New research from economists at Victoria University has revealed that CGT changes will penalise investors with multi asset portfolios. The research conducted by Victoria University’s Centre of Policy Studies found that while the inflation indexed CGT proposal was principled, there were flaws in the structural design.

Under the proposal, capital gains will be fully indexed for inflation, while capital losses will not. Where there is rising inflation, the indexed cost base of all assets will also rise, protecting single asset investors. Those with multiple assets, however, will not be able to use inflation-adjusted capital losses to offset their real capital gains on an equal basis. The research found that the more return variance there is among assets, the more tax rates will increase.

The paper’s authors, James Giesecke and Jason Nassios, concluded that the current design does not meet the primary aim of being inflation neutral. They recommended that the Government amend the legislation to index and recognise real capital losses alongside real capital gains.

The new CGT comes into effect 1 July 2027, so if you are wondering how your investment strategy might be affected, contact us for a confidential call.

General Advice Warning:

The information in this blog is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether the information is appropriate for you and seek professional advice before making any financial decisions.
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