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MoneyLink Financial Planning, 56 Hill Street, Orange (2026)

15/10/2026

High Capital Gains Possible Without CGT

The new tax rules to apply from July 2027 are changing the way investors think. The most obvious impact is buyers’ recent avoidance of residential property. Values have fallen sharply in many areas.

The changes are complex so a recap is useful. Capital gains tax (CGT) will apply to gains in excess of inflation with a minimum rate of 30 per cent. Gains up to inflation will be tax free.

Negative gearing of existing residential properties will be banned. Income losses due to loan interest and other costs will not be deductible against other income such as salaries. Self-managed super funds will be entirely banned from borrowing to buy residential property.

Residential properties have been popular investments for many years. Values keep up with inflation due to the limited supply of land, and building costs escalating faster than inflation. Not enough homes are being built to meet demand and house the whole population including immigrants.

Most importantly the gearing commonly used multiplies the capital growth returns. Gearing simply means investing with borrowed money.

Under the new rules, the gearing of property, shares, managed funds and other growth investments will be able to provide gains greater than inflation with no CGT payable. This is because the CGT due is not calculated on the capital the investor outlaid but on the gain in the value of the asset.

For example, it will be possible for an investor to double their investment, make a 100 per cent capital gain, and yet pay no CGT. Suppose a person pays a 20 per cent deposit on a property or share portfolio and borrows 80 per cent.

The value rises by 20 per cent over the next five years in addition to the buy and sell costs. The investor makes a 100 per cent gain on their cash outlay. However the 20 per cent gain on the asset value is likely to be around the rate of inflation, so no CGT will be payable.

If an investor buys an asset with borrowings that grows at the rate of inflation they can make high capital gains and pay no CGT. If the investment also produces enough income from rents or dividends to meet the interest cost of the loan, there will be no net income and so no income tax payable either.

If costs including interest exceed the income, the loss will no longer be tax deductible against other income such as salaries, for residential properties. Losses will continue to be tax deductible against salaries for other investments.

The best investments in the future may be geared ones where the assets grow at the rate of inflation and produce enough income to pay the borrowing costs.

01/10/2026

The Best Savings Vehicles

The new tax rules continue to puzzle investors. Financial advisers and other professionals aren’t much further advanced in trying to work out how best to respond to them either.

The new thirty per cent minimum tax on realised capital gains above inflation starts next July. It is assumed everyone will pay more tax. The majority will, but some people won’t, and it’s difficult to work out.

The likely outcome is dependent on the circumstances of the investor and the investment, both of which vary greatly, and the unknown future inflation rate.

Super funds are unaffected. They remain very tax efficient and now become even more attractive for savers and investors.

The limits on super contributions are generous. Up to $32,500 per year including employer super guarantee payments, can be saved into super, with a tax deduction allowed for it. That’s enough to accommodate a healthy savings plan. Up to four times that can be put in without a tax deduction.

The money in super funds is inaccessible to some people. How much of a problem is that? Well, we cannot take it out and go buy a fancy car. We can’t take a world trip with the money. And we cannot pay the kids school fees with super savings.

However, if we don’t plan to do those things with our savings, access isn’t such a problem. The full balance is available if age sixty and retired, or from age sixty-five. Ten per cent of the balance is cashable each year from age sixty by starting a pre-retirement pension.

The main reason to save and grow our super may be to fund a comfortable retirement. However from age sixty we can draw from it to pay children’s university costs, help with their house deposits, or other things.

Some super funds allow members a lot of control over their investments. They are administration systems with a huge range of investment options. Savers can focus on their favourite area, including property if they wish. They can choose nearly any larger company share in Australia or overseas.

If that doesn’t give enough control and investment choice people can set up a self-managed super fund.

Those funds can no longer borrow to buy residential property but can still borrow for commercial and rural property. So investors can set up a self-managed fund and buy a small industrial or commercial property, funded largely by borrowings.

Super funds can also buy investments with gearing (borrowing) built in, to boost returns. There are geared managed funds that invest in shares, property and other growth assets. The returns will be accelerated by the gearing just as if the super fund had borrowed itself.

