I think there is a real possibility that we see many 'investors' spooked and get rid of their residential property investments. Many would have seen large capital gains in the past few years and therefore be happy to exit, even foregoing price in order to get out quickly. Markets can be a fickle beast when sentiment turns and I would expect many of these 'investors' have made their investments on a hope and a dream (and the advice of some peanut advisor), so more susceptible to panic selling.

Who knows what happens but I'm sure the unintended consequences will appear in good time. What we can be certain about is that whoever gets in at the next election will do so by promising to kick our economic can down the road yet again. It is a scary thought.

While we're at it, can we have a flat income tax rate, that they dial up and down as they balance the budget. That would be one way to make everyone more conscious of incomings and outgoings and the trade-offs. Sorry, don't mean to hijack the conversation.

For CGT, the devil will be in the detail. Are they risking triggering any sharemarket sell offs? I feel like grandfathering and inflation pegging should be non-negotiable. And none of this unrealised gains nonsense. That idea seems like it came from some activist who has never done maths or owned anything.

Agreed. 100% back to Indexing.

Albo is infuriating. So scared of offending someone, I'd be blown away if he does more than just give the discount a little snip.

He better be careful, if Pocock wakes up one day and decides to make a political party, it's all over red rover.

You covered it well @Strawman: indexing is an appropriate alternative to a flat discount rate and grandfathering is a must as a fundamental principle of a reliable governing system to support investment.

Further to your point about the lump sum nature of a capital gain I think you should also flag the averaging mechanism that was also part of the pre 1999 capital gains system (hardly ever mentioned). Tax on a capital gain was first calculated from the indexed cost base, then net capital gains were taxed by dividing by 5 and then progressive tax rates used to calculate tax then multiplying that amount by 5. So the gain is notionally spread over multiple years for the purpose of tax rates used.

Due to our progressive tax system most of a significant capital gain generated over decades would be taxed at the top rate – ie it was not progressively taxed. By averaging this allows for some degree of equity to how income is taxed on progressive scales. Not perfect but at least not as punitive.

A write up from the AFR this morning that doesn't sound horrible (indexation moving forward with a hybrid grandfathering of already owned assets).

A hypothetical example of how the transition to the new regime would work is an investment property that is held for a total of 15 years, including 10 years (2016 to 2026) under the 50 per cent CGT discount and five years (2026 to 2031) under the future inflation indexation model. Two-thirds of the gain (notionally 10 of the 15 years) would be taxed by the existing 50 per cent discount system, while one-third of the gain (notionally five of the 15 years) would be taxed under inflation indexation.

https://www.afr.com/policy/tax-and-super/cgt-change-to-tax-existing-investments-based-on-length-of-ownership-20260503-p5zt9x

I'm cautiously optimistic, but wouldn't be surprised to see it compromised at the last minute by backlash, or special interest carve outs. Taxation should be grounded in fairness and simplicity (both left the chat some time ago). Indexation is a step in the right direction WRT fairness, and with online tax portals a background calculator that automatically sorts out indexation based on a buy and sell date would not be hard (it's pretty amazing how much of a tax return is pre-filled these days).

If I were King:

• Index CGT
• Remove many many deductions from individuals
• Reduce income tax rates due to removal of deductions
• Bring back the Lamington Tax Offset to help those who require it whilst not giving it to the very high earners
• Give everyone a UBI and then make it taxable
• Provide a basic level of Utilities for free and then have an increasing charge for more consumption. (everyone deserves to be able to run an aircon/heater/fridge/lights/bathrooms)
• and finally, stop telling people what they can and can't do with their own assets/money as long as it doesn't hurt others.

ta

@Strawman i was in the AFR on the weekend talking about this. I don't see a clear connection between mooted changes to the CGT and fixing housing issues, ie making it easier for younger people to afford a house. tenous connection at best. as i said in the article, reducing immigration, limiting the number of property investors can hold, limiting negative gearing, and many other measures come first. So that's the first point I'd make: CGT changes do not fix housing affordability imo

Secondly, a wholesale change to CGT that includes shares as well, limits the ability of the young to accrue wealth, taxes them more, and locks in the wealth structure, limiting mobility. So increasing CGT a lot is a bad thing.

