Your retirement plan’s CGT shock (with Adrian Raftery)
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What is the main topic discussed in this episode?
Hello, welcome to the Australian's Money Puzzle podcast. I'm James Kirby. Welcome aboard. Earlier this year, one of the most popular shows I did was with the author and professor Adrian Raftery, also known as ACCA, Mr. Taxman. Now, I would say, unfortunately, I recorded the show with Adrian prior to the budget. And I suppose, like many other people, we thought that the budget would be a conventional budget that would have some details that would matter for a week or two. Of course, the budget turned everything upside down, particularly in relation to the tax issues. aspects of investing. So I thought it would be a splendid idea to bring Adrian back. And knowing what we know now, ask the author of 101 ways to save money on your tax legally.
What does he have to say? How are you, Adrian? I'm really well, thanks, James. How are you going? Good. Great to have you on the show again. I know what it's like doing books and you try to bring them up to date and you do your best, but you must have been thrown, like everybody else, at the scale and scope of the tax changes which have been put through in the budget, which is now, I know, back in May. But I won't say it's turned everything upside down, but gee... For most people, the rules that we've lived by for a generation as investors, a lot of them are thrown out the window, aren't they?
Well, the tax laws are still there. So they're just different. And I've grown up in an environment where you had a heap of different dates applicable and the 16th of August 1978 and the 21st of September 1999 and all these different odd dates over the years. There was a buzzword about 25 years ago to simplify the tax system. And they did reduce out a lot of those and they brought in the 50% capital gains discounts. And now there's three constants in life, death, taxes, and changes to tax. And I've written my book now.
How did the May budget fundamentally change capital gains tax rules for retirees?
It's been 16 editions. And the difference between the first edition to the 16th, I reckon there's about one third has been rewritten or probably more with changes. TAP tips just gone straight out, left, right and centre. Evolves over time. It was admittedly one of the biggest federal budgets in 40 years, probably since capital gains tax and fringe benefits tax and dividend imputation was introduced back in September 1985. So it is, I guess, it was a seismic shift. And particularly when the last probably 15 years, decades, 15 years, we normally got all the secrets in the federal budget in advance. And so we knew there was something happening with capital gains tax. We knew there was something happening with negative gearing, but we didn't know the extent of it.
We didn't know there was capital gains tax was going to extend beyond to shares.
Yeah, across the board.
Bring in pre-CGT assets as well. So there was all these different things and with limited time. with, you know, next to zero time to plan. And I know we'll talk a little bit later on about it, but borrowing within self-made super funds was a last minute addition to get this legislation through. And there was next to no time at all in relation to prepare for that. So I think the whole community were a bit shocked. We weren't expecting it. Some, you know, beliefs that we had over the years, this is what we should do, you know, invest in them, prepare for retirement and sell in retirements. Well, that's all changed now. And I guess what has brought back is a year-end tax planning is probably more important than ever over the next two years.
So should I sell that share? Should I sell that property? Should I hold on to them? How long should I hold on for? Should I retire now, not retire? So all these things have changed tremendously. And I must admit, look, you know, I must thank Jim Chalmers and Albo and Advance because they've guaranteed the next few editions of my book. But probably more importantly, they've also, you know, people are calling me up and emailing me And, you know, ordinary people who, you know, generally wouldn't talk to them much at all. There was a seismic change to them in their own personal life and what they were planning to do.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:09–2:12
2
How did the May budget fundamentally change capital gains tax rules for retirees?
2:12–14:29
3
How should retirees re‑think the strategy of selling assets in retirement after the CGT change?
14:29–20:17
4
What is the new 30% minimum CGT (and top‑up tax) and who does it apply to?
20:17–21:17
5
When does the 30% minimum CGT take effect and how does the 30 June 2027 valuation date matter?
21:17–21:34
Speakers
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