Wealth Taxes coming to you - are you ready!!!
Grant's opinion on proposed / changing law — general commentary, not a prediction or advice.
As you know I am a big fan of AI and I am right in the midst of building the Tax Guru brain from the ground up. For me the process is no different to training - of which I have over 40 years of experience. It is all about putting manageable chunks into the brain that are curated and more importantly the truth, so that the results are right on point, provide relevant and accurate sources. If must be structured the right way so that it does not hallucinate the way most AI systems do - because they troll the internet looking for answers. That is too sloppy. We want specialist brains to drive our human performance further and faster.
But here is the rub. Let’s say we nail this and the Tax Guru, over time becomes equal to or better than Australia’s top tax lawyers and accountants and lightyears ahead of the professionals working under them. Well there will be job displacement. We see this happening right now in IT and even stretching into public service of all places.
Which brings me to government budgets. Unemployment rises - personal income taxation goes down and the government is in strife. With more than 6 million people over aged 60 and not working, not paying taxes and costing the budget in terms of aged pensions and aged care, well we have a major problem.
And the governments upcoming Productivity Summit will throw down the gauntlet that older Australians should be sharing the burden with younger Australians - whose personal income tax powers the economy. What is on the table:
| Proposal Type | Proposer(s) | Details and Rates | Estimated Impact |
|---|---|---|---|
| Annual Wealth Tax | Greens | 10% annual tax on net wealth of billionaires; 10% cap on capital flight (asset outflows). Targets ~150 individuals. | Not specified; aims to raise billions for equity. |
| Inheritance/Intergenerational Transfer Tax | Grattan Institute; Per Capita (e.g., Miranda Stewart, Ken Henry); ACTU (via trusts/CGT) | Reintroduce federal inheritance tax on large estates/gifts; high thresholds to exempt most. Grattan: Include family home equity above $750,000 in Age Pension assets test. Reduce CGT discount from 50% (no new rate specified). Tax trusts as companies. | $4 billion/year (Grattan pension test). Reduces wealth Gini by ~0.003; curbs $3.5–5.5 trillion transfers by 2050. 3 sources |
| Superannuation Taxes (Including Death Benefits) | Grattan Institute; CBA; Per Capita (e.g., Helen Hodgson) | Tax super earnings in retirement at 15% (align with accumulation phase); cap concessions above levels needing state support (e.g., >$3 million balances). Increase contributions tax to 35% for incomes >$220,000; lower pre-tax cap to $20,000. Tax death benefits at 15–32% for non-dependents (current rate, but tighten exemptions). | $5.5 billion/year (retirement earnings); $4+ billion/year (contributions/caps). Reduces bequests (1 in 3 super payouts by 2060). 3 sources |
| Capital Gains Tax and Negative Gearing | ACTU; CBA (via Henry Review) | Curb negative gearing deductions; reduce 50% CGT discount (no specific new rate, e.g., to 25% implied in debates). | $3–5 billion/year; improves housing affordability. 2 sources |
| General Wealth/Consumption Shift | CBA; Productivity Commission (indirect) | Increase GST to 15% and broaden base; introduce land taxes over stamp duty. No direct wealth rate. | $10+ billion/year total reforms; productivity boost of $15 billion. 3 sources |
Your client's situation
Whether and how this fits your situation is a conversation with Grant.
Ask the free strategist the what and the why, then book a private session to work through the how.