22/09/2026

Time to Underweight Australian Shares

The graph comparing average returns from Australian and US shares is concerning. Vanguard says for the last twenty years Australian shares have made 7.2 per cent per annum compared to US shares on 11.8 per cent per annum. Compounding those rates produces a very big difference.

Australian shares outperformed in the 1980’s and early 1990’s. They also had a good patch from 2000 to 2007. The rest of the time they have lagged.

Most concerningly, US shares have done better than ours each year since 2013. Lonsec Research says over the last ten years the All Ordinaries has returned 9.3 per cent per annum while the global share average was 13.7 per cent and the S&P500 in the US made 14.5 per cent per annum.

The main sector driving returns when Australian shares did well was mining. When the world needs more raw materials and commodity prices are high, we do well. That’s our only competitive advantage. Yet simply digging up naturally occurring resources and shipping them seems basic.

Australia’s franking credit system has produced more focus by our companies on paying high dividends with tax credits. US companies prefer to reinvest more of their profits in growing their businesses, thereby raising their share prices.

Other factors are also holding us back. One is over-regulation. Multiple layers of approvals are required before any major building or project can start. Mining companies allow at least ten years from the discovery of a resource until they can start mining.

Compliance is a burden everywhere, ongoing. It has a big cost and, in some cases, there doesn’t seem to be much benefit.

Our shrinking productivity is an important factor. Output per worker per year has been declining since before Covid. Little effort is being made to correct this.

Unions are being allowed more power under the current Government, for example in the WA mining industry. That will reduce productivity further. Working from home, is not as efficient on average as working in the business premises. Studies show that WFH means lower productivity longer term.

The number of government employees in Australia has grown rapidly in recent years. Economists say the private sector is more efficient, flexible and productive than the government sector. More government employees means lower average output. Lower productivity limits company profits and share prices.

The new capital gains tax rules discourage risk taking and entrepreneurship, especially penalising business builders.

Sadly, investors should underweight Australian shares and overweight overseas shares, especially US stocks.

11/09/2026

Exchange Traded Funds Appeal

ETFs or Exchange Traded Funds have grown enormously in the last decade. Both their number and the money invested in them continue to increase. From around $50 billion invested ten years ago the total has grown to $472 billion now, in 494 funds, according to Lonsec Research.

ETFs are similar to traditional managed funds in that they own a pool of many investments, but are different in that the ETF units are traded on the share market.

ETF’s started out as index tracking funds and most still are. If it was an ETF tracking the Dow Jones Index the fund simply bought shares in all the companies that make up that Index. It did not employ any clever, highly-paid fund managers and charged low fees. It provided average returns.

The main benefits were the diversification across many companies and the avoidance of below-average returns. The downside was never receiving above-average returns either. ETF’s have been developed that replicate every major index on Australian and overseas markets.

The main competitors to ETFs are active fund managers. Their aim is to beat the averages by making smart investment choices that outperform the averages. Sometimes they succeed and sometimes they don’t. Many financial advisers prefer actively managed funds to index funds.

Actively managed funds outperformed passive on average from 2000 to 2011 but passive funds have done better since. However one fund manager thinks that may be starting to change.

From their early days of simply tracking the major, well-known market indices ETFs have become increasingly specialised. ETFs were set up tracking the mining share average or industrial company average, or the US technology company index.

Active managers would argue that, if your preference was the mining sector, it was possible to pick some of the better performing mining companies and earn above average returns from active funds.

ETFs have continued to specialise making some of them now very interesting. For example there are AI ETFs. Many risk-taking wealth accumulators want to profit from AI, but which companies will be the winners? An ETF that buys all major AI focused companies may be the answer.

There are ETFs investing in microchip manufacturers, lithium miners, AI infrastructure, copper producers, and many other specialised industries. If you believe copper is a key ingredient of the future, a copper ETF might work for you.

