The CGT Debate: Protecting the Retirement of Mum and Dad Investors
Why This Matters — Now
The Federal Government is under mounting pressure to reform Australia's 50% Capital Gains Tax discount — the mechanism that allows investors to pay tax on only half the profit from assets held more than 12 months. Proponents frame this as fixing an intergenerational inequity baked into the housing market. Critics call it a retirement tax on the middle class.
With Australian Senate Select Committee hearings beginning this Monday, the window for shaping the outcome is narrow. The stakes are highest not for institutional investors or high-net-worth property empires — but for the millions of Australians who use property as their de facto superannuation.
Who's Really at Risk: The Accidental Investor
The policy debate has framed this as a battle between housing affordability and investor privilege. That framing misses a critical cohort: lower-middle-class Australians, now approaching or in retirement, for whom direct property investment was the only viable wealth-creation vehicle available.
These are people who:
• Entered the workforce before compulsory super (or when super balances were negligible), meaning employer contributions alone couldn't fund a comfortable retirement.
• Choose property for its tangibility and stability — not for tax minimisation strategies unavailable to them anyway.
• Relied on eventual asset sales to fund the retirement, the superannuation system of the 1980s and 90s was never going to provide.
Applying a blanket reduction to the CGT discount doesn't just inconvenience these investors — it retroactively rewrites the financial plan they've been executing for 20 or 30 years. Unlike institutional players, they have no offshore structures to retreat to. They have a title deed and a plan for a dignified retirement.
What Reform Should Actually Look Like
Our position is that reform, if it must come, should be surgical. The current debate risks using a sledgehammer on a problem that requires a scalpel. We advocate for two non-negotiable protections:
1. Grandfathering for Existing Owners
Any changes to the CGT discount must apply only to new investment property purchases made after the legislative date. Retrospective application would shatter investor confidence and trigger a wave of distressed sales — the very market instability the government claims it wants to avoid.
2. Tiered Thresholds Based on Portfolio Size
Reform should target professional-scale portfolios — those with a net asset value exceeding $10 million. This draws a defensible line between the mum-and-dad investor with one or two properties and the corporate-scale landholder whose tax minimisation capacity is structurally incomparable.
"Changes to CGT won't just affect property. Business sales, share portfolios, and estate structures all carry capital gains implications. If you haven't spoken to your accountant or financial adviser about how this could affect your position, now is the time."
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