August 21, 2025 • 24 mins
This week's economic summit coincided with a surprise move by the Albanese government to lift the deeming rate for the first time in four years: The measure reduces access to the pension for wealthier Australians. Moreover, it's exactly the sort of change that advisers have warned are set to come down the line as Treasurer Jim Chalmers exerts his influence in the second term government.
Will Hamilton of Hamilton Wealth Partners joins Associate Editor - Wealth James Kirby in this episode.
In today's episode we cover
- Deeming rate lift -The first move?
- Super tax confirmed unchanged
- CGT and negative gearing - Key risks
- Save the super performance tests
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:10):
Hello, and welcome to The Australian's Money Puzzle podcast. I'm
James Kirby. Welcome aboard everybody. It's been a long time
since any government moved to change wealth taxes, but this
week at the Economic Summit in Canberra, I think we
may be looking at a serious redrafting of investment rules
as we know them. We've got a lot to talk about.
(00:32):
My guest today is Will Hamilton of Hamilton Wealth Partners.
Speaker 2 (00:36):
How are you well, very well, Thank you very much
for having me.
Speaker 1 (00:38):
It's good to have you on. You know, I had
an idea to put you on because I know that
you're very politically alert as well as being a financial advisor,
and you will be across what's happening at the summit.
But to my surprise, but it's also a very interesting signal.
I think just this week, in the middle of the summit,
barely receiving any wide attention, of course, the government did
(01:00):
something very interesting. They lifted the deeming rates. The deeming
rates are the rates, of course, at which the government
deems you are making on your investments in the control
pension access, and by lifting the deeming rates, they tighten
pension access. It's a move I see, and I've actually
sort of mentioned many times I thought it was coming
(01:20):
because it hasn't been changed since twenty twenty one. Scott
Morrison was in power when it was in and I
think it is one of the first steps if you like,
that this government is taking to tighten up both wealth
taxes and pension access, which are very much actually more
or less the same thing because they all basically work
out as wealth tax you've been watching the summit, tell
(01:42):
me what in terms of the risk that there will
be more taxes, wealth taxes in particular coming down the line,
where are you coming from? What do you think?
Speaker 3 (01:51):
Well, I've been saying for a little while that I
don't think it'll be increases in taxes, but it will
be decreases in.
Speaker 2 (02:00):
Tax breaks, so to speak.
Speaker 3 (02:01):
So cutting the CGT discount from fifty percent to twenty
five percent, you know, playing potentially with negative gearing. So
it's those things where people get a break, and it's
even when you look at the performance tests where they've
been playing with that. I've read a book called Abundance,
which is Jim Charmer's favorite book. Now I read it
(02:24):
so I can understand where the government's coming from on things.
It's actually a really good book and it's a very
interesting reading. And the thing is with these concessions, it's
the top taxpayers that naturally benefit from this, the lower
taxpayers don't, So this is where they're coming from this
and also with the performance test, it's about providing supply
because of the doubling of the price of the income
(02:45):
required to buy house and over the last twenty years.
Speaker 1 (02:49):
So you see them coming in with a we're changing
the terms and tightening the terms rather than headline grabbing,
you know, brutal straight up web taxes. So interesting, isn't
it that the deeming race, as I say, hasn't changed
since Scott Morrison was in power the budget, which was
the obvious opportunity to do so. Amanda Rishworth, who was
(03:10):
the minister at the time, said no, we're not changing
the deeming rate. But this week, this week when they're
having a summit discussing these sort of things and this
is on the agenda, they move for the first time
in over four and a half years on deeming and
they make it a bit tighter. Is that something of
a sign of things to come?
Speaker 2 (03:29):
Yes?
Speaker 3 (03:30):
And I think that they're aware also you know, it's
projected that we're going to get to twenty seven expenditure,
getting to twenty seven cent of JEDDP, which you know,
people like Costello I think from memory it was twenty
two percent. He wouldn't allowed to go above that, say
in our full five percentage points above that. And I
know that's projected, it's not where it is. But they've
(03:50):
got to catail expenditure and the people have got used
to this middle class welfare so to speak as they
call it that's come out, especially since COVID and even
needing to tell that, so that they're going to start
to do that. And this is the first sign because
it's two sides of the equation. There's one is revenue
and the other is expenditure. And I think Governor Low
(04:12):
I will form a Governor Low of the Reserve Bank,
very critical as well and outspoken on the extent of
expenditure of the government, you know, And it makes me
realize also just some of the things. Having read Abundance,
and I do recommend that people do read this. It
helps you see where the government's coming from.
Speaker 1 (04:28):
Yes, because it's like a manifesto basically, and to some extent,
every government has one, or at least many governments have one,
and you get an idea of where they're coming from.
That is a book across written in the US. It's
a client Eklin.
Speaker 3 (04:41):
Yeah, ezral substitute America for Australia as you read it.
Speaker 1 (04:48):
Well, let's hope it don't substitute it directly. So in
terms of reading Tea leaves. In terms of politically feasible moves,
let's look at the two sides we talked about how
they can. Basically there's the revenue and there's the expenditure.
We see some things at the summit like NDIS, perhaps
some structural reform to NDIS. We see the deeming rate
(05:11):
basically being pinched. Where else do you see? What do
you see coming down the line you mentioned CGT. Just
what's your sense of where they'll move.