It is specialised and higher risk but at least you aren’t relying on just one company. One ETF provider has just launched a Space Tech ETF with the ASX trading code MOON. Let’s hope its performance is …

02/09/2026

Investment Outlook

Where should we invest now? The last financial year produced above average returns for people holding a diverse spread of investments, and from most investment sectors. That was a surprise considering the events the year produced, especially the Middle East conflict.

Several of those issues remain a concern today meaning the outlook is far from assured.

There is no simple resolution to the US–Iran conflict. President Trump can’t find an off-ramp. His problem in that he has to answer to the voters, while the Iranian leaders don’t. They simply stamp out any dissent quickly and brutally.

Until there is a resolution oil supplies remain at risk. There haven’t been any shortages so far but reserves are reducing. Oil prices remain above pre-war levels, adding to inflation especially in Australia, Asia and Europe. The US now produces enough oil for its own needs.

Interest rates are uncomfortably high after multiple rate rises by central banks in Australia, Britain, the US and Europe. Further increases are expected here and in Europe.

Australian inflation is at 3.5 per cent compared to the 2.5 per cent target. The biggest cause is excessive government spending, as it is in other countries.

Productivity in Australia, output per worker per year, has fallen for the last five years and is down about five per cent in total. Yet wages continue to rise. This is unsustainable. Consumers are being squeezed. Harvey Norman says foot traffic in its stores is down about a fifth over the last year.

The recently announced tax changes have damaged confidence in the housing market and created uncertainty in relation to other investments.

However the outlook is not all negative. The application of artificial intelligence programs in the workplace will help productivity. It is the future, that’s obvious. The leading companies that utilise it will do well.

The building of AI data centres worldwide requires resources, which Australia can supply. Mineral prices are high and likely to remain so. Technology companies require much capital, providing investment opportunities.

Our rural sector is doing well with most agricultural commodity prices high. Recent seasons have been good, and the current one is shaping up well.

We are likely to see one more interest rate hike before rates plateau. Markets will soon start to anticipate rates falling next year.

The best approach for investors is to be diversified, hold a spread of investments in many areas. That should earn reasonable returns regardless of what eventuates. It doesn’t pay to be too pessimistic. Things usually work out better than most expect.

21/08/2026

Planning and Managing Retirement Income

What is the greatest concern people approaching retirement have? There is little doubt it is “After my salary stops, where will my income come from, and will it be enough?”

What is the most common concern for people already in retirement? The most likely answer is “Will my money run out before I pass on?”

These concerns highlight the importance of good retirement income planning. A well thought out retirement plan addresses both those questions and puts the retiree’s mind at ease.

There are many pieces of information required to prepare the ideal retirement income plan. The first is how much capital the person or couple have to fund their retirement?

This is calculated by adding the values of all their assets, excluding their home and personal use items, then deducting all debts or liabilities. That gives the amount of money available to generate income from.

The next question is their age. Older people can draw income from the same capital at a higher rate. What is their personal life expectancy? How healthy are they? How long did their parents and other family members live?

Do they want to leave money for their children on their death? Are they concerned if their investments run down slowly? People’s opinions on this vary greatly. Many say yes, they want to leave benefits for family, but some say no, the kids are wealthier than they are.

Some retirees want to spend more income early in their retirement when they are healthier and more active, and less later. That can be planned for. However aged care costs need to be planned for too.

A further important question is how conservative, or growth focused the retirees wish their investments to be. Cautious investments earn lower returns so the retiree may have to live on less income.

After gathering all this information financial planners can work out how much income the retiree can draw from their investments sustainably.

This calculation will be based on an assumed earning rate and income needs rising with inflation. It will show how long the money will last, and if, and when, it is likely to run out.

Do these asset levels mean the retiree will qualify for a part or full Age Pension? If so, a combination of investment and pension income can give a comfortable total.

Some people may want higher spending levels. Annuities can boost their total income and qualify them for more age pension but may mean less money for the kids later.

Ongoing monitoring and review of the retirement income plan is also important, to make adjustments depending on how investment returns and inflation actually work out.

