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Super tax battle starts now (with Geoff Wilson) · The Money Puzzle

• 0:08
  Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm
• 0:11
  Speaker 1: James Kirby Fund the Australian. Welcome aboard everybody now. My
• 0:15
  Speaker 1: guest today is one of the best known figures in
• 0:17
  Speaker 1: the investment markets in Australia. It's Jeff Wilson and he
• 0:20
  Speaker 1: runs the six billion dollar Wilson Asset Managed Group. It
• 0:25
  Speaker 1: is a group which has funds listed on the stock market.
• 0:28
  Speaker 1: It also has an operation aside operation if you like,
• 0:31
  Speaker 1: which is the Future Generation Fund. It's a charitable operation
• 0:34
  Speaker 1: and we had Caroline Gurney on the show a few
• 0:37
  Speaker 1: months ago who runs that side of things. Now, in
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  Speaker 1: recent years Jeff has come to prominence because more than
• 0:43
  Speaker 1: just acting as a fund manager, he does act as
• 0:45
  Speaker 1: something of an investor representative for momandell investors across Australia
• 0:49
  Speaker 1: because he has about one hundred and thirty thousand investors
• 0:52
  Speaker 1: on the books. And he came to prominence in the
• 0:55
  Speaker 1: public domain some years ago in the Frank Dividends of affair.
• 0:58
  Speaker 1: We might call it the ill fated attempt to change
• 1:00
  Speaker 1: Frank dividend rules, which he mounted quite a successful campaign on.
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  Speaker 1: Now today, with the ALP almost certain to be re
• 1:09
  Speaker 1: elected in the new parliament. He's come to prominence again
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  Speaker 1: because the reelection of Albanesi Chalmers combination will mean it
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  Speaker 1: will mean, folks, the reintroduction of an attempt to put
• 1:21
  Speaker 1: in a new tax on super And it's not so
• 1:24
  Speaker 1: much that it's a new tax, okay, but it's the
• 1:27
  Speaker 1: nature of this tax based on