Thirdly, i invested under the indexation method, and it was administratively onerous, and I thought it was also too onerous. You take risks investing in equities, an inflation offset was not enough, imo, i think a cost of equity 8-10%pa is more reasonable or inflation plus 3-4%pa

Grandfathering is fair, but it limits the revenue gain to the government a lot, and embeds low activity where large gains exist, eg property.

so if i was benelovent dictator, i would do all the things to put the pressure off housing, but beware what you wish for, Australia would collapse if housing collapses, we are now drug addicts, the horse has bolted, so needs a gentle approach over a long time and probably won't work. Back to the tax i would target residential property, leave the other assets out (ok, that's hard to do), and have a higher than inflation indexation adjustment.

when i bought my first property in 1990, it was 2.5X my gross income, 3 bed quarter acre block. Now what is it 7-10X, its goign to be a difficult road to fix that.

100% agree on the indexation requirement, so the asset cost base rises in line with inflation, rather than any changes to the tax rate once the tax rate has been set. When you say "potentially limited to residential housing" @Strawman - are you saying that the proposed CGT discount amount is likely to be limited to residential property? If so, does that mean there will be an incentive for people to change the mix of their investments to include less residential property? And would that be a good or a bad thing?

I don't have any residential property assets outside of the home that I live in, which is exempt from CGT, but I do pay CGT on shares sold, outside of my Income Stream Account, but I could wear a CGT discount reduction from 50% to 33% across the board (including shares) if the cost bases were properly indexed, as long as that money (tax) raised was used well, not wasted. Even reducing government debt is a good use of such revenue to be honest because it reduces interest payments on that debt and ultimately will allow for more to be spent on essential services.

If there was a super like option I would be putting that against @Solvetheriddle's post. This proposed solution is just another bandaid fix, in the long line of bandaid fixes, that pretend to fix something but don't actually solve the problem. If they wanted to actually to fix the problem, they should make the hard call and cap negative gearing in a planned and staggered approach to help wean people of the property drug. The continued grants and incentives only make things worse, detract from productivity and make us less competitive globally with our already high wages.

TBH I think over time negative gearing should only be allowed against your primary place of residence and not multiple residences. This change may not need us to change the CGT rate, as any losses intentionally incurred can offset the property can be recouped when the CGT event occurs

I am happy to wear the reduction in CGT discount on shares and residential property because this needs to be a consistent approach. I am fortunate to never have owned assets during the indexation method, but it does seem onerous for each holding having to work out the applicable indexation rate, although I'm sure an AI agent or Power Query etc could do it much quicker if a standard rate is applied for each month.

I know its off topic but i think the fact that they are asking the wrong question is my main feedback.

ok, so i just got canned for the interview -- i suspect they found a better guest which, lets face it, wouldn't have been hard. But i'll tell myself it's because they didnt want to drive up to the mountains :)

At least it sparked a good thread. Excellent points all around.

And great that @Solvetheriddle managed to get some thoughts out there -- nicely done btw! I'll post the link and highlight part of it. You made some great points mate.

@Bear77 it's all speculation and rumour (maybe some selective leaks to try and run things up the flagpole), but one of the articles i read said they might be considering limiting the changes to investment properties. Hard to think that wouldnt have an impact to some degree, but as @Solvetheriddle said probabky not enough to fix housing affordability.

Here's the AFR link:

(you've already doxed yourself Shawn so im putting the pic in too :)

Ok this might throw the cat amongst the pigeons but I’ll just say it. As an investor (but not in property) I would suggest that you’re right that indexation is the logical way forward. UNLESS we as a nation are of the belief that housing is for living in and not for investing in. If we wanted to make the decision to improve affordability we might choose to have punitive conditions as compared with other more productive investments and this could include a capital gains discount which is less than inflation.

