISA and won’t be touching it until then. Not sure if I should continue to funnel savings into that, or if a deposit beyond a comfortable 5% is excessive.

Sorry for the rant, would appreciate some honest, simple advice of what you’d do as a young person.

Edit: Thanks for all the replies everyone, feeling heaps better after expressing and hearing a range of perspectives. Definitely the priority is to make the most of the existing seems like 5% deposit and FHSS to get a PPOR. Also apologies if this reads as an entitled post - truly not the intention, and I know it’s privileged to even be financially secure enough to be concerned about CGT, but have just seen a lot of discourse since last night and wanted to seek clarification. In saying that, some of the replies have been a bit demoralising, in that they assume things about my life or personality just from me simply asking a question, which was a bit disappointing. I’ve also adjusted my clarity for a few sentences to better articulate my ideas. Thanks all :)

This budget has achieved a few simple things

1. PPOR is the tax shield now

- This budget will encourage more incentive to maximise/upgrade PPOR. There will be more tailwind pressure, as good quality PPORs will be in demand in favour of low/mid-grade IPs. People will be incentivised to trade PPORs amongst each other and renovations on existing PPORs will increase. Furthermore, this will be too hard for any political party to touch in future as this would create wide-spread outrage.

2. Super is even more incentivised

- The tax break from super is too large to ignore any longer. It is such a favourable tax environment and still provides very, very good returns; the clincher, however, is the restrictions to accessing it and the legislative risk that also comes with it

3. Negative gearing/investing in established IPs will decline

- This, I think, is a positive first step, as houses should not have been a way to get filthy rich in the first place. The classic buy infinite IPs in Australia will not apply anymore. Which I think is fair, but it still feels like the ladder was pulled up just as (we FIRE-ers) were about to use this. The game changed after we had already started playing it. Investing in commercial RE may be more attractive now that negative gearing still applies to this class.

4. Investing in shares outside super just became less attractive

- Due to the loss of the 50% discount and the minumum 30% tax on the way out. Still a great wealth engine, but less powerful than previously. Could consider debt recycling into this as negative gearing is still valid for shares?

Keen to hear more discussion! It seemed shocking when I digested the budget. But now, I think the incentives have just changed, and there is still scope for us to CoastFIRE rather than FIRE entirely. Unfortunately, the ever-increasing ageing population needs taxation money, and the working population needs to foot the bill.

Was interested in the tangible change of the new CGT rules on FIRE.

The FIRE method was basically:

• Calculate Your Number: Multiply your desired annual retirement expenses by 25. For example, if you need $60,000 per year, you need a $1.5 million portfolio.
• The 4% Rule: Once retired, withdrawing 4% of your portfolio annually is generally considered safe for your money to last 30+ years.

Everyone's cost base might be slightly different, but the general consensus seems to be tax paid would be around 10-15% of your income. I will split the difference and say 12.5% tax. So in this scenario, you withdraw $60,000, you pay $7,500 in tax, and you take home $52,500 for the year.

Under the new method, assuming:

• Hold time of shares: 30 years
• Annual return on shares: 10%
• Inflation rate: 3%

If you were to withdraw $60,000 in shares in 30 years, the cost base of this would have been $3,439 as of todays money. Adjusted for inflation at 3% per year that cost base becomes $8,345 in 30 years time.

You would pay 30% tax on the difference, which is $15,496

So your 60,000 withdrawal under the new rules would hypothetically net you about $44,500 after tax instead of $52,500 under the old rules.

If you wanted to maintain an after-tax withdrawal rate of $52,500, you would need to withdraw approximately $70,000 per year. Making your FIRE target $1.75 million, instead of the old $1.5 million.

Food for thought I guess..

let me know if I've made any errors here

With the new CGT changes in the 2026 budget, I've been trying to work out the real impact on a FIRE drawdown strategy.

My understanding is that under a 4% drawdown rule on a $2.7M portfolio you're only selling $108,000 worth of units per year, not liquidating the whole portfolio at once. So the CGT calculation only applies to the gain component of those units sold annually, not the full portfolio value.

If roughly 74% of each unit's value is gain at retirement, that's about $80,000 in gains per year. Under the new inflation-indexed rules the real gain after 25 years of inflation is closer to $44,000, taxed at the 30% minimum, so around $13,200 in CGT annually. Effective rate of about 12% on the withdrawal.

Interestingly that's almost identical to what you'd have paid under the old 50% discount rules at a 32.5% marginal rate.

Am I missing something or is the actual annual CGT impact of these changes pretty negligible for long term buy and hold FIRE investors who are only selling 4% per year?

Seems like the people most affected are those planning a full liquidation event rather than a slow drawdown.

That obviously carries its own future risk with how they treat super policy but the suggestion was stop investing further into shares and redirect that $ directly into none concessional super. We are already maxing out the concessional contributions. Rational is that it won’t carry the CGT penalties and potentially future abolishment of franking credits. Thoughts?

Context, 22, have been buying stocks since 18. With new the CGT changes announced last night, what's everyone thinking as the next step forward? Is it even worth purchasing equity anymore?

Feels like they've just pulled the ladder up and the "in-betweeners" are left to face consequences.

Would love to hear your thoughts.

.. If you are only able to achieve a 4.6&#37; return over 5 years. That seems like a sensible number to use given the return of growth assets over the past 50 years! (sarcasm)

No doubt there are plenty of others like me, in the accumulation phase, who have had their entire strategy turned upside down as a result of last night's budget.

I've had a bit of a think about what I need to do in the short to medium term future. I'm mostly posting this to hear others thoughts and to have holes poked in my plan. These are just approximate and I'll no doubt change it as details become clearer.

1. Discard the idea of retiring fully before Super preservation age. Instead I'll look to achieve an income stream up to $45k using dividends and/or part time work.
   1. Pros: Still get to use the lower tax thresholds
   2. Pros: Reduces my FIRE number significantly
   3. Cons: Still need to work
2. Following from above, I'll continue contributing to growth shares as per usual, since the impact of of the 30% minimum tax is nullified. As I near retirement and start reducing work, I'll start prioritising high dividend yield ETFs to provide the abovementioned income stream.
   1. Pros: still get high growth from investments
3. Max out super concessional contribution cap. This is now the most tax advantageous investment vehicle and it would be silly not to take advantage.
   1. Pros: Pre-tax contributions taxed at 15%
   2. Pros: Can be withdrawn tax free at preservation age
   3. Cons: Need to wait until preservation age
   4. Cons: Can be subject to future reforms (hopefully grandfathered in)
4. Look to upgrade my $700k Sydney townhouse to a house in the $1.5-$2 million range as soon as possible.
   1. Pros: when I downsize, PPOR gains are tax free.
   2. Cons: could be stuck in an underperforming market, especially considering the impacts to the broader property market as a result of CGT and negative gearing reforms.
5. Think about how I'm going to structure future inheritance towards my child. So far the best idea I have is to incorporate that into my super, and give it as a gift once I reach preservation age. But again I'm very wary that this will be subject to reform.

Hello, I'm 18 and I have recently received around a million dollars, I'm unsure of what to do and how to best make use of it. Should I contact an accountant? A financial advisor? A Lawyer?
People in my life have recommended ETF's but I'm scared I will make the wrong choice. Any advice would be very much appreciated. Thank you.