Tag: tax reform

Albo the Silent Partner – a budget explainer for Betty from Blacktown

Somewhere in Blacktown, Betty is reading the budget papers. Her accountant isn’t answering. Her family’s at work. The Treasurer is on the telly saying “distortions. This post is for her.

G’day Betty.

You rang your accountant. He didn’t ring back. Your daughter’s working two jobs and your son-in-law’s on night shift, so the family WhatsApp is all emojis and no answers. Meanwhile every news bulletin has someone in a suit yelling about “indexation” and “distortions” and you’re left wondering whether the bloke on the telly just took something off you or gave you something, and whether you should be cross about it.

Let me have a crack. No jargon. Promise.

What actually changed on budget night

A week ago, on 12 May, Jim Chalmers handed down the budget. Three things matter for normal people:

One. From July 2027, when someone sells an investment, a rental, some shares, a business, the tax rules change. The old deal was simple: hold it more than a year, only pay tax on half the gain. The new deal: you only pay tax on the bit that beats inflation (the “real” gain), but with a minimum tax rate of 30% on whatever’s left.

Two. Negative gearing, where landlords offset rental losses against their wage, gets limited to new builds only, also from July 2027. If you’ve already got an investment property, nothing changes for you. You’re grandfathered in.

Three. Family trusts get a minimum 30% tax from July 2028. This is the bit that’s upsetting small business owners, because a lot of them run their butcher shop or tradie business through a trust.

What it means for you, Betty

Here’s the thing the government has been hopeless at saying out loud: if you’re a pensioner, the minimum 30% tax on capital gains doesn’t apply to you. Pensioners are exempt. That’s in the budget papers. Nobody’s said it on the 6 o’clock news because it doesn’t fit either side’s story.

If you own your home, your home is not touched. The main residence exemption is untouched. Sell the house, no tax. Same as it ever was.

If you’ve got a bit of super, your super is not touched. The CGT discount inside super funds stays.

If you’ve got a rental you bought years ago, nothing changes for you unless and until you sell, and even then the old rules apply to the gains you’ve already made.

So far, so boring. So why is everyone yelling?

Why everyone’s yelling

Because of the bit that isn’t about Betty. It’s about Betty’s nephew Luke who runs a life-coaching business, or your neighbour’s daughter who started a little software company in her garage. When they eventually sell, the government takes a minimum 30% slice. Small business owners have started making AI memes of Anthony Albanese photoshopped into their shop windows as the “silent partner” the bloke who didn’t do any of the work but turns up on settlement day with his hand out.

That’s the meme. And memes win arguments these days, Betty, whether we like it or not.

Now , the government will tell you there are small business CGT concessions that still let eligible owners halve or even wipe their CGT bill on sale. That’s true. They are real and they are generous. But Jim Chalmers spent a week not saying it loud enough, and Anthony Albanese spent a week saying “we’re returning to the pre-1999 system” as if anyone under 50 remembers what the pre-1999 system felt like.

The bit that should actually worry you

It’s not the policy. It’s the competence.

A week after budget night, Labor’s own backbenchers are telling journalists they can’t explain it. The Prime Minister himself admitted yesterday that the trust changes “will take longer to develop”, which is political code for we announced it before we’d finished designing it. He’s said he’ll bring the CGT legislation to Parliament “in a fortnight.” Everything’s in a fortnight. Nothing’s actually happened yet.

If your accountant won’t ring you back and the Treasurer can’t explain the policy on Insiders, that’s not your fault, Betty. That’s theirs.

What to actually do

  1. Don’t panic-sell anything. The changes don’t start until July 2027. You’ve got over a year. Existing assets are mostly grandfathered.
  2. If you’re a pensioner, breathe out. The minimum tax doesn’t apply to you.
  3. Keep ringing the accountant. When he finally picks up, ask him two questions: does anything I own get caught by the new rules, and if so, when do I need to decide anything? That’s it. Don’t let him bill you for an hour of jargon.
  4. Watch the trust stuff. It’s the bit most likely to change between now and when it’s legislated. If anyone tells you what the final rules are before about September, they’re guessing.

The bottom line

The budget isn’t the disaster the memes suggest, and it isn’t the masterstroke the press releases suggest. For most pensioners and most homeowners, very little changes. For people who own businesses they plan to sell, or who use family trusts, there’s real stuff to work through and the government hasn’t finished working it through itself.

