Ryan Maddock

Director & Founder | Maddock’s Accounting & Advisory

[Gerard Rennick @RennickGBR]

Putting aside the complexity of the proposed CGT changes, there is a simple illustration of why the minimum 30% tax rate just seems unfair in our system.

Someone on $190,000 of earned income a year has an effective tax rate of less than 30%.

Anyone under that (most Australians) will have a lower effective rate.

Yet, if they make a capital gain as part of their income, it has a minimum rate higher than their marginal tax rate. High income earners aren't affected because their rate is already higher.

So the proposed system only penalises lower income earners.

There are many flaws in this legislation, but the minimum tax rate seems to be the worst one in my view.

[Davey @TheRealDavey2]

Under Labor's new capital gains tax, if you're on the top tax rate, have a 6% mortgage and 2.5% inflation, you need to earn 9.1% investing - no small feat - just to break even with putting your money in a mortgage offset account. That's before you are compensated one cent for the risk you took, the double taxation, the time and effort.

Say you want to make at least 3% after tax above putting money in your offset account. A modest benefit. You would need to make 14.76% in the market. Do that consistently and you would be ranked amongst the greatest investors of all time. That's right - Labor's hurdle for investing as an Australian is you need to be amongst the greatest investors of all time. So if you're John Templeton or Walter Schloss, no worries.

[Ryan Maddock @RyanMaddockCA]

@Greatest_Fails You realise that none of those changes actually do anything to improve the standard of living don’t you? Prove me wrong but point me to any academic study that shows how the proposed changes to capital gains tax, negative gearing and trusts will actually improve productivity?

[Ryan Maddock @RyanMaddockCA]

@toy59496 I submitted mine last week so it’s taking a few days to go through and be reviewed as others have said. I’d expect the number to keep growing considerably over the rest of the week and maybe even into next week

[Ryan Maddock @RyanMaddockCA]

@toy59496 Crazy right!

[Ryan Maddock @RyanMaddockCA]

@toy59496 Thanks for the kind words. To be honest and I think I’d speak for most accountants and say this is the last thing we want to deal with given most of it it adds no value at all. If the submissions go someway to bringing awareness to the issues it’s been time well spent

[Ryan Maddock @RyanMaddockCA]

@PaulZauch @MarkAndrew076 I’d concur with this, if there’s one observation I have on his personality it’s he’s incredibly stubborn and my concern right now is that won’t allow him to actually back down contrary to what the evidence may be. If I had to bet, I don’t think there’s any significant walk back

[Ryan Maddock @RyanMaddockCA]

@JaredAberach It’s a very slippery slope from here if that’s the view inside govt and treasury

[Ryan Maddock @RyanMaddockCA]

@CharlizeTheroff Don’t worry, apparently life is always easier under Labour

[Ryan Maddock @RyanMaddockCA]

This nails the whole point about how badly conceived the proposed changes are and worth a read

[David McMahon @David_McMahon75]

The responses to this have confirmed my point: a lot of people are treating these CGT changes as a moral issue instead of an economic one.

I get it. It sounds fair and common sense to say that all kinds of economic activity should be taxed the same. But that’s not how any tax system in the world works.

Why? We tax some activities more heavily and others more lightly because we care about incentives. We tax tobacco heavily to discourage smoking, for example. Super concessions are there to encourage saving. CGT concessions encourage people to invest their savings in businesses that create jobs. Everybody benefits from this.

I agree there is too much leveraged speculation in the housing market. The default path to getting wealthy in Australia shouldn’t be leveraging up on as many investment properties as possible. But there are targeted ways to address that without hitting all forms of productive investment.

[Ryan Maddock @RyanMaddockCA]

@linzcom Makes me wonder how much of mess they’ve got to make of things before the majority realise the path that we’ve been pushed down. Will it take a full blown depression (including a flight of capital away from Aus) before we see a real shift in perspectives?

[Ryan Maddock @RyanMaddockCA]

@angelar68197975 The token tax cuts don’t go close to offsetting the impact of inflation and bracket creep over the last 5 years. This budget does nothing to address the real fall in living standards over that time.

[TaxPawspective @TaxPawspective]

If Andrew was being honest, he wouldn’t refer to “returning” to the pre-99 system, which:

- had an averaging rule to limit bracket creep effects of multi-year gains
- had no 30% minimum tax
- applied indexing to companies
- excluded pre-85 assets

Why would he omit that?

[anonymous frypan🍳 @AnonymousFrypan]

Australia’s new minimum wage is $26.44 an hour. A full-time worker earning the legal minimum now falls into the middle income tax bracket. Bracket creep has reached the point where minimum wage workers are being taxed as “middle income”.

It isn’t easy under Albanese.
#auspol

[Senator Matt Canavan @mattjcan]

Labour productivity had NEVER fallen over a 4 year period UNTIL the election of this Labor government.

If you want to understand why things are costing more, why interest rates are going up and why your living standards are going backwards, this is the answer.

[Ryan Maddock @RyanMaddockCA]

@onslowshipping Submitted mine as well today. I agree it’s unlikely to make a difference but somehow felt a sense of relief by sharing my opinions and observations nonetheless.

[Tarric Brooker aka Avid Commentator 🇦🇺 @AvidCommentator]

Let's check in on Australian productivity growth....

Oh.....That's not gone well...

[Tarric Brooker aka Avid Commentator 🇦🇺 @AvidCommentator]

In Q1, the Australian economy grew by 0.27%.

The working age population grew by 0.64%.

Working increasingly hard to go nowhere or flat out backwards.

[Richard Davies @Richard01357064]

Jim Chalmers wants Australians celebrating a tax cut.

What he doesn't want them asking is:

📈 Is the total tax burden falling?
📈 Is government spending falling?
📈 Are workers keeping more of their income over time?
The answer to all three is no.
This is classic Chalmers statsplaining.

A small tax cut is being advertised loudly while much larger tax increases on investment, housing, savings and wealth creation are pushed through quietly. Labor's broader tax package raises tens of billions through changes to capital gains tax, negative gearing and trusts.

Meanwhile, workers continue to be hit by bracket creep and inflation. A tax cut that doesn't keep pace with rising costs is not a path to prosperity.

The real measure isn't whether taxes fall by a few dollars next month.

The real measure is whether Australians are keeping a larger share of what they earn and whether government is consuming a larger or smaller share of the economy.

Labor's answer is:

❌ higher taxes on investment
❌ higher government spending
❌ bigger government
❌ more redistribution

A genuinely pro-worker government would reward both work and investment, because tomorrow's jobs, wages and opportunities depend on today's savings, capital and entrepreneurship.

A worker who buys shares is a worker.
A worker who invests in an ETF is a worker.
A worker who starts a business is a worker.
A worker trying to buy an investment property is a worker.

Prosperity comes from encouraging all of them — not setting workers and investors against each other.

The problem with this Budget is that it celebrates consumption today while taxing the investment that creates prosperity tomorrow.