The chief executive of Australia's largest bank has argued that the Albanese government's proposed changes to capital gains tax should be confined to passive investments such as housing, rather than extending to assets linked to enterprise and innovation.
Commonwealth Bank CEO Matt Comyn expressed his view that the tax overhaul ought to target wealth accumulated through passive asset accumulation, distinguishing it from productive capital or risk-taking ventures. 'I think that's the area you have to look at,' he told 7.30. 'This is a step where I do think wealth, particularly relative to labour and consumption, is taxed lightly and inconsistently.'
Mr Comyn emphasised the distinction between passive asset accumulation and investments in start-ups, founder-led businesses, or junior explorers. 'I don't think we want to change the incentives around risk, enterprise and innovation,' he said, noting that the government is examining the matter closely.
However, Labor's proposal extends beyond the model backed by Mr Comyn, applying the changes across all major asset classes, including shares, property, and businesses. Under the Budget changes, the current 50 per cent capital gains tax discount will be scrapped and replaced with an inflation-based system designed to tax only 'real' profits above inflation when assets are sold.
Currently, investors who hold an asset for more than 12 months can automatically cut their taxable profit in half before paying tax. For example, someone who bought shares for $100,000 and later sold them for $200,000 would make a $100,000 profit, but under the current system, they would only pay tax on $50,000 because of the 50 per cent discount.
Under Labor's new model, investors would no longer receive that automatic discount. Instead, the original purchase price would be adjusted for inflation, and tax would only apply to profits above the inflation-adjusted amount. Additionally, a minimum 30 per cent tax rate on indexed gains from shares and investment properties will be introduced, preventing investors from sharply reducing their tax bill by selling assets during a low-income year.
Mr Comyn said he planned to discuss the proposed changes with Treasurer Jim Chalmers. The changes will not apply to small businesses, defined as companies with net assets below $6 million or annual turnover of less than $2 million.
The government will also abolish negative gearing for future property investors, although exemptions will remain for newly built homes. Investment properties that were already negatively geared before Budget night would be grandfathered under the existing rules. Homeowners who had lived in a property before Budget night would also still be able to negatively gear a property if they later turned it into an investment property.