Anthony Albanese has earned his new nickname. He is the silent partner, silent on the bits that would reassure you, silent on the bits that would honestly admit what’s still being figured out. Until he starts talking like a human being instead of a Treasury press release, Betty from Blacktown is going to keep being confused. And so will the rest of the country.

Hang in there. Ring the accountant on Monday. And if he still won’t pick up, ring me.

The Shit Sandwich and the Sacred Calling

Last week’s budget was described, by at least one prominent politician, as a shit sandwich. In the days since, my feed has filled up with variations on that theme. Angry posts from farmers and farming families, several of them quoting scripture, most of them warning that the government is now taxing Australians in life and in death.

There is no death tax in this budget. There is no inheritance tax. What there is, among other things, is the end of the pre-CGT exemption for assets bought on or before 19 September 1985. From 1 July 2027, those assets get a market value reset, and any gain after that date becomes taxable. For a family sitting on land a grandfather bought in 1972, that is a genuine change. The pre-2027 gain stays exempt, but the planning assumption that the asset would never attract CGT is gone.

That is worth being angry about if you are directly affected. It is not the end of civilisation, and it is not a death tax, but it is a real shift in the rules for long held family assets. The small business and farm CGT concessions remain in place. The 50% CGT discount is being replaced by cost base indexation, which is a return to how the system worked between 1985 and 1999. Trusts get a 30% minimum tax from 1 July 2028, with several categories exempt.

That is the factual picture. The emotional picture is different, and it is the emotional picture that gets shared.

The post that prompted this one quoted Proverbs 13:22, a good person leaves an inheritance to their children’s children, and built an argument that modern tax policy is in tension with biblical stewardship. It is a familiar move in rural commentary.

Farming gets framed as a sacred calling, a multi-generational legacy, the soul of the nation. The argument runs that ordinary commercial rules should not apply to it, because what farmers do is not ordinary commerce.

Here is the problem with that framing. A farm is a small business. It happens to involve land and livestock rather than dry cleaning or panel beating, but the structural features people invoke to mark it as different, capital intensity, weather risk, commodity price exposure, thin margins, succession planning, asset values shifting under policy changes, exist across the small business economy. A suburban café owner whose parents bought the shop in 1980 faces the same pre-CGT change as a grazier whose parents bought the property in 1980. Only one of them gets Proverbs quoted in their defence.

Farmers already have a substantial suite of concessions that other small businesses do not. The small business CGT concessions, the farm-specific rollover, farm management deposits, primary producer income averaging, fuel tax credits, drought assistance and the farm household allowance.  By international standards Australian farmers are lightly supported. The EU and US are far more generous. But by domestic standards, against other small businesses, the deal is good.

Which brings me to the honest version of the argument, the one farm lobbies rarely make out loud because it undercuts the rugged independence branding.

The rebates exist because food has to stay cheap. Australian consumers pay one of the lowest proportions of household income on food in the developed world. That is not an accident. Production costs are subsidised at the input end. Fuel, finance, drought support, levies matched by government. The saving flows through to retail. Governments of both major parties have made the same political judgement for decades. It is cheaper and less visible to subsidise farm inputs than to let food prices float to their true cost. A $12 loaf of bread ends governments faster than a fuel rebate scheme that nobody outside agriculture understands.

There is a second piece, which is food security. Most developed countries support domestic agriculture for the same reason they support domestic steel or semiconductors. You do not want to be wholly import dependent for something essential. That is a legitimate public interest argument and it is the one that should be made.

What is striking is that this argument almost never appears in the angry posts. Instead the framing is persecution. City elites who do not understand us, governments that hate producers, taxes designed to crush the family farm. It is emotionally satisfying and politically effective, but it obscures what is actually going on. The rebates are not charity. They are not a moral reward for choosing a noble profession. They are a consumer subsidy delivered through producers, designed to keep retail food prices down and maintain sovereign production capability.

If the argument were made that way, it would be harder to dismiss. It would also be harder to wrap in scripture, which may be why it is not the version we hear.

The budget is not a shit sandwich. It is a set of policy choices, some of which deserve sharp criticism. Pretending otherwise does the people most affected by the real changes no favours at all.