Speaker 3 (05:20):
Yeah, I think it's going to be on tax breaks,
which is also about simplifying that the tax system, and
whereas I also thought on they make grandfather assets that
you're like Keating did in nineteen eighty five, boom, as
of tonight, this comes in. But if you're you're prior
of that your grandfather, you know, there's even talk that
you'll only be grandfathered for a period like five years,
(05:44):
So that that's a lot harsher than I thought.
Speaker 1 (05:46):
For instance, explain what you mean there will that said,
not everyone would understand where you're coming from there about grandfathering.
Speaker 3 (05:52):
So if you have an asset, yeah, so on on
things like SAG on CGT, they're talk Yeah. For instance,
they're talking about and fathering assets that you already hold.
Speaker 2 (06:03):
Yeah.
Speaker 3 (06:03):
The discussion that I've heard is, you know, you'll only
have a five year break on that, not as in
tonight at the new rate of a twenty five percent
discount comes in on assets that you purchase from tomorrow
and the assets that you hold today are at a
fifty percent discount. They'll only that that grandfathering will only
last for a number of years. Now, that's also telling
(06:24):
you they want that that's a chase for revenue.
Speaker 1 (06:26):
Yes, okay, So just to bring listeners into the picture here,
just in case. The perhaps I suppose the outstanding piece
of speculation as to what they might do, almost as
a process of elimination, is that at the moment there's
the CGT discount, if you have an asset of any description,
if you hold it for more than a year, then
(06:46):
the tax that's applicable only it is reduced by fifty percent.
And the rumor basically is that they'll turn that down
to twenty five percent. And you're explaining that also, they'll
only have a limited number of time by which you
have to by which you can sell the asset and
not get it with that tax, because that's called grand furthering,
and they have this sort of safety period. Isn't five
years enough? Most people get their backt together in five years.
Speaker 3 (07:10):
Oh yes, it's enough. But I think that what I've
was envisaged in as I said they would do like that.
It was done in September eighty five with Katine when
he sort of brought in SGT an asset SGT free
an acid. Yeah, is now accessible, but no that's not
the case. So that mains their main business.
Speaker 1 (07:28):
Yeah, yes, I think it's I mean, tell me what
you think. But it's also interesting if you think about
what really matters for investors at this summit, and it's
nothing short of entertaining to look at some of the
submissions and everything's on the table. I mean, death tax,
inheritance tax, well tax of European style. I think they
(07:49):
should all be should be aware that they're all on
the table and that they are being bounced around basically
at this time. But in terms of hard data, hard
facts so far are I thought the most interesting thing
was that, first of all, Jim Chalmer said, hey, super
tax is going through us. I've planned. Even Andrew Fraser,
the former Queensland treasure close friend of the treasure who
(08:13):
put in a late application if you like, a lead
submission to the someone and said look there's another way
to do this and don't do unrealized gains. He got
shot down basically, and Charmer said, no, we've got our
plan we're sticking with. So I think hard message from
the summits is that super taxes going through us planned.
What do you think too much? Do you think that's accurate?
Speaker 2 (08:32):
I think so.
Speaker 3 (08:33):
Look everything that both the Prime Minister and the Treasurer
have said, they haven't buckled one little bit on this,
and you know what I might think, And you have
others like Andrew Fraser just mentioned on unrealized capital gains
it's coming.
Speaker 1 (08:47):
Yeah, So that's super tax, CGT, YEP, pension access. We've
got three sort of major items there. Anything else you
think we should talk before the break in terms.
Speaker 3 (08:57):
Of potentially negative gearing, you could say restrictions on negative gearing.
Speaker 2 (09:02):
Shortened ran on all these things.
Speaker 1 (09:03):
And short And ran on them and he lost an election.
Speaker 3 (09:07):
Yeah, but I don't think it's going to be a
dramatic you know, they allow you to have so many
properties whatever. But yeah, but again, I think you'll see
some tightening of those concessions.
Speaker 1 (09:16):
Do you think the public appetize and the context in
which you could bring in those has changed? In other words,
when short And tried to bring it in, everyone basically
jumped up and down. Do you think it's more receptive now?
Speaker 2 (09:31):
Yes.
Speaker 3 (09:31):
I think he tried to do this in twenty nineteen
from memory pre COVID. We're now post COVID, and I
think everybody does realize there is an issue, and it's
an issue. It's with the fact that we're overspending and
we're not and read there's a shortage of revenue, so
we need to look at both sides of the balance sheets,
so to speak. And you know, it's interesting, this isn't
(09:51):
just an Australian issue. You know, look what Starmer tried
to do. Correct then the issue is not going to
be with the people. It actually could be with his
own bench like Sarma had. When you have a large majority, Yeah,
sometimes people start flexing their muscles on the back bench.
And like what Starma was proposing was really towards curbing
(10:12):
I think it's called pit which is their ndis.
Speaker 2 (10:16):
Yeah, and he was just trying to curb the excesses
in that.
Speaker 1 (10:19):
And they've also tried non dom taxes and they're now
trying property taxes, aren't they. So it keeps coming. There
are waves of basically wealth tax efforts in a corresponding
economy the UK at the same time with interestingly a
labor government. Okay, we'll take a short break. We'll be
back in a moment. Lots to talk about. Hello, Welcome
(10:43):
back to The Australian's Money Puzzle podcast. James Kirby here
with Will Hamilton, regular guest of Hamilton Wealth Partners. I
tend to get Will on when I have very tricky,
urgent issues to talk about. We do the budget together
each year, and obviously this we have the economic Summit
just before we talk about what investors are doing ahead,
(11:06):
if you like, of the potential changes that are coming
down the line. You mentioned about housing. You mentioned the
performance tests. I don't know what you think, but I
thought that was a studied leak from the summit. I
thought it meant very little in the overall scheme of things.