I say this with absolutely acknowledgement of my biases: share investor, father of three young children who will never afford a house (unless I’m able to hand it to them)

As they say a good head for radio ????

Agreed @Strawman. I also question the arbitrary way we are focusing on CGT some 25 years after a herd of boomer horses have well and truly bolted into their exclusive green pastures of residential real estate and kicked the gate shut behind them — but if we must, then grandfathering and indexing are essential, in my opinion, in the interests of fairness.

A concern I have is that this creates some perverse incentives. For example, I’ve never invested with borrowed money before. However, if this goes through there would be one more thing in the ‘Pro’ column (that of increasing ones cost-base to reduce the impact of CGT). I reckon there would be no shortage of operators out there to offer it too, as they scramble to recoup some lost business in interest only home loans.

@Strawman with assets in mutliple jurisdictions, I see Governments across the developed world are struggling to balance the books, and so I am somewhat resigned to the fact that every now and then some tax ruling is going to take a chunk of my hard earned assets, and I have built this in to my "margin of safety" planning for retirement!

Having said that, I have recenlty been the beneficiary of the UK scrapping the Lifetime Charge on pensions, a 25% Government take above a certain limit, which was NOT recognised as Tax by the ATO - so a real hit to me. Therefore, anything the Australian Government does to me I sort of see as "you win some, you lose some".

I'll probably alienate myself to most of the investing community in Australia when I say that I never understood the negative gearing lark on property, when those who own only 1 property - the one they live in - don't have access to the benefit. (Yes, I know that any gain is completely tax free on your primary resident). Are houses intended to be homes or investment assets? I think the fact that they are the latter in Australia has contributed to an unbalanced economy.

I agree with grandfathering or having a transition on scrapping any changes to capital gains, mainly for the reason you made: people take long-term decisions based on the rules at a point in time, and you are punishing people who go to the trouble of understanding the rules and diligently planning for their futures. So, a transition is good.

As to whether the CGT discount should be scrapped, indexed, or reduced from 50% to something else, I don't have a strong point of view - because at the end of the day the Government has to decide how much tax it wants to take from investment gains versus the other available sources. Obviously, as a long term investor, I like the 50% discount, so I'm not going to vote for changing it. Equally, as you say, there should be some recognition of the cost of capital / inflationary effect, but that needs to be balanced with avoiding complexity.

Personally, I think the Governmet could do more with 1) raising the GST and 2) implement an inheritance tax to create the fiscal headroom for bigger reforms, including a) lowering taxes on low to middle income people and b) lowering the tax rate on business and investments of all kinds.

Philosophically, why should the taxes I pay vary based on whether the income is earned through my labour or applying my labour to capital (provided losses can be offset against future gains to recognise the risk)?

I despair that the Government will fail to use its strong majority and the lack of a viable alternative to make meaningul and generational change. I fear more incrementalism.

so if i was benelovent dictator, i would do all the things to put the pressure off housing, but beware what you wish for, Australia would collapse if housing collapses, we are now drug addicts, the horse has bolted, so needs a gentle approach over a long time and probably won't work.

I agree with this, which is why I think making residential property a less appealing asset class versus commercial/industrial/shares etc is the best path forward.

The most potent part of residential property is that it allows leverage in a way that no other asset class does. To that end, I think negative gearing has done a lot of the heavy lifting on RP as an investment.

I know a lot of young people are rentvesting these days as the only viable way for them to get on the property market. A change back to indexation would hit them pretty hard as they often target high growth areas. Ditto with shares.

Frankly, I think this policy is not particularly well thought out. The government has the largest majority in the history of the Australian Parliament, keeps insisting it wants "big reform" but the first "big reform" is just blowing the dust off a tax policy from 41 years ago.

I think there needs to be an acknowledgemnt that houses are not just an asset class, they are a social good. Home ownership has tonnes of benefits that don't show up in metrics. It's a sad state of affairs when younger people can't buy a home despite paying 47% marginal rates. Having saved money at confiscatory tax rates to then roll back to indexation which will likely see most of them paying close to their marginal rate is pretty egregious.