13/08/2026

New Tax Rules Suit Managed Funds

Prime Minister Albanese’s decision to tax capital gains the same as income has caused consternation, confusion and perhaps even a little chaos for people with significant assets. Add in the bans on negative gearing and the minimum thirty per cent tax on trust distributions and people have a major challenge.

Some small businesses are owned by trusts. Many trustees will want to restructure, from family trusts to companies for example. Others may want to set up new trusts for disabled people separate from existing family trusts as they would escape the tax.

These restructures could incur large stamp duty costs. The Australian Small Business Ombudsman has said the Federal Government should provide stamp duty concessions for these restructures.

For people who hold investments outside of superannuation, what to do next is a serious question. The new tax makes potentially high growth, high risk investments much less desirable. If people pick a share that doubles or triples in value over a year or two nearly all the gain will be taxed.

Investments of lower risk that provide a sound income and grow more slowly become much more attractive. The rules penalise risk takers, especially those who build new businesses from scratch.

Managed funds are likely to be one of the beneficiaries of the new rules. Most fit into the category of lower risk, providing an income, with lower growth. They hold many assets in the category they invest in, meaning lower risk than if one owns a single asset.

For example a share fund owns shares in many companies, making it safer than picking an individual share. The dividends paid by the companies the fund has invested in are passed through to investors, with imputation tax credits if applicable.

In addition, managed funds usually pay their investors more than just the dividends they receive. They also pay out realised capital gains with their income distributions.

If the fund managers have bought something that has made a strong gain and they decide to sell it, the realised gain must be assessed for tax in the hands of the investor, so it is paid out to them rather than being reinvested.

Unrealised gains are not paid out, meaning the funds usually still grow in value, but more slowly. So funds typically have lower risk, good income and moderate growth. That is appealing under the new capital gains tax rules. Investors can reinvest the distributions to boost their account growth if they wish.

If possible, adding to superannuation is the best response to the new tax rules. If that’s not possible, managed funds could be a good choice.

06/08/2026

Wealth Building with Negative Gearing

Buying an investment property has been a popular wealth building strategy for lots of people for many years. Once they have owned their home for a while and their equity in it has built up due to the loan reducing and the value rising, buying a second property makes sense.

Or at least it did. The property related costs plus the interest on the loan to buy it were tax deductible against the rental income. If those expenses exceeded the rental income the loss was deductible against salary or other income. It was a good way to reduce tax on one’s salary.

That is no longer allowed in relation to existing properties. Any such loss can be carried forward for future use but cannot be claimed immediately as a deduction against salary. The deduction is still allowed if the property is new. However competition for new properties has risen strongly.

Importantly, this ban on negative gearing only applies to existing residential property, not other investments. Negative gearing losses can still be claimed on investments such as commercial properties, shares and managed funds.

Some people keen to build wealth may like to buy a small commercial or industrial property. That can work well if the tenant is strong and reliable.

Negative gearing using managed funds may be the best option available now for many wealth builders. Money can be borrowed against the investor’s home to buy the funds. Some banks will also lend against the value of the new investments as well.

Bank loans are available at close to standard mortgage interest rates. Margin loans are also available that don’t require property as collateral. They lend against the funds or shares. Interest rates are 2 to 3 per cent higher, but the interest is tax-deductible, reducing the net cost.

Managed funds pay income distributions at varying rates, sometimes quite high, so it is best to reinvest them if possible. This will grow the investment value much faster.

Managed funds can be bought in smaller parcels with borrowings increased to buy more over time, unlike properties that require a very large loan initially. Loans for funds can also be reduced easily if circumstances change, such job loss or time off work for children. They are flexible.

Managed fund investments fluctuate more in value than residential property, but if the wealth building plan is over a long term that shouldn’t be a problem. Any negative gearing losses remain deductible against salary and dividends often carry some imputation tax credits.

People put off negative gearing of property should consider using the strategy with other investments.

22/07/2026

Super Rule Changes, or Not

At this time of year the changes to superannuation that began from July 1 are usually a good topic for discussion. However this year it’s the changes that didn’t happen that are most newsworthy.