The super funds will do what they want to do.
That they're making some teeny weeny change to the performance
(11:29):
tests to satisfy the super funds. Well, yeah, you know, okay,
and maybe they'll build more houses. Yeah, sure, perhaps in
the in the fullness of time. That's that's always a probability.
But I think the performance tests are worth having, and
they may not be perfect, they will never be perfect.
But I don't think that I think that's almost a
(11:50):
decoy basically, that performance test stuff. It's arcane virtually. What
do you maybe, do you think it's more than that?
Speaker 2 (11:57):
No, I don't.
Speaker 3 (11:57):
I actually like the performance tests as well. But I
do think this is about some attempt to try and
drive supply on housing.
Speaker 2 (12:05):
Again.
Speaker 3 (12:05):
I get back to their book abundance and they've they've
got to increase the supply and how do they do it?
Speaker 1 (12:10):
And they won't ever get into trouble by trying And
they do try also, to be fair, they are trying
all sorts of things from incentives programs, shared equity and
now trying to get the big super funds, who will
in the end only do it if they can make
money out of it. And it's worth pointing out, folks
that the big super funds or well into the housing market.
They've build luxury apartments so you can find them all
(12:32):
over the country, bank rolled by SeaBus, et cetera. It's
just affordable housing. They don't want to do because they
can't make money out of it. All right, put that
to one side. Tell me what in terms of what's
happened so far, super taxes for sure, changes are coming
down the line. This is a second term labor government.
They've got the win behind them, they've got strong ratings,
(12:53):
they are in a position to do things. What are
investors doing ahead of this? Is there moves to chake
money out of super and if there is, for instance,
where are people putting it? And will it just be
a chase where they move to family trust and then
they government move on family trust and then they chase
(13:14):
them across somewhere else.
Speaker 3 (13:16):
Look, we've seen a few clients want to do this.
We've said just hold off because there isn't any hurry.
You still, you know, you've gotten to the end of
this year and we need to see the legislation and
we haven't seen the legislation yet, but you know, basically
not what's coming, but we do. I think it is
wise when you've got time to wait. But no, Look,
there are one or two that have panicked, I think
is probably the right way to put it, and they
(13:37):
want to get things sort of pre last financial year.
And yes they are moving things into one is to
family trust. But will family trust get taxed? They've said
no new taxes, so you know, we have to therefore
rely on that that there won't be any new taxes
in this term. That doesn't mean there won't be in
(14:00):
the next term of parliament. The other thing is, you know,
one or two people have sort of where they've got
excess balance, have been using this to you nonconcessional contributions
to children and making their members of super funds and
things like that. So us send them some articles in
the paper that this is a common strategy we've had.
You know, we have seen some people want to do that.
You know, again we caution them because you've got different
(14:22):
risk profiles for different age groups.
Speaker 1 (14:24):
Just to explain to listeners, that's moving. Traditionally, super funds
there was a limit on how many people could be
in them, and it's now six. So people are saying, oh,
there's just mom and dad so far. Let's open it up.
Let's put the kids in, adult kids in redistributing inside
super But you're saying that opens what cand of worms?
Speaker 2 (14:42):
Well, you've got to they're our members, your super fund.
Speaker 3 (14:46):
You've got to me as long as you're doing things
I think with governance in there, and yeah, there's transparency,
there's openness, and just remember, you know, make sure everybody's
in the right risk profile because generally a person who's
in their thirties they've got thirty ideas until they can
access super and so they're going to have a different
risk profile than somebody who's in their sixties.
Speaker 1 (15:07):
Yeah, exactly, So mom and dad are they're sort of
possibly preserving to some extent, and adult children brought into
the SMSF for the first time because there's a new
you can now have up to six people, isn't it.
In smsfs, they could be looking at extremely different where
they could be looking at growth stocks, they could be
looking at ethical concerns that weren't on the table perhaps
(15:30):
twenty years ago. Is that what you're referring to.
Speaker 2 (15:34):
Yeah, look, there's different needs.
Speaker 3 (15:36):
It's just it's the same as when you get different
generational changes and people looking at your paths and you're
in your one age groups wanting to give to more
environmental causes, whereas the older generations are wanting to give
to your more health related So you've got to be
aware of the generational issues you're bringing into yourself. And
(15:57):
it's super fun when you do that. And you've got
to make sure that the eypinness and transparency is there.
Speaker 1 (16:02):
Okay, past folks, by the way, are the philanthropic tax
shelters basically public that are very good and useful but
for very wealthy people. Really all right, And we have
had someone on the show in the past if you
want to have a look at that. One last thing
will which I thought was really interesting. We've been talking
on the show about the almost like something under your
(16:24):
nose basically for people are planning around potential wealth tax changes,
and that the sort of opportunity that's under everyone's nose
is that it's all income is tax free up to
eighteen thousand or so, and so many people don't have
to have everything in super but I see some suggestions
(16:45):
that could be closed off too to income that it
could only be for Saturdy. It wasn't that interesting.
Speaker 2 (16:50):
That was interesting. I sort of looked at them with horror.
Speaker 1 (16:55):
Well, it's like on the show, we've not that we've
just discovered it, but we have been talking about it,
and many people have been talking about it, and then
suddenly you see, oh, there's a couple of submissions saying, hey,
close that off. That's a escape corridor. So that's what
do you think is that realistic?
Speaker 2 (17:10):
I don't think that one's realistic.
