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The Albanese government’s budget has landed with a clang in the regions, triggering widespread anger among farmers and small business owners over proposed changes to the capital gains tax.
On budget night, Treasurer Jim Chalmers replaced the 50 per cent capital gains tax (CGT) discount with an indexation model for all assets except superannuation and new residential builds.
The change means that Australians who own shares, businesses or farmland will no longer receive the discount when they sell after July 2027, and will instead pay tax on their indexed capital gain at their marginal income tax rate of up to 47 per cent, or a minimum of 30 per cent.
As he tried to stem a withering backlash, Dr Chalmers said the change was about making the system “fairer” and “more neutral”, but many Aussies aren’t buying the Treasurer’s pitch.
Among them is 34-year-old Cooper Scoles, who owns two machinery-related businesses in Dubbo in regional New South Wales.
He called the budget a “massive blow to pretty much every Australian, no matter their age, who has worked their a**e off to start their own business or get ahead in life”.
“If these capital gains tax changes were in place back when I started out, I don’t think I’d be able to have my businesses that I’ve got now,” Mr Scoles told news.com.au.
“Because I used a lot of the equity and the capital that I’ve earnt off investing my money, whether it was in shares or housing.”
Mr Scoles said it took him years to build up the capital needed to fund his businesses: registered training organisation SKIVL and machinery dealership Central West Machinery.
He bought an investment property at the age of 19 for $200,000, then upsized to a larger home, which he sold along with $100,000 worth of shares to fund his ventures.
“And that $100,000 worth of shares was the main kicker to get into this as well — I needed that extra buffer to help fund developing the block of land I bought for my training facility,” he said.
But under the proposed CGT rules in the budget, Mr Scoles would have paid much higher tax on that capital — and he’ll also be hit with a whopping bill if he decides to sell his businesses or his farm outside Dubbo after the proposed changes take effect in July 2027.
“It affects your future,” the father-of-two said about the changes.
“A lot of people build up assets or build up a business so that when they do get to a certain age, they can give their kids a good life and a future.
“They can also then look to retire at a decent age, and use the money out of the businesses and everything they’ve created. But the government’s going to take 47 per cent of that — what’s the point?”
Anthony Albanese was caught off guard by the intensity and swiftness of the public backlash following the budget’s release, and appeared visibly emotional when he defended the reforms last week, arguing they were about “backing aspiration for all” and helping young people to get on the property ladder.
Former Labor prime minister Paul Keating also launched a defence of the changes, taking aim at “wealthy people” and claiming that under the current system, “income is taxed too heavily while capital is taxed too lightly”.
But Mr Scoles called Mr Keating’s argument “ridiculous”.
“They talk about how they’re trying to bring it in for the wealthy investors, but the main people it affects are small business owners and the middle class,” he said.
“We are always the forgotten ones and we are the most affected by a lot of these changes.”
Mr Scoles said the feeling in Dubbo about the budget was “nothing but negative” and when he discussed it with mates down at the pub, “a lot of words that come out are words that you probably can’t write in the newspaper”.
Federal budget ‘will hit the middle class’
InvestorKit CEO Arjun Paliwal, a property tycoon with much of his $20 million portfolio held in company structures, agreed that the changes wouldn’t solely hit the top end of Aussie society.
“This is targeted at middle class Australia as much, if not more, because when a wealthy person has more tax to pay, they also have more choices and more moves they can make,” Mr Paliwal told news.com.au.
“Whether that be different entities, asset classes, reinvesting more money in their business or deciding to spend more on life. There’s a lot more flexibility and choice.
“This budget won’t touch wealthy investors like me. It will hit the middle class and young Australians trying to get ahead.”
The investor argued there was a deeper issue at work: the political approach of “hurting one Aussie to help another”.
“And what for? Because they aren’t managing their spending right,” he said of the Albanese government.
“They are overspending in other areas of government. They are bloating the public workforce rather than investing in long-term vision and investability in Australia through private enterprise.”
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