From where I sit, the big winners look to be the buy and hold crowd who are generally older, while the young get tossed under the bus again.

Putting CGT aside for a minute, I think allowing tax deductions for interest on mortgages for owner-occupied homes is an interesting concept (allowable in the US). It would provide tax incentives for young people buying their first home. My son (who lives in Seattle) told me about this. I believe it would be even more effective if it applied to new builds as it would increase the housing supply, which I believe is the underlying issue with housing prices.

This is how it works in the US according to ChatGPT:

Interest is often deductible on owner occupier homes but with conditions:

• You can deduct mortgage interest only if you itemise deductions (many Americans don’t, due to the high standard deduction).  
• The loan must be secured by your home and used to buy, build, or improve it.  
• There’s a cap: generally interest is deductible on up to US$750,000 of mortgage debt (post-2017 loans).  

BRING IT ON!

King for a day, tax reform (note exact rates applied for suggestions would need to be worked out by Treasury with a view to maintaining or reducing tax as a % of GDP):

• CGT: Index cost base – not as complicated to manage now with IT solutions than it was pre-1999. Impact for long held assets is negligible and we want long term investing, prefer grandfathering but a prorate application of methods is an acceptable compromise and not hard to work out with software.
• Homes: interest on residential properties as deductable up to a cap (approximately the interest on average home at 10 year average rate), level playing field with investors.
• Borrowing: influence via APRA, increasing bank LVR on non-productive assets. Kill first home buyer and other similar schemes. I know this will make it harder initially for first home buyers, but those who do buy will do so with appropriate capacity and prices will ultimately be lower.
• House supply: Link LGA funding to residential property growth rates (eg under 2% reduce funding, above 4% growth increase funding).
• GST: broaden to everything and increase rate (probably 15%), increase tax base and reduce reliance on income tax.
• Welfare Adj: Over compensate welfare recipients for impacts of GST with one time increase. May include a social housing element in LGA funding conditions.
• Stamp Duty: Link the increase in GST revenue to the states to their removal of stamp duty and payroll tax. Improves housing and labour mobility, affordability and efficiency.
• Income tax: Index rates, increase threshold to 50-75% of average income and top rate to 100% over average income (preferably just 2 rates), Treasury to calculate appropriate rates. Offer option of significant flat deduction in place of itemised deductions.
• Superannuation: Tax income taken out of superannuation exactly the same as any other income. 

Take a deep breath and keep dreaming!

Reading this thread, one thing is clear: the Strawman team should be put in charge of the country's tax policy. It might not lead to a golden age of prosperity, but it'd be a hell of a lot better than what we've got now :)

Maybe we could at the very least push our pollies to live within our means

@Rick that was their in india as well, which is a good concept, but again need to restrict only for first home buyers instead of giving money to people u five them tax deductions atleast it will be relief for cost of living preesures.

@Strawman will not agree becuae it still doent address supply side issues.

to solve that we need more skilled manpower in construction industry, for that need to have targeted kigration related to that field

Regarding the fear of 'popping the housing bubble', is there some reason why we can't let the air out of the policy tailwinds slowly, by for example, stepping down 5% of the effective tax benefit every year over 20 years so that policy slowly goes away (with grandfathering etc)? People might say 20 years is too long, but the entire point is to slowly redirect people's capital to building businesses and away from asset speculation, without tanking the entire system. It might be slightly finicky for accounting but software can handle it.

In other words, say - this is where we're heading, we all know why, it's happening slowly so everyone has time to adjust.

I've got a line I use with people at work who aren't from Australia. When they ask what it's like here, I tell them: "We're the land of rules and taxes." And then I remind them that we were founded by criminals, so maybe that explains why we needed so many of them. Usually gets a laugh. But like most jokes, there's a truth buried in it.

