Over the past week, I’ve taken some time to go through the Federal Budget in detail, particularly through the lens of AMP’s Chief Economist, Dr Shane Oliver — whose commentary I’ve followed for many years.
What follows is not just a summary, but my interpretation of the budget and what it actually means for you from a financial planning perspective.
The Big Picture
This is one of the more significant budgets we’ve seen in recent years, particularly with the changes to property taxation and investment structures.
However, stepping back — and I agree with Shane Oliver here — this feels more like a tax increase than genuine tax reform.
The Government has made some moves toward fairness, particularly around housing and wealth inequality, but it hasn’t fundamentally improved how the tax system works.
One area where I think Shane makes a strong point is around the balance between income tax and GST.
Right now:
- We rely heavily on income tax, which is largely borne by those still working
- Whereas GST spreads the burden more broadly across spending
Shifting more toward GST (as part of broader reform) would arguably be a fairer and more sustainable system — but that hasn’t happened here.
What Has Actually Changed
The headline changes are centred around property and investment taxation:
• Negative gearing will be restricted to new properties only from 2027
• The 50% CGT discount will move toward a system based on “real gains” (adjusted for inflation) with a minimum tax rate
• A 30% minimum tax on discretionary trusts
• Ongoing small tax offsets and business incentives
These are meaningful changes — particularly for those still in the accumulation phase.
What It Means for Our Clients
For most of our clients, the reality is this: There’s unlikely to be a major direct impact.
The majority of clients we work with are:
- Pre-retirees or retirees
- Focused on generating income rather than accumulating new assets
- Not heavily reliant on discretionary trust structures
- Often already reducing or exiting investment property exposure
In fact, many of the strategies we’ve implemented over the years have been designed with this exact environment in mind.
For example:
- Negative gearing is largely irrelevant in retirement, as there’s no income to offset
- We often guide clients toward reducing debt and simplifying structures
- And in many cases, selling down geared property into retirement has already been part of the plan
So, while these changes are significant at a policy level, they are not something I’d be overly concerned about for most existing clients.
Property – More Noise Than Long-Term Change?
The changes to negative gearing and CGT sound significant — and they are — but I do think there’s an element of short-term noise here.
The intention is to:
- Push investors toward new builds
- Improve housing affordability
And encouraging new construction is a positive.
However, I agree with the broader view that:
Housing affordability is fundamentally a supply issue, not just a tax issue.
Reducing incentives for investors:
- May reduce demand in the short term
- But can also reduce supply over time
Which doesn’t necessarily solve the underlying problem.
So, while we may see some short-term adjustments in the property market, I don’t see this as a long-term structural shift that dramatically changes outcomes.
Investment Implications
From an investment perspective, there are a few things worth noting:
- Property may become less attractive relative to other asset classes
- Superannuation becomes even more valuable from a tax perspective
- The changes may shift focus slightly toward income-producing assets rather than pure growth
Again, this aligns with how we’ve already been positioning portfolios — with a strong focus on:
- Diversification
- Income sustainability
- Tax efficiency
The Bigger Issue – Productivity and Living Standards
If we take a step back, the real issue (and this is something Shane Oliver highlights consistently) is:
Australia’s long-term challenge is productivity and living standards
Not just:
- Tax settings
- Not just housing
The Budget makes some progress around deregulation and business incentives, but overall, I’d describe it as incremental rather than transformational.
So, What Should You Do?
At this stage, I wouldn’t be making any reactive decisions based on these changes.
Instead, the focus remains on what we’ve always done:
• Stick to a long-term strategy
• Ensure your portfolio is well diversified
• Continue to focus on tax efficiency and income sustainability
• Review any planned property decisions carefully, particularly if you’re still accumulating
For those still building wealth, these changes may influence strategy over time.
For those already in retirement, it’s largely business as usual.
Final Thoughts
Overall, this is a meaningful Budget, but not one that fundamentally changes the game.
It’s a shift in direction — particularly around property and tax — but it doesn’t solve the bigger economic challenges we face.
For our clients, the key message is simple:
Stay focused on your plan, not the headlines.
If anything, this Budget reinforces the importance of:
- Having the right strategy in place
- Being proactive but not reactive
- And making decisions based on your personal goals, not policy changes
As always, if you’d like to talk through how any of this applies to your situation, I’m more than happy to chat.
The Whitehead Financial Team