The changes that did happen are worth noting. The limits on contributions have been indexed up. Concessional or tax-deductible contributions are now allowed up to $32,500 per annum instead of $30,000.

People planning their salary sacrifice arrangements for the year can adjust their voluntary contributions up so that, when added to their employer super guarantee contributions, the total will be close to but not over $32,500.

The limit for non-concessional or non-tax-deductible contributions is four times the concessional limit, so $130,000 per year now. The ‘bring-forward rule’ also allows two future years contributions to be made immediately to cover the three-year period.

So people who wish to build up their super with non-deductible lump sums from inheritances, asset sales or other sources can now put $390,000 in their accounts, up from $360,000. This limit can also be used in recontribution strategies to eliminate the super death benefit tax.

However, the most important news is the changes that didn’t happen to superannuation. Capital gains tax is changing. In most cases the tax payable will be higher, but not in super.

Capital gains within super accounts will continue to be taxed at ten per cent. Capital gains in pension accounts will continue to be tax free.

Many other rules are changing to boost the Government’s tax take. That makes superannuation more appealing.

Negative gearing of existing residential properties has been banned. If the expenses including interest exceed the property’s rental income the deduction will no longer be allowed against other income such as salaries.

Family trusts are also directly in the Government’s firing line. New rules impose a minimum thirty per cent tax on trust distributions even if the beneficiary is paying no tax or is in the bottom bracket.

The fact that the only changes to the super rules allow more money to be put in makes it more attractive than ever compared to other investments. Income tax is fifteen per cent while accumulating and zero in pension mode.

Even for people who are over the limit of the amount they can convert to a tax-free pension it will be better to keep the extra amount in super accumulation mode, at least up to $3 million.

People who are reluctant to put all their savings into super can retain more control by using a wrap account with a large investment menu or setting up a self-managed super fund.

01/07/2026

Renters to be Hit by Tax Changes

The Government’s rush to push its new capital gains tax and negative gearing rules through Parliament without proper scrutiny has produced another nasty negative twist.

In order to persuade the Greens to vote for the legislation in the Senate the Government agreed to ban self-managed super funds from borrowing to buy residential property.

This change was not discussed previously and appeared entirely without warning. It will come into effect in early August giving people in the process of buying a property very little time to adjust their plans.

The Government has belatedly recognised the problem I wrote about on May 29 concerning people who start small businesses from scratch and so have no cost base to index to inflation when they sell their business. Their full gain will be assessed for tax.

Thousands of hard-working, ambitious people start businesses in Australia every year. We need them to keep doing that. Some will fail and some succeed. New businesses are the source of progress and innovation. The Government has now established a taskforce to try to find a solution.

Taxing capital gains the same as income is a backward step for the country. Making a capital gain involves risk of loss. It is not nearly as certain or easy as doing a job and being paid a salary. New Zealand, which has no capital gains tax, will welcome Australian entrepreneurs.

The biggest impact of the ban on negative gearing of residential properties will be on renters. Investors are already withdrawing from the market, causing auction clearance rates to nosedive. That will reduce prices a little for first home buyers.

However not every tenant wants to buy a property. Many are young people who haven’t decided on a career yet, or where they want to live long term, and haven’t found a partner. Some are students. Other tenants include low-income earners and older, divorcees and single people.

These people don’t want to buy a home at present. They just want to rent a property at a reasonable rate. Unfortunately, they will be hit hardest by the changes.

There is already a shortage of rental properties with multiple applications usually received for each vacant dwelling. As investors withdraw from the market and self-managed super funds are banned from borrowing to buy, the shortage of rental properties and high rents will get much worse.

This ban on negative gearing of residential property will probably have to be reversed within a few years, perhaps at the next election in early 2028. Hopefully the ban on self-managed super funds borrowing to buy properties will also be reversed.

MoneyLink Financial Planning

15/10/2026

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22/09/2026

11/09/2026

02/09/2026

21/08/2026

13/08/2026

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