I love being in Aussie. Hopefully this slows the immigration.
Current System (50% CGT Discount)
Step 1: Apply CGT discount
Capital gain: $100,000
50% discount: $50,000 taxable
Step 2: Total taxable income
Salary: $100,000
Taxable capital gain: $50,000
Total taxable income = $150,000
Approx tax payable
Tax on $150,000 ≈ $40,567
Tax without the capital gain
Tax on $100,000 salary ≈ $22,788
Effective tax caused by the gain
$40,567 − $22,788 = $17,779
So under the current system:
Tax on the $100k gain ≈ $17.8k
Effective CGT rate ≈ 17.8%
Proposed New System
(30% minimum CGT with no 50% discount, plus indexation)
For this example, assume inflation indexation = $0 adjustment.
Step 1: No discount
Entire gain taxable = $100,000
Step 2: Total taxable income
Salary: $100,000
Capital gain: $100,000
Total taxable income = $200,000
Approx tax payable
Tax on $200,000 ≈ $60,667
Additional tax caused by the gain
$60,667 − $22,788 = $37,879
So under the proposed system:
Tax on the $100k gain ≈ $37.9k
Effective CGT rate ≈ 37.9%
The government is taking in an additional $18,975 in tax for every $100,000 capital gain sale.
That's 18.97%!!!!!!!