Tax arbitrage and border impacts under Labor's CGT tax hikes

Question

? Which other country has the CGT regime proposed by the Budget? ? Can you name one other OECD country? ? How does Australia now compare? ? How does it affect investment that Australian now has the world's highest CGT? Higher than China, New Zealand has zero CGT. ? Australia is now the only major OECD jurisdiction whose capital gains tax combines three features: marginal-rate taxation, inflation-adjusted (real) gains, and a 30 per cent minimum floor. Most other countries apply a flat headline rate to nominal gains. Why did Treasury believe this was the most optimal way to tax capital gains? ? Why are individual investors denied the capital gains tax discount and required to pay tax rates of at least 30 per cent-and up to 47 per cent-while superannuation funds can access an effective tax rate of just 10 per cent? ? Has treasury modelled the capital migration towards superannuation? ? Is it true that under the current GGT and 50% discount system - gains and losses are treated symmetrically? ? For example, If one share rises by $100,000 and another falls by $100,000, they broadly offset each other regardless of inflation. Investors are effectively taxed on their net nominal gain across the portfolio? ? Does the changes to CGT allow someone to deduct real losses against a capital gain - or is it only limited to nominal losses? ? Wouldn't you create a distortion in the system by not allowing someone to deduct real losses? ? Do the proposed CGT changes favour single ETFs / managed funds over multiple direct shares holdings? ? Is it true that Treasury's modelling works reasonably well for broad market ETFs because the ETF behaves more like a single compounding investment? ? And if you have more than ETF then you are also relatively more disadvantaged? ? What do you think is the average share of losses in individual share portfolio? ? Do you agree with the statement from Geoff Francis that ''You will typically pay more tax than the Treasury numbers suggest because the only way you get the Treasury numbers is if you invest in an indexing tracking stock''? ? What impact will the proposed changes have on direct ownership of ASX listed companies, entrepreneurial investing and higher risk long term capital formation? ? Does this mean that the proposed system favours managed funds like ETFs over direct / individual shareholdings? ? Have you considered these, perhaps unintended consequences, of the reforms? And the impacts on different cohorts? ? Are there any other countries with this same approach as the proposed CGT changes? ? Is a flat tax like the GST considered a regressive tax? Why is that? ? Does that mean a minimum 30% flat tax is also regressive? ? How many small businesses in Australia are structured as either individuals, partnerships, companies or trusts? ? If they are prudent taxpayers, what will the changes require them to do? For example, should they seek a valuation before the changes commence? ? Given the complexity of the changes, what other considerations should they take into account? ? Should individual shareholders, like employees, similarly obtain a valuation to ensure they do not over-pay tax in the future? ? Did you model the impact on different businesses of the tax changes? ? Has Treasury sought to estimate how any change in the rate of business formation as a result of the CGT changes? ? How many valuations does Treasury estimate will be needed across the entire economy, across all affected assets and businesses? ? Has Treasury estimated the cost per valuation? ? Are high growth businesses worse off under the tax changes compared to the 50% CGT discount? ? All else equal, would you expect higher productivity businesses to grow at faster rates than low productivity businesses? ? How can higher taxes on capital and investment improve productivity relative to lower taxes on capital and investment? ? What is Treasury forecasting the CGT changes will do to investment? ? Given the CGT changes raise revenue, does Treasury expect a reduction in investment? ? The CGT and negative gearing changes structurally disadvantage individual property investors relative to super funds, which pay 10% on gains and are exempt from the quarantine. ? Has Treasury modelled the extent to which super fund capital is expected to replace individual landlords, and does the government consider the institutional ownership of Australia's rental housing stock a desirable policy outcome? ? The combination of the CGT and negative gearing reforms are expected to raise $3.6 billion in additional revenue over the next five years. If the problem is intergenerational equity and housing affordability, why is the Government increasing tax on a young person saving for a home deposit by investing in an ETF or managed fund? ? Please explain how taxing a young person's ETF investment more builds a single home.