Speaker 3 (17:11):
No.
Speaker 2 (17:12):
Again, I think there could be quite an outcry on
that one.
Speaker 3 (17:14):
And I think they're going to make decisions where is
less noise.
Speaker 1 (17:18):
Yes, because they do seem to be in the end
a relative. How they move is quite conservatively. They bring
it up, they put it on the table, and then
they get it through. Well, if they were to be
re elected again, there was their procedure. They said, well,
we've put it to an election, We've been elected, so
we are absolutely given to go ahead, green light to
do whatever. That's how they did the super tax. Okay,
(17:39):
well that's a pretty that was a pretty juicy in
newsworthy session, folks with Will, we're going to now have
some questions. Some of them are on the summit, but
we've probably dealt with them. But there's some great questions
which we'll deal with in a moment. Back in a moment. Hello,
(18:09):
and welcome back to The Australian's Money Puzzle podcast. James
Kirby here with Will Hamilton of Hamilton Wealth Partners. Piece
of correspondence from Jeremy. Hello from Hobart. I've recently started
listening to your podcast while writing my indoor trainer and
I really enjoy the discussions. It makes the cold winter
garage sessions much more bearable. So thank you, Thank you.
(18:32):
Jeremy down there in cold Hobart. We're here and Sonny Melbourne,
our producer Lea is in rain SAWTN, Sydney. Jeremy's just
asking about the best structures and pros and cons around
basically for holding family investments. It's a very dark question, Jeremy.
We won't be able to get to it today, but
I think it would be worth listening to what Will
had just been saying at the end of the last
(18:54):
segment around alternatives. If you like to super that being
family trust, expansion, family truss, expanding the SMSF out to
anything up to six people. There are starters if you like,
we'd come back to that another time if we can.
None of this is advice, it's information only question from Demien.
Speaker 3 (19:14):
There will yeah, So Damien asks, would you know what
the final dividend for twenty twenty five is on my
Vanguard ETF VSO's small caps is at three dollars ninety
eight per share. It seems extraordinarily high for an ETF
made up of some one hundred and ninety six separate companies.
They have a dividend yield of seven point eight eight percent,
(19:37):
and I can't seem to be able to track down
where it has come from. So if I was you,
I would have a chat with Vanguard and find there.
You know, there could be as with ETFs, the rebalancing occurs,
there could be some capital gains in that. But I
would have a chat with them and that they will
be able to give you that transfer, that that degree
(19:58):
of transparency that you are quire.
Speaker 1 (20:00):
Very good and Damian, we've had questions like this before,
and often sometimes the mechanics of the ETFs are not
instantly obvious to the clients who buy the ETFs. You
know they mirror the stock market. Yes, but not always
in their dividend flows for instance. That could be due
to do with the mechanics or the timing, as Will
has alluded to. Now, the final question is actually this
(20:24):
is a reprise of a question because I wanted to
put it to you too, Will. We had it on
the show the other day that was really interesting. So
a guy called Drew. He says, I'm forty three and
every year the level of my earnings means that I
exceed the concession of super cap, the tax free super
cap of thirty thousand dollars, and I have to pay
(20:45):
the extra tax for high earners Division two ninety three,
and in the future two ninety six is coming down
the line, and he says, with limitations on super contributions
and penalties, I would like to explore the idea of
opting out of compulsory super contributions if your balance is
high enough, and take that payment as part of your salary.
(21:06):
With so many restrictions on super going forward, should this
be an option? So you get to the point now,
because they haven't changed this tax free pre tax consessional
cap for years and years, and they keep lifting the
Super innovation guarantee at twelve percent. That people are, whether
(21:30):
they like it or not, pushed into this higher tax
category because of mandatory super's and the same people don't
need is because by definition they don't need it. I
think it was like an oversight and what do you
think that people should be allowed at that level, at
that level where they're clearly able to look after their
super do something else with it, rather than fall into
(21:51):
line with the mandatory rules.
Speaker 3 (21:54):
Look, and it's not just that it's yes, some people
have what you're led to back concessional contributions if they're
over the transfer balance cap. There's some there's planning that's
required around that as well. So yes, I do think
that it may make sense. The biggest issue for the
majority of people thought, is getting money into super. That
doesn't seem it's necessarily an issue that Drew's talking about, but.
Speaker 1 (22:17):
It is the big issue. I mean, you can have
two million and super pend no tax, but you can't
put in more than thirty grand a year pre tax.
Speaker 2 (22:24):
Which is so this was all brought in by Kelly Dwyer.
Speaker 3 (22:28):
Yeah, by the Liberal government, and I think it's a
flaw in the system and the way you get money
in and some of those limits and therefore bringing in
division two nine three and then you've got division two
nine six is three rightly, says I think these are
this all needs to be redrawn.
Speaker 2 (22:47):
I think yeah.
Speaker 1 (22:48):
And actually one of the submissions, one of the key
submissions to the Economic Summit suckling back ever son see
to the economics some much, which we've talked about all
through from the start, was to lift that concession of
supercap from thirty grand to fifty. We had a piece
of that on that submission in the Australian a few
days ago and I think certainly that would make a
(23:10):
lot of sense. Very good, very succinct. We got through
a lot there, Will.
Speaker 2 (23:15):
We did, James, thank you for having me on.
Speaker 1 (23:17):
Thank you very much for coming on. That was Will
Hamilton of Hamilton Wellth Partners, which, as you've probably heard,
is an experience podcast guest. The way he bounced through
all that terrific. All right, let's have some emails the
money puzzle at the Australian dot com dot au. Lovely
to see those questions coming in in streams if you like.
