Superannuation Discussion + market volatility

[burmans]

Along with increasing rents as supply dries up…

Of course demand will reduce also as home buyers (ex renters) buy up all those established houses being sold by disillusioned investors.

The real issue is as always new homes but there is an (albeit somewhat mild) incentive now for investors to move from established to new properties.

 

[hydrabyss]

Of course demand will reduce also as home buyers (ex renters) buy up all those established houses being sold by disillusioned investors.

The real issue is as always new homes but there is an (albeit somewhat mild) incentive now for investors to move from established to new properties.

That assumes all home buyers are existing renters. In reality, many buyers are coming from shared housing or living with family before purchasing. Add to that net migration, with more people arriving than leaving, and rental demand isn't reduced on a one-for-one basis.

 

[hydrabyss]

Of course , that is because in retirement, the retirement super investment earnings are tax free.

I have a friend who suggested that whatever the super balance is at retirement, assume that it is 10-20% less calculate the retirement income from that reduced amount - again to mitigate against potential falls in asset values.

Lots of ways to dice it...

@andye s suggestion of using 4% withdrawals is another way but I think thats too conservative.
Maybe run out super at age 100?

I should add for context if it was not for a lung condition I had no intention of stopping work anytime soon. But still being a number of years from benefitting from super trying to work out which way to go is likely more personal than financial.

The idea of semi retiring is where I would like to be but then I forego accessing an income replacement pension that is not means tested but only allows income form investments. The possible CGT changes looming will make that slightly harder but like most things there will some way to work around it.

 

[drron]

And as usual whenever a Government tries to make it simpler they instead make it more complicated.
As well screw up the timing. Housing beginning to fall, stock market a bit jittery.

 

[CaptJCool]

And as usual whenever a Government tries to make it simpler they instead make it more complicated.
As well screw up the timing. Housing beginning to fall, stock market a bit jittery.

Not feeling sorry for the profiteers out of share sales

The minimum 30% tax equalises all entities to paying the same. (Except for super funds but that’s a long term can’t access it gig)
So both factors
The size of the discount 50% cut down to inflation adjusted might mean a higher net figure on which to levy a higher tax rate
For those on the 47% rate, paying 23.5% CGT now, it’s hardly an imposition to go from 23.5% to 30%

 

[Mr_Tee]

Not feeling sorry for the profiteers out of share sales

The minimum 30% tax equalises all entities to paying the same. (Except for super funds but that’s a long term can’t access it gig)
So both factors
The size of the discount 50% cut down to inflation adjusted might mean a higher net figure on which to levy a higher tax rate
For those on the 47% rate, paying 23.5% CGT now, it’s hardly an imposition to go from 23.5% to 30%

Not quite right......

For those on a 47% rate (marginal tax rate) they will pay 47% tax on Capital Gains. The 30% is a minimum rate, not a flat/maximum/capped rate.

 

[CaptJCool]

Not quite right......

For those on a 47% rate (marginal tax rate) they will pay 47% tax on Capital Gains. The 30% is a minimum rate, not a flat/maximum/capped rate.

For asset classes with lower real returns, indexation gives a larger effective discount than 50%.

This gives the full explanation

50% CGT Discount Reform: Cost Base Indexation + 30% Minimum Tax from 1 July 2027 | AusTax.tools

Budget 2026 replaced Australia's 50% CGT discount with CPI cost base indexation plus a 30% minimum tax on real capital gains. The new rules apply to gains accruing after 1 July 2027 — with split treatment for assets owned at that date.

austax.tools

 

[Mr_Tee]

For asset classes with lower real returns, indexation gives a larger effective discount than 50%.

This gives the full explanation

50% CGT Discount Reform: Cost Base Indexation + 30% Minimum Tax from 1 July 2027 | AusTax.tools

Budget 2026 replaced Australia's 50% CGT discount with CPI cost base indexation plus a 30% minimum tax on real capital gains. The new rules apply to gains accruing after 1 July 2027 — with split treatment for assets owned at that date.

austax.tools

Buying assets classes with lower real returns does not sound like a good investment strategy to me.

If you want the lowest real return then put your cash in a bank account paying 0.05%pa in interest. Your CGT worries are solved in an instant.

The optimum asset class to buy is the one that provides the highest after tax risk adjusted return.

 

[Quickstatus]

Buying assets classes with lower real returns does not sound like a good investment strategy to me.

But if the asset turns out to be a dud and actual returns were lower.......

All investments do not come with a crystal ball unfortunately

 

[Mr_Tee]

But if the asset turns out to be a dud and actual returns were lower.......

All investments do not come with a crystal ball unfortunately

Sure, but my point was that you don't have an investment strategy that says you should buy into something looking for lower real returns so you end up paying less tax under the new regime vs. the old regime.

And if your inflation adjusted returns get too low then you will fall foul of the new poison pill in the legislation about offsetting capital losses.