A Tax for Everything

Australia is, without question, one of the most taxed nations on earth when you add it all up. Income tax. GST. Fuel excise. Alcohol tax. Tobacco tax. Capital gains tax. Stamp duty. Land tax. Fringe benefits tax. Payroll tax. We have taxes stacked on top of taxes, and if the government finds a gap, you can bet there's a working group somewhere figuring out how to fill it.

Now, some taxes I genuinely understand. Cigarettes? Fine there's a public health cost and someone has to pay it. Tax on Alcohol? There's an argument there too. But even on cigarettes, I think we've gone too far. When you push the legal price so high that organised crime steps in to fill the gap, you haven't solved the problem,you've just created a new, worse one. Today Australia has a booming black market for illegal tobacco, and it's funding serious crime. That's what happens when tax policy tries to be too clever.

The Productivity Argument Nobody Wants to Have

Here's the thing that rarely gets said clearly in the political debate: lower taxes can produce more tax revenue. It sounds counterintuitive, but the logic is straightforward. When people keep more of what they earn, they spend it locally. Local spending creates business activity. Business activity creates jobs and profit. Jobs and profit generate tax. If you get the settings right, a lower tax rate on a bigger economy can outperform a higher tax rate on a stagnant one.

The problem is that requires a government willing to think long-term, and we haven't had many of those.

We Waste What We Collect

But here's where I'll give you both sides of politics equally because this isn't a left or right problem. The issue isn't only that we tax too much. It's that we spend it appallingly badly.

You want a symbol of government waste? The Bureau of Meteorology spent an eye-watering amount on a website redesign that made things worse. That's not an isolated incident it's a pattern. Billion-dollar IT projects that fail. Consultants hired to tell departments what their own staff already know. Money shovelled into programs that produce reports, not results.

If Australian taxpayers could trust that their money was being used efficiently and intelligently, the conversation about tax levels would be very different. But they can't and they know it.

We're Offshoring Our Future

There's a bigger strategic problem that doesn't get enough attention. Australia is increasingly comfortable letting other countries do the hard industrial work for us. We dig up raw materials, ship them overseas, buy back finished products, and call it trade. Fuel refining is the starkest example we became so dependent on imported refined fuel that a genuine supply disruption could have brought the country to its knees. COVID exposed that vulnerability for everyone to see, and yet the policy response was half-hearted at best.

We should be asking: what industries do we need to maintain on Australian soil, not for economic efficiency, but for national resilience? Energy. Food production. Advanced manufacturing. Critical minerals processing. Instead, the incentive structure we've built makes it cheaper and easier to offshore almost everything. That's a short-term gain trading away long-term security.

The Qantas Question

And then there's the corporate handout problem. During COVID, Qantas received substantial government support to survive the pandemic. Fine there was an argument for keeping the national carrier alive. But here's what I can't accept: the government handed over that money as a gift, not an investment.

If a private business needed saving and you put in the capital, you'd take an equity stake. You'd own part of it. Then, when the good times returned and they did for Qantas, spectacularly you'd sell that stake at a profit and return the money to the public purse. That's not radical. That's just basic finance. Instead, Australian taxpayers subsidised the recovery of a company that then went on to post record profits. The public carried the risk; shareholders got the reward.

That's not a market economy. That's privatised profit and socialised loss and it happens again and again.

What We Actually Need

I'm not anti-business. I'm not anti-tax. What I want is a government that does the basic job well: create an environment where Australian businesses can grow, where new industries can take root, where smart people want to start things here rather than in Singapore or the US.

Instead, we regulate heavily, tax repeatedly, spend inefficiently, and then wonder why the economy feels increasingly like it's running on fumes.

We have a remarkable country. Genuinely remarkable. But somewhere in the last twenty years, we got comfortable. We assumed the good times were structural rather than circumstantial. We assumed the mining boom was a foundation rather than a windfall.

It wasn't. And the bill for that assumption is still being written.

Rant Over!