So we're getting Someone comes in and they ask two
(23:38):
or three questions at a go, and I love that
because if you're making the effort to send in a question,
send in several. Very welcome. Okay, talk to you soon.
Hello, and welcome to The Australian's Money Puzzle podcast. I'm
James Kirby. Welcome aboard everybody. It's been a long time
since any government moved to change wealth taxes, but this
week at the Economic Summit in Canberra, I think we
may be looking at a serious redrafting of investment rules
as we know them. We've got a lot to talk about.
(00:32):
My guest today is Will Hamilton of Hamilton Wealth Partners.
Speaker 2 (00:36):
How are you well, very well, Thank you very much
for having me.
Speaker 1 (00:38):
It's good to have you on. You know, I had
an idea to put you on because I know that
you're very politically alert as well as being a financial advisor,
and you will be across what's happening at the summit.
But to my surprise, but it's also a very interesting signal.
I think just this week, in the middle of the summit,
barely receiving any wide attention, of course, the government did
(01:00):
something very interesting. They lifted the deeming rates. The deeming
rates are the rates, of course, at which the government
deems you are making on your investments in the control
pension access, and by lifting the deeming rates, they tighten
pension access. It's a move I see, and I've actually
sort of mentioned many times I thought it was coming
(01:20):
because it hasn't been changed since twenty twenty one. Scott
Morrison was in power when it was in and I
think it is one of the first steps if you like,
that this government is taking to tighten up both wealth
taxes and pension access, which are very much actually more
or less the same thing because they all basically work
out as wealth tax you've been watching the summit, tell
(01:42):
me what in terms of the risk that there will
be more taxes, wealth taxes in particular coming down the line,
where are you coming from? What do you think?
Speaker 3 (01:51):
Well, I've been saying for a little while that I
don't think it'll be increases in taxes, but it will
be decreases in.
Speaker 2 (02:00):
Tax breaks, so to speak.
Speaker 3 (02:01):
So cutting the CGT discount from fifty percent to twenty
five percent, you know, playing potentially with negative gearing. So
it's those things where people get a break, and it's
even when you look at the performance tests where they've
been playing with that. I've read a book called Abundance,
which is Jim Charmer's favorite book. Now I read it
(02:24):
so I can understand where the government's coming from on things.
It's actually a really good book and it's a very
interesting reading. And the thing is with these concessions, it's
the top taxpayers that naturally benefit from this, the lower
taxpayers don't, So this is where they're coming from this
and also with the performance test, it's about providing supply
because of the doubling of the price of the income
(02:45):
required to buy house and over the last twenty years.
Speaker 1 (02:49):
So you see them coming in with a we're changing
the terms and tightening the terms rather than headline grabbing,
you know, brutal straight up web taxes. So interesting, isn't
it that the deeming race, as I say, hasn't changed
since Scott Morrison was in power the budget, which was
the obvious opportunity to do so. Amanda Rishworth, who was
(03:10):
the minister at the time, said no, we're not changing
the deeming rate. But this week, this week when they're
having a summit discussing these sort of things and this
is on the agenda, they move for the first time
in over four and a half years on deeming and
they make it a bit tighter. Is that something of
a sign of things to come?
Speaker 2 (03:29):
Yes?
Speaker 3 (03:30):
And I think that they're aware also you know, it's
projected that we're going to get to twenty seven expenditure,
getting to twenty seven cent of JEDDP, which you know,
people like Costello I think from memory it was twenty
two percent. He wouldn't allowed to go above that, say
in our full five percentage points above that. And I
know that's projected, it's not where it is. But they've
(03:50):
got to catail expenditure and the people have got used
to this middle class welfare so to speak as they
call it that's come out, especially since COVID and even
needing to tell that, so that they're going to start
to do that. And this is the first sign because
it's two sides of the equation. There's one is revenue
and the other is expenditure. And I think Governor Low
(04:12):
I will form a Governor Low of the Reserve Bank,
very critical as well and outspoken on the extent of
expenditure of the government, you know, And it makes me
realize also just some of the things. Having read Abundance,
and I do recommend that people do read this. It
helps you see where the government's coming from.
Speaker 1 (04:28):
Yes, because it's like a manifesto basically, and to some extent,
every government has one, or at least many governments have one,
and you get an idea of where they're coming from.
That is a book across written in the US. It's
a client Eklin.
Speaker 3 (04:41):
Yeah, ezral substitute America for Australia as you read it.
Speaker 1 (04:48):
Well, let's hope it don't substitute it directly. So in
terms of reading Tea leaves. In terms of politically feasible moves,
let's look at the two sides we talked about how
they can. Basically there's the revenue and there's the expenditure.
We see some things at the summit like NDIS, perhaps
some structural reform to NDIS. We see the deeming rate
(05:11):
basically being pinched. Where else do you see? What do
you see coming down the line you mentioned CGT. Just
what's your sense of where they'll move.
Speaker 3 (05:20):
Yeah, I think it's going to be on tax breaks,
which is also about simplifying that the tax system, and
whereas I also thought on they make grandfather assets that
you're like Keating did in nineteen eighty five, boom, as
of tonight, this comes in. But if you're you're prior
of that your grandfather, you know, there's even talk that
you'll only be grandfathered for a period like five years,
(05:44):
So that that's a lot harsher than I thought.
Speaker 1 (05:46):
For instance, explain what you mean there will that said,
not everyone would understand where you're coming from there about grandfathering.
