Tax Changes Are Coming, But Don’t Let the Headlines Drive Your Decisions
By Joe Smith
Major tax reform inevitably creates uncertainty. With changes to capital gains tax, negative gearing and discretionary trusts on the horizon, many investors, business owners and families are understandably asking the same question: should I be doing something now?
My advice is simple: be informed, be prepared, but don’t panic.
Changes to capital gains tax and negative gearing have been legislated, with key measures commencing from 1 July 2027. The capital gains reforms include replacing the existing 50 per cent CGT discount for individuals and trusts with indexation for affected gains, together with a 30 per cent minimum tax on certain capital gains. Negative gearing of residential property will generally be restricted to new builds, although important transitional arrangements apply.
The Government has also announced a 30 per cent minimum tax rate for discretionary trusts from 1 July 2028, subject to exceptions.
These are significant reforms, but tax law is rarely as simple as the headlines suggest.
The real impact will depend on your individual circumstances, existing investments, ownership structures, transitional provisions and ultimately the detailed legislation and guidance from the Australian Taxation Office. The ATO has acknowledged that its guidance will continue to be updated as further stages of legislation are passed.
That makes this a time for planning, not knee-jerkreactions.
Selling an investment, transferring assets or restructuring a family trust can have consequences well beyond the tax measure you are trying to address. Acting prematurely could potentially create a tax or commercial problem rather than solve one.
As accountants and trusted advisers, our role is to look beyond the headline. We need to understand what has actually changed, consider how the rules apply to each client and weigh up the broader consequences before recommending action.
If you would like to discuss your individual situation, please contact the team at UHY Haines Norton CQ on 4972 1300.