My response for the ABC is that it is an ill thought out cash grab, from a desperate and incompetent government. It's a clear disincentive to investment from a government that doesn't want the average punter to have income streams other than salaries that they can maximise their PAYG takings from. Rather than invest, they want people to spend everything they earn on consumption that they can earn more GST from and ensure a compliant, welfare dependent Labor voting rump.

This is a blatant cash grab from a section of the community that Labor is pretty sure doesn't vote for them, to increase handouts to sections of the community that they think they can buy votes from. The cut to the CGT discount is just a thin edge of the wedge on the path to increased 'wealth' taxes.

The incredulous part of it is that the suggestion that it is for 'intergenerational fairness' is completely ludicrous. It is going to massively disadvantage younger people, particularly if there is grandfathering.

@Bear77 I doubt very much that you will get a reduction in CGT discount AND indexation. It is more likely to be a reduction in CGT discount OR indexation. Considering cumulative CPI is something like 53% since 2009, indexation would potentially give people increased CGT discount on capital gains (particularly on long held investment properties where the biggest growth has been) and the thieving grubs won't want that outcome, hence the 'grandfathering'.

I'd give it zero chance of any additional 'revenue' being used well. The ONLY use I'd trust these muppets to use it on is paying down debt, but there's also zero chance of that when they've increased it by record levels since gaining office.

@tomsmithidg A reduction in the CGT discount means we pay more CGT, so indexing the cost base to account for inflation is a possible offset that may make that CGT discount reduction more palatable for voters. One creates more revenue for the government (i.e. reducing the CGT discount so we pay more CGT on asset disposals) and the other offsets that cash grab by allowing the gain to be calculated in real money terms, i.e. allowing for inflation, unlike now where there is no indexation so gains are NOT calculated in real money terms now, and by that I mean in terms of what the cost base would purchase today vs then.

Exactly my point mate, the reduction in the discount is for the purpose of grabbing more tax. The major increase in capital gains is investment properties that have been held for a long period of time. If they adjust the cost base for inflation they will make less money, possibly less than if they just keep the current 50% discount. They clearly don't give a rats about voters, they went to the last election saying they wouldn't touch this stuff after it lost Shorten the unlosable election previously. Some boffin has clearly done the vote counting and they think they can sneak this through now and not have it cost them the next election.

If they had any decency (but this is Labor) they'd run on this as an election platform before touching it, but seems they are 'running out of other people's money' too quickly to risk it at this stage.

I'd love it to be like @GazD 's idea where housing is for living not investing, but it's not even necessary to 'pop' the housing bubble @lastever to inject some affordability. Federal and State governments just need to get together and remove all the taxation from a new build, for a first homebuyer only, to reside in only. That would lower the cost of a home for those starting out by about 50%. The government forgoes all the revenue. It doesn't bid up house prices, and it's only available once. As a primary place of residence any capital gain is tax free, and if the buyer wants to later sell they then have to compete in the same market as everyone else. It would need some safeguards around it, for example only for Australian citizens and requiring the tax to be paid retrospectively if the house is flipped inside a certain time frame (say 10 years).

There's some fairness, with youngsters getting to buy in at a similar price and a similar sized mortgage to their forebears, but with higher wages.

I see this as a solution for the wrong problem. Shouldn't tax incentives encourage more investment and therefore, help solve the housing crisis?

What about the tax incentives provided to the build to rent schemes? Cutting incentives to private individuals whilst providing generous tax incentives to companies seems like a reverse Robin Hood. Although it's not the first time the government has tried driving with one foot on the brake and the other on the accelerator.

As for "free up housing supply". Guess what provides an incentive to pass the investment property on as inheritance, instead of selling it now. You guessed it, a larger tax bill.

So, I am sure we will see CGT changes dressed up as a social cohesion argument. Helping the younger generation etc. etc. whilst the rules are grandfathered for those that have already benefited. Essentially, improving taxation revenue from the younger generation, which the government is claiming to help. Maybe help means funding bigger deficits and allowing the government to give out more "cost of living relief"? (Have I mentioned the brake and the accelerator line?)