Speaker 3 (05:52):
So if you have an asset, yeah, so on on
things like SAG on CGT, they're talk Yeah. For instance,
they're talking about and fathering assets that you already hold.
Speaker 2 (06:03):
Yeah.
Speaker 3 (06:03):
The discussion that I've heard is, you know, you'll only
have a five year break on that, not as in
tonight at the new rate of a twenty five percent
discount comes in on assets that you purchase from tomorrow
and the assets that you hold today are at a
fifty percent discount. They'll only that that grandfathering will only
last for a number of years. Now, that's also telling
(06:24):
you they want that that's a chase for revenue.
Speaker 1 (06:26):
Yes, okay, So just to bring listeners into the picture here,
just in case. The perhaps I suppose the outstanding piece
of speculation as to what they might do, almost as
a process of elimination, is that at the moment there's
the CGT discount, if you have an asset of any description,
if you hold it for more than a year, then
(06:46):
the tax that's applicable only it is reduced by fifty percent.
And the rumor basically is that they'll turn that down
to twenty five percent. And you're explaining that also, they'll
only have a limited number of time by which you
have to by which you can sell the asset and
not get it with that tax, because that's called grand furthering,
and they have this sort of safety period. Isn't five
years enough? Most people get their backt together in five years.
Speaker 3 (07:10):
Oh yes, it's enough. But I think that what I've
was envisaged in as I said they would do like that.
It was done in September eighty five with Katine when
he sort of brought in SGT an asset SGT free
an acid. Yeah, is now accessible, but no that's not
the case. So that mains their main business.
Speaker 1 (07:28):
Yeah, yes, I think it's I mean, tell me what
you think. But it's also interesting if you think about
what really matters for investors at this summit, and it's
nothing short of entertaining to look at some of the
submissions and everything's on the table. I mean, death tax,
inheritance tax, well tax of European style. I think they
(07:49):
should all be should be aware that they're all on
the table and that they are being bounced around basically
at this time. But in terms of hard data, hard
facts so far are I thought the most interesting thing
was that, first of all, Jim Chalmer said, hey, super
tax is going through us. I've planned. Even Andrew Fraser,
the former Queensland treasure close friend of the treasure who
(08:13):
put in a late application if you like, a lead
submission to the someone and said look there's another way
to do this and don't do unrealized gains. He got
shot down basically, and Charmer said, no, we've got our
plan we're sticking with. So I think hard message from
the summits is that super taxes going through us planned.
What do you think too much? Do you think that's accurate?
Speaker 2 (08:32):
I think so.
Speaker 3 (08:33):
Look everything that both the Prime Minister and the Treasurer
have said, they haven't buckled one little bit on this,
and you know what I might think, And you have
others like Andrew Fraser just mentioned on unrealized capital gains
it's coming.
Speaker 1 (08:47):
Yeah, So that's super tax, CGT, YEP, pension access. We've
got three sort of major items there. Anything else you
think we should talk before the break in terms.
Speaker 3 (08:57):
Of potentially negative gearing, you could say restrictions on negative gearing.
Speaker 2 (09:02):
Shortened ran on all these things.
Speaker 1 (09:03):
And short And ran on them and he lost an election.
Speaker 3 (09:07):
Yeah, but I don't think it's going to be a
dramatic you know, they allow you to have so many
properties whatever. But yeah, but again, I think you'll see
some tightening of those concessions.
Speaker 1 (09:16):
Do you think the public appetize and the context in
which you could bring in those has changed? In other words,
when short And tried to bring it in, everyone basically
jumped up and down. Do you think it's more receptive now?
Speaker 2 (09:31):
Yes.
Speaker 3 (09:31):
I think he tried to do this in twenty nineteen
from memory pre COVID. We're now post COVID, and I
think everybody does realize there is an issue, and it's
an issue. It's with the fact that we're overspending and
we're not and read there's a shortage of revenue, so
we need to look at both sides of the balance sheets,
so to speak. And you know, it's interesting, this isn't
(09:51):
just an Australian issue. You know, look what Starmer tried
to do. Correct then the issue is not going to
be with the people. It actually could be with his
own bench like Sarma had. When you have a large majority, Yeah,
sometimes people start flexing their muscles on the back bench.
And like what Starma was proposing was really towards curbing
(10:12):
I think it's called pit which is their ndis.
Speaker 2 (10:16):
Yeah, and he was just trying to curb the excesses
in that.
Speaker 1 (10:19):
And they've also tried non dom taxes and they're now
trying property taxes, aren't they. So it keeps coming. There
are waves of basically wealth tax efforts in a corresponding
economy the UK at the same time with interestingly a
labor government. Okay, we'll take a short break. We'll be
back in a moment. Lots to talk about. Hello, Welcome
(10:43):
back to The Australian's Money Puzzle podcast. James Kirby here
with Will Hamilton, regular guest of Hamilton Wealth Partners. I
tend to get Will on when I have very tricky,
urgent issues to talk about. We do the budget together
each year, and obviously this we have the economic Summit
just before we talk about what investors are doing ahead,
(11:06):
if you like, of the potential changes that are coming
down the line. You mentioned about housing. You mentioned the
performance tests. I don't know what you think, but I
thought that was a studied leak from the summit. I
thought it meant very little in the overall scheme of things.
The super funds will do what they want to do.
That they're making some teeny weeny change to the performance
(11:29):
tests to satisfy the super funds. Well, yeah, you know, okay,
and maybe they'll build more houses. Yeah, sure, perhaps in
the in the fullness of time. That's that's always a probability.
