Young Australians striving to save for their first home are being cautioned that Labor's sweeping tax overhaul may further diminish incentives to work harder and invest wisely.
Budget Criticized for Lack of Incentives
Financial commentator David Koch has criticized the Federal Budget for failing to reward hard work. "There's nothing there to encourage earning more income, working harder, or improving productivity," he said. "Australian personal tax rates are still some of the highest in the world, with revenue from personal income tax at record highs. Tax thresholds haven't changed at all. What incentive is there to work harder? We need that to help fight inflation."
Key Changes to Capital Gains Tax
Under the proposed reforms, the current 50 per cent capital gains tax discount would be abolished and replaced with an inflation-indexation system. Additionally, the Albanese government would introduce a 30 per cent minimum tax on net capital gains. These changes would affect investors in shares, exchange-traded funds, managed funds, and property, as well as business owners, startup founders, and employees with equity schemes.
Koch noted that these reforms make superannuation funds and owner-occupied homes the most tax-efficient investments for the average Australian. "The family home remains capital gains tax free, while the CGT discount is being wound back on other investments, and superannuation continues with its 15 per cent earnings tax and concessional treatment. So, tax-wise, by far the best places to invest your money are your own home and your super."
Impact on First-Home Buyers
The changes may accelerate a shift toward saving through superannuation under the First Home Super Saver Scheme, which allows first-home buyers to build a deposit in a lower-tax environment. Contributions are taxed at just 15 per cent, and individuals can withdraw up to $50,000 of voluntary contributions for a home deposit. However, many argue this is insufficient given median house prices exceeding $1 million in major cities like Perth, Sydney, Brisbane, Melbourne, Canberra, and Adelaide.
Stockspot founder Chris Brycki warned that the reforms could hit younger Australians saving for a deposit through long-term investing. According to Stockspot modelling, someone who grew a $25,000 ETF investment into $40,000 over five years would keep about $2,164 less after tax under the proposed rules. "For younger Australians trying to build a first home deposit through disciplined long-term investing, that alone could delay reaching the same property goal by another 9-12 months," Mr Brycki said. "For a generation already struggling with housing affordability, rising rents, and slower wage growth, this pushes the dream of home ownership even further out of reach. This is hardly a win for aspiring young homeowners."
