Budget tax changes spur Australian investors to pull back from markets

Following the May federal budget, Australia introduced sweeping changes that eliminate the 50% capital-gains tax discount, replace it with indexation, and restrict negative gearing to new-build properties while imposing a 30% minimum tax on investment earnings. A Global X poll of 1,500 investors found that households with children are especially likely to cut back on investing, with many shifting to income-based assets or exiting the market due to confusion over the new rules.

Alex Zaika, chief executive of Global X, said the reforms have made the tax system unnecessarily complex and could deter early-stage investing, which relies on compounding returns. Treasurer Jim Chalmers framed the changes as the most ambitious tax reforms in decades, aimed at fairness for workers, first-home buyers and future generations, but critics argue they penalise lower-income investors. The International Monetary Fund has nonetheless endorsed the measures, describing them as a gradual, balanced shift that could ease housing affordability pressures. The reforms are set to raise about $3.6 billion in the 2027-2028 fiscal year, with a one-year grace period for assets purchased after July 1, 2027.