But I think the performance tests are worth having, and
they may not be perfect, they will never be perfect.
But I don't think that I think that's almost a
(11:50):
decoy basically, that performance test stuff. It's arcane virtually. What
do you maybe, do you think it's more than that?
Speaker 2 (11:57):
No, I don't.
Speaker 3 (11:57):
I actually like the performance tests as well. But I
do think this is about some attempt to try and
drive supply on housing.
Speaker 2 (12:05):
Again.
Speaker 3 (12:05):
I get back to their book abundance and they've they've
got to increase the supply and how do they do it?
Speaker 1 (12:10):
And they won't ever get into trouble by trying And
they do try also, to be fair, they are trying
all sorts of things from incentives programs, shared equity and
now trying to get the big super funds, who will
in the end only do it if they can make
money out of it. And it's worth pointing out, folks
that the big super funds or well into the housing market.
They've build luxury apartments so you can find them all
(12:32):
over the country, bank rolled by SeaBus, et cetera. It's
just affordable housing. They don't want to do because they
can't make money out of it. All right, put that
to one side. Tell me what in terms of what's
happened so far, super taxes for sure, changes are coming
down the line. This is a second term labor government.
They've got the win behind them, they've got strong ratings,
(12:53):
they are in a position to do things. What are
investors doing ahead of this? Is there moves to chake
money out of super and if there is, for instance,
where are people putting it? And will it just be
a chase where they move to family trust and then
they government move on family trust and then they chase
(13:14):
them across somewhere else.
Speaker 3 (13:16):
Look, we've seen a few clients want to do this.
We've said just hold off because there isn't any hurry.
You still, you know, you've gotten to the end of
this year and we need to see the legislation and
we haven't seen the legislation yet, but you know, basically
not what's coming, but we do. I think it is
wise when you've got time to wait. But no, Look,
there are one or two that have panicked, I think
is probably the right way to put it, and they
(13:37):
want to get things sort of pre last financial year.
And yes they are moving things into one is to
family trust. But will family trust get taxed? They've said
no new taxes, so you know, we have to therefore
rely on that that there won't be any new taxes
in this term. That doesn't mean there won't be in
(14:00):
the next term of parliament. The other thing is, you know,
one or two people have sort of where they've got
excess balance, have been using this to you nonconcessional contributions
to children and making their members of super funds and
things like that. So us send them some articles in
the paper that this is a common strategy we've had.
You know, we have seen some people want to do that.
You know, again we caution them because you've got different
(14:22):
risk profiles for different age groups.
Speaker 1 (14:24):
Just to explain to listeners, that's moving. Traditionally, super funds
there was a limit on how many people could be
in them, and it's now six. So people are saying, oh,
there's just mom and dad so far. Let's open it up.
Let's put the kids in, adult kids in redistributing inside
super But you're saying that opens what cand of worms?
Speaker 2 (14:42):
Well, you've got to they're our members, your super fund.
Speaker 3 (14:46):
You've got to me as long as you're doing things
I think with governance in there, and yeah, there's transparency,
there's openness, and just remember, you know, make sure everybody's
in the right risk profile because generally a person who's
in their thirties they've got thirty ideas until they can
access super and so they're going to have a different
risk profile than somebody who's in their sixties.
Speaker 1 (15:07):
Yeah, exactly, So mom and dad are they're sort of
possibly preserving to some extent, and adult children brought into
the SMSF for the first time because there's a new
you can now have up to six people, isn't it.
In smsfs, they could be looking at extremely different where
they could be looking at growth stocks, they could be
looking at ethical concerns that weren't on the table perhaps
(15:30):
twenty years ago. Is that what you're referring to.
Speaker 2 (15:34):
Yeah, look, there's different needs.
Speaker 3 (15:36):
It's just it's the same as when you get different
generational changes and people looking at your paths and you're
in your one age groups wanting to give to more
environmental causes, whereas the older generations are wanting to give
to your more health related So you've got to be
aware of the generational issues you're bringing into yourself. And
(15:57):
it's super fun when you do that. And you've got
to make sure that the eypinness and transparency is there.
Speaker 1 (16:02):
Okay, past folks, by the way, are the philanthropic tax
shelters basically public that are very good and useful but
for very wealthy people. Really all right, And we have
had someone on the show in the past if you
want to have a look at that. One last thing
will which I thought was really interesting. We've been talking
on the show about the almost like something under your
(16:24):
nose basically for people are planning around potential wealth tax changes,
and that the sort of opportunity that's under everyone's nose
is that it's all income is tax free up to
eighteen thousand or so, and so many people don't have
to have everything in super but I see some suggestions
(16:45):
that could be closed off too to income that it
could only be for Saturdy. It wasn't that interesting.
Speaker 2 (16:50):
That was interesting. I sort of looked at them with horror.
Speaker 1 (16:55):
Well, it's like on the show, we've not that we've
just discovered it, but we have been talking about it,
and many people have been talking about it, and then
suddenly you see, oh, there's a couple of submissions saying, hey,
close that off. That's a escape corridor. So that's what
do you think is that realistic?
Speaker 2 (17:10):
I don't think that one's realistic.
Speaker 3 (17:11):
No.
Speaker 2 (17:12):
Again, I think there could be quite an outcry on
that one.
Speaker 3 (17:14):
And I think they're going to make decisions where is
less noise.
