The AIR warned the CGT changes will undermine retirement confidence and increase tax burdens on older Australians who have planned responsibly for their retirement and disadvantage young Australians saving for a home.
AIR chief advocate Wayne Strandquist said the removal of the long-standing 50 per cent CGT discount and changes to investment taxation rules will disproportionately affect retirees who rely on modest investment income to maintain financial independence.
“Self-funded retirees are not speculators – they are Australians who have worked, saved and invested prudently over decades in order to fund their own retirement. The Government should be encouraging self-reliance and long-term saving, not penalising those who have done exactly what successive governments have encouraged them to do,” Strandquist said.
He said many retirees with lower superannuation balances depend on investments in shares, fixed interest, property and managed funds to supplement superannuation income.
“Changing the rules late in life creates uncertainty, undermines confidence and penalises people who no longer have the ability to top up their savings through employment,” he added.
“Retirees with lower taxable income generated by capital gains will now pay a minimum of 30 per cent tax rather than be taxed at the applicable tax threshold.”
Strandquist said governments should not encourage Australians to save for their own retirement and then change the taxation rules after they have retired.
“Young Australians need more homes to be built, not more taxes that reduce investment and undermine confidence,” he said.
“As they save for a deposit on a home, they invest in growth assets but will now pay more tax when they sell their investments to buy their first home. Older Australians deserve fairness, certainty and respect for the financial decisions they have made in good faith under existing laws.”
