Treasurer Jim Chalmers has justified his capital gains tax reforms on the basis that they’ll make investment decisions more neutral by removing tax distortions. They may do the exact opposite.
Crunching the numbers for different investments, the changes will make where an investment is held, how it is structured and whether returns come from income or growth more important than ever.
Here are the investments likely to fare the worst, through to the best options left for everyday Australians to build wealth, as a direct result of Labor’s tax changes.
10. Crypto
Crypto sits at the bottom because almost its entire return comes from capital growth.
There’s no income, no franking and no pooled structure to soften the tax treatment of individual winners and losers. A successful cryptocurrency may produce a real gain taxed at a minimum of 30 per cent while a failed memecoin may not provide equivalent recognition for the loss of purchasing power.
An already speculative investment is about to become less rewarding after tax. The same goes for other high-risk investments such as mining explorers, biotech companies and venture capital.
9. Gold
Gold has a similar problem. It produces no income so investors rely entirely on its price rising.
Indexation provides some protection because only gains above inflation will be caught by the new rules. However, those real gains will face a minimum 30 per cent tax rate and lose access to the 50 per cent CGT discount from July next year.
Gold will still play an important role as portfolio insurance. It often moves in a different direction than shares and can provide protection during periods of market stress and rampant money printing. We’ll continue recommending that clients hold a meaningful allocation. But the new rules make gold a less tax-efficient way to build wealth.
8. Established investment property
Established property is hit from both sides. Investors buying established homes now face narrower negative gearing rules. Losses will generally be quarantined against residential property income and gains rather than deducted against wages. Future real capital gains will also face the new CGT regime.
New homes receive better treatment. They retain negative gearing and investors can choose between the existing CGT discount and indexation.
The new apartment may receive a tax advantage over the identical apartment next door simply because it was built more recently. So much for neutrality.
7. Actively managed funds and direct shares
Managed funds can combine gains and losses internally before distributing taxable income. That may protect investors from some of the problems facing portfolios of directly held shares.
Their weakness is turnover. Active managers regularly buy and sell. Redemptions by other investors can also cause gains to be realised and passed through.
Investors can receive a tax bill despite never selling their own units. Under the new system unnecessary turnover could become even more expensive.
6. Listed investment companies
LICs also pool investments. Their company structure allows gains and losses to be managed internally. Tax paid by the LIC may then support franked dividends.
That becomes more useful when the tax system favours income over capital growth.
But LICs can trade below the value of their assets. Investors also depend on the board’s dividend and capital-management decisions. A more attractive tax wrapper doesn’t make every investment inside it attractive.
5. Broad market ETFs
Broad ETFs are diversified and have low turnover so realise fewer gains year to year. Gains and losses can be netted within the fund before taxable amounts are distributed.
This helps because an investor holding shares directly may pay tax on the big winners while receiving less recognition for investments that fell behind inflation. Inside one ETF, those outcomes can be combined.
4. Term deposits and government bonds
These assets haven’t become better – they’ve simply suffered less damage.
Most of their return comes through interest. That continues to be taxed at the investor’s marginal rate. For someone on a low marginal rate, earning interest may now look more attractive than taking investment risk and facing a minimum 30 per cent tax on the real gain.
The reforms could encourage Australians to leave more money in bank deposits and government debt rather than fund growing businesses. That’s an odd outcome for a policy supposedly designed to improve productivity.
3. Dividend-focused Australian share ETFs
The new rules favour income over growth. Imagine a company earns $100 and pays $30 in company tax. It can distribute the remaining $70 as a fully franked dividend or reinvest it.
An investor on a 30 per cent tax rate can keep the $70 dividend without paying any more tax. If the same amount is reinvested by the company and becomes a $70 real capital gain, the minimum tax could reduce it to $49.
This will make mature dividend-paying businesses more attractive. It may also encourage boards to distribute profits rather than reinvest in new staff, technology and expansion.
Investors shouldn’t abandon diversification to chase yield – but the tax signal is certainly to take the money today rather than invest it for tomorrow.
2. Superannuation
Super becomes relatively more attractive because its tax treatment is largely unchanged.
Earnings in accumulation are generally taxed at 15 per cent. Long-term capital gains are generally taxed at 10 per cent. Retirement-phase earnings may be tax-free within the relevant limits.
That compares with a minimum 30 per cent tax on many real gains held personally.
The problem is access. Money inside super generally can’t fund a home deposit, a new business or other goals before retirement. The reforms make super a better tax shelter while making flexible wealth harder to build.
1. The family home
The clear winner is the principal residence.
It remains entirely exempt from CGT. There is no minimum tax, indexation calculation or annual tax on the benefit of living there.
That creates a strong incentive to buy a more expensive home, renovate or direct extra savings towards the mortgage. A taxable investment must now earn an even higher pre-tax return to match the same after-tax gain in a family home.
This may push more capital into existing houses without adding a single property to Australia’s housing supply.
What the reforms will do
The government says the reforms will remove distortions and encourage investment based on economic returns. Yet its new system favours the family home over super, super over personal investments, income over growth and pooled funds over direct ownership.
It hasn’t removed the distortions – it just rearranged them and added several more.
This article was originally published as an opinion piece for The Australian – Investment winners and losers under Labor’s CGT changes (23 September 2026).