Speaker 1 (17:18):
Yes, because they do seem to be in the end
a relative. How they move is quite conservatively. They bring
it up, they put it on the table, and then
they get it through. Well, if they were to be
re elected again, there was their procedure. They said, well,
we've put it to an election, We've been elected, so
we are absolutely given to go ahead, green light to
do whatever. That's how they did the super tax. Okay,
(17:39):
well that's a pretty that was a pretty juicy in
newsworthy session, folks with Will, we're going to now have
some questions. Some of them are on the summit, but
we've probably dealt with them. But there's some great questions
which we'll deal with in a moment. Back in a moment. Hello,
(18:09):
and welcome back to The Australian's Money Puzzle podcast. James
Kirby here with Will Hamilton of Hamilton Wealth Partners. Piece
of correspondence from Jeremy. Hello from Hobart. I've recently started
listening to your podcast while writing my indoor trainer and
I really enjoy the discussions. It makes the cold winter
garage sessions much more bearable. So thank you, Thank you.
(18:32):
Jeremy down there in cold Hobart. We're here and Sonny Melbourne,
our producer Lea is in rain SAWTN, Sydney. Jeremy's just
asking about the best structures and pros and cons around
basically for holding family investments. It's a very dark question, Jeremy.
We won't be able to get to it today, but
I think it would be worth listening to what Will
had just been saying at the end of the last
(18:54):
segment around alternatives. If you like to super that being
family trust, expansion, family truss, expanding the SMSF out to
anything up to six people. There are starters if you like,
we'd come back to that another time if we can.
None of this is advice, it's information only question from Demien.
Speaker 3 (19:14):
There will yeah, So Damien asks, would you know what
the final dividend for twenty twenty five is on my
Vanguard ETF VSO's small caps is at three dollars ninety
eight per share. It seems extraordinarily high for an ETF
made up of some one hundred and ninety six separate companies.
They have a dividend yield of seven point eight eight percent,
(19:37):
and I can't seem to be able to track down
where it has come from. So if I was you,
I would have a chat with Vanguard and find there.
You know, there could be as with ETFs, the rebalancing occurs,
there could be some capital gains in that. But I
would have a chat with them and that they will
be able to give you that transfer, that that degree
(19:58):
of transparency that you are quire.
Speaker 1 (20:00):
Very good and Damian, we've had questions like this before,
and often sometimes the mechanics of the ETFs are not
instantly obvious to the clients who buy the ETFs. You
know they mirror the stock market. Yes, but not always
in their dividend flows for instance. That could be due
to do with the mechanics or the timing, as Will
has alluded to. Now, the final question is actually this
(20:24):
is a reprise of a question because I wanted to
put it to you too, Will. We had it on
the show the other day that was really interesting. So
a guy called Drew. He says, I'm forty three and
every year the level of my earnings means that I
exceed the concession of super cap, the tax free super
cap of thirty thousand dollars, and I have to pay
(20:45):
the extra tax for high earners Division two ninety three,
and in the future two ninety six is coming down
the line, and he says, with limitations on super contributions
and penalties, I would like to explore the idea of
opting out of compulsory super contributions if your balance is
high enough, and take that payment as part of your salary.
(21:06):
With so many restrictions on super going forward, should this
be an option? So you get to the point now,
because they haven't changed this tax free pre tax consessional
cap for years and years, and they keep lifting the
Super innovation guarantee at twelve percent. That people are, whether
(21:30):
they like it or not, pushed into this higher tax
category because of mandatory super's and the same people don't
need is because by definition they don't need it. I
think it was like an oversight and what do you
think that people should be allowed at that level, at
that level where they're clearly able to look after their
super do something else with it, rather than fall into
(21:51):
line with the mandatory rules.
Speaker 3 (21:54):
Look, and it's not just that it's yes, some people
have what you're led to back concessional contributions if they're
over the transfer balance cap. There's some there's planning that's
required around that as well. So yes, I do think
that it may make sense. The biggest issue for the
majority of people thought, is getting money into super. That
doesn't seem it's necessarily an issue that Drew's talking about, but.
Speaker 1 (22:17):
It is the big issue. I mean, you can have
two million and super pend no tax, but you can't
put in more than thirty grand a year pre tax.
Speaker 2 (22:24):
Which is so this was all brought in by Kelly Dwyer.
Speaker 3 (22:28):
Yeah, by the Liberal government, and I think it's a
flaw in the system and the way you get money
in and some of those limits and therefore bringing in
division two nine three and then you've got division two
nine six is three rightly, says I think these are
this all needs to be redrawn.
Speaker 2 (22:47):
I think yeah.
Speaker 1 (22:48):
And actually one of the submissions, one of the key
submissions to the Economic Summit suckling back ever son see
to the economics some much, which we've talked about all
through from the start, was to lift that concession of
supercap from thirty grand to fifty. We had a piece
of that on that submission in the Australian a few
days ago and I think certainly that would make a
(23:10):
lot of sense. Very good, very succinct. We got through
a lot there, Will.
Speaker 2 (23:15):
We did, James, thank you for having me on.
Speaker 1 (23:17):
Thank you very much for coming on. That was Will
Hamilton of Hamilton Wellth Partners, which, as you've probably heard,
is an experience podcast guest. The way he bounced through
all that terrific. All right, let's have some emails the
money puzzle at the Australian dot com dot au. Lovely
to see those questions coming in in streams if you like.
So we're getting Someone comes in and they ask two
(23:38):
or three questions at a go, and I love that
because if you're making the effort to send in a question,
send in several. Very welcome. Okay, talk to you soon.
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