Why and how are other asset classes are brought into the housing conversation? Social cohesion or revenue? A lot of young people have turned to index funds and investing as a means of building wealth, as housing is out of reach for them. If they need to crystalize this gain to put the money up for a deposit, it gets realized in one large hit. (Not arguing fairness here but pointing out the settings don't help young people). The argument goes out the window if the government decides to use the revenue to buy every person a house on their 18th birthday.

As for the tax settings themselves, I can't contribute more than what's been covered. I agree with @Strawman that we'd be better off with this group setting fiscal policy. Genuinely surprised how many people have put their hand up and said "Hey, indexation is fair". I agree wholeheartedly.

Also, it is diabolically hard to change the rules retrospectively without significant unintended consequences, particularly for people that have planned modest retirements with the current set of rules.

As mentioned, my point isn't to argue what is fair or unfair (I think others have done that well). I only add this to post to point out the contradictions in the two of the main arguments that will be used to sell this tax increase as something that is "good for young people" and "good for housing affordability".

Finally, I acknowledge that there is a role for governments and taxes should be paid by those most able to pay them, however, there are fairer means of doing this whilst encouraging investment.

So, what problem does this solve?

They are planning to grandfather it from what I hear @tomsmithidg, so the CGT discount reduction, if it happens, would only apply from the time the change becomes law, with the full 50% CGT discount applying to all gains made up to that point. The purposes of grandfathering it is so that it doesn't unduly penalise people who have structured their investments over prior years based on the current legislation, so my point is that when you said that they are unlikely to reduce the discount AND index the cost base, but would be more likely to do one OR the other, I pointed out that the two things work in opposite directions, so my position is that they are never going to index the cost base UNLESS they ALSO reduce the CGT discount rate, otherwise they are simply shooting themselves in the foot, the ONLY reason they would consider indexation would be to try to offset the impacts of lowering the CGT discount rate. If they allow cost base indexation alone, without a discount rate reduction, they simply collect less CGT, period, there is NO extra tax collected at all, so why would they do that?

And the indexation would also begin from the time the new legislation was inacted, it would not be retrospective, so there would be no retrospective CGT discount reduction and there would also be no retrospective cost base indexation, because everything prior to the proposed changes would stay unchanged, i.e. be grandfathered. So the indexation, if it was to happen, would only apply going forwards, not backwards, as with the proposed CGT discount rate deduction.

What it would mean is that people would need to record a reasonable valuation for their various assets at the point that the proposed new legislation comes into play, if it was to proceed, in whatever form it does, because then there would be two different calculations to make on eventual disposal of assets that CGT applies to, one for the time up to the new legislation, using a 50% discount rate, and another for the time after the new legislation, using the reduced discount rate and possibly (but probably not - I don't personally think they'll allow indexation even though I strongly support it) an indexed cost base that starts from the time the legislation comes into affect. That would be the only way they can do it if they are grandfathering. With or without indexation - and, as I say, it will probably be without. But they would only allow indexation if they were also lowering the CGT discount rate or raising more CGT in a different way. And it will not be retrospective indexation.

Geoff Wilson on X:

Wake up Geoff...

Yes capital gains will be taxed the same as income (purchasing power adjusted) - so lets fix income tax!

Stop punishing success of those who employ labor

@Tom73 , they don't want to 'fix' income tax, certainly not if it decreases their take. If they were interested in fixing income tax and 'making it fairer', they'd start by indexing the brackets. As it is the income tax take has increased by over 90% in the last 10 years, mostly due to bracket creep, but also due to the crazy immigration numbers.

They canned the stage 3 tax cuts after saying they would honour them before the election they were voted in, and now they're going after the CGT and negative gearing that they said they wouldn't touch before the last election.

How useless is this mob! Not only have they got record tax revenues, but also record commodity prices underwriting their 'budget' and the muppets are still running up record debt while tanking investment and productivity. They really are an exceptional sort of incompetent.