If you start a business and grow it from hard work, you will now be taxed more. It's not just passive gains, it's all gain.

My understanding is that the difference is in the Capital Gains Tax, which doesn't apply to the day-to-day running of the business or its profitability or the salaries it pays.

Again, my understanding is that the (only) difference is when the business is sold, and the 50% discount to CGT is no longer applied and instead there is an inflation adjustment instead (what I don't understand here is how to get an initial valuation, and would it be essentially $0, so the entire amount is capital gains? which feels somewhat unfair)

So it will be a hit at the time the business is sold, not at any point during the running of the business. My (potentially naive) take is that the hard work that goes into running and growing a business is about the provision of the goods or services, but if it's about maximising "the exit", then that feels to me like not the kind of incentive that it should be. The 'running' of the business being more important than the selling of it.

The 50% CGT discount has set a bad precedent. It should have been lower, or should have scaled over time. It has deformed the expected reward structure.

Can a business agree to be sold in tranches over time? If such a thing helps minimise tax then I can see that becoming the norm. I know that selling a house is a big, singular chunk of money that generally needs to be 'managed' in order to pay the minimum amount of tax. Maybe fractional selling is going to become a thing.

Wouldn't paying yourself a higher salary (since it's your own business) and/or putting more into superannuation offset the 'retirement' hit of not getting a golden exit parachute?

ps. Australia uses a progressive tax system. If you earn very little money, you pay a very low tax rate (or many zero). If you earn a massive corporate salary, you pay the top rate.

The new 30% floor completely throws that out the window for capital gains. It means even if your total income for the year is low enough that your normal tax rate should be 16% or 0%, the government steps in and forces a flat 30% tax on the asset sale anyway.

So, contrary to what the government is saying, this new regime taxes the poorer even more.

On paper yes, but very few of the _actual poor_ were making capital gains on asset sales. Aus Govt figures claim 90% of people under 35 do not own shares outside of retirement funds(which get different tax treatment).

It closes the loop holes where wealthy people approaching retirement would spend a few years paying very little tax and living off capital gains instead at a ~20% tax rate.

My non-heavily-researched understanding is that people who make their entire, or a majority of, their annual 'earnings' from capital gains may not be all that poor.

There's a whole spectrum of examples that can be used to demonstrate fairness or lack of fairness. Can you elaborate on your example of taxing a poor person even more by forcing a flat 30% tax on capital gains? Is this person you? What does your life entail whereby you are poor whilst also living almost entirely off capital gains?

You can still get all your capital out before the 1st of July 2027, and then re-distribute into areas that have better tax incentives, like new house builds. Sounds like that might solve two problems at once.

It's not me. I actually work for a living and I receive a salary. Many people I know with their own business plan to hopefully get out of it some day. They all make less than me but own a business of their own.

Let's say this works and those people who already have assets get taxed a bit more, when they are gone, there would then now very little incentive to work hard and start a business.

Such short term thinking will pretty much destroy the economy in the long term. You can't tax an economy to health and fairness.

So these people make very little money on their business yet think someday they'll be able to sell this business for a lot of money? Sounds like they might need a reality check; who's going to buy an unprofitable business anyways?

This isn't short term thinking. It's the opposite.

Allowing the super wealthy, whom are the actual ones that benefit from capital gains, accumulate untold wealth is clearly resulting it a multitude of societal ills (including the dismantling of democracy itself here in the US).

Looking at even a little bit of recent history will clearly show you what happens when we let the super wealthy just get more wealthy (have a look at the Gilded Age).

The propaganda around taxation causing economic slowdown is so tired...

>It means even if your total income for the year is low enough that your normal tax rate should be 16% or 0%, the government steps in and forces a flat 30% tax on the asset sale anyway.

From the budget:

"Recipients of means-tested income support payments, such as the Age Pension or JobSeeker, will be exempted from the minimum tax if they receive any payment in the financial year in which they realise the capital gain."

The flat rate is to stop people from dropping their income artificially and claiming the reduced rate. Most people won't run foul of this. Something like 90% of the capital gains discount was taken by the top 1%.

So your argument only applies to people who earn between 20 & 45k who don't get any government benefits (which are means tested, so they cannot be cash or asset rich), and realise a capital gain from an investment (is. not their house).

While philosophically I think it wrong that someone who earns very little cannot spread a tax liability over multiple years, the way corporations can.. I cannot think of a way that a disjoint could be given for this cohort that does not also open the door to loopholes for the 1%. Plus the number of people effected will be vanishingly small, and the amount to which that small number of purple are effected will also be small.

So, largely, contrary to what you are saying, they are not..

Sorry, what asset sales are poor people making while earning no income?

Is this a common thing in Australia cause it's not here in the US.

If you're saying instead that it applies to people living off their investments, then I have no sympathy for them as they're able to live off of ownership not labor. They should pay the same or more tax than anyone else.

Capital gains is from selling an assets, if you still own the business you can take as many profits from it as you want. If you're talking about selling the business, then presumably you had years of realizing profits from the actual operation of the business. Now that you sell it, yes, you should be taxed at a higher rate. That said, there are tons of tax loopholes for that scenarios like in the US like a cash balance plan.

But let's be honest, we're talking mostly about the sale of assets like stock ownership. That's how the super wealthy accumulate even more wealth. Then combine that with "buy, borrow, die" and you're paying almost no taxes.

All most people is for the rich to pay a proportionally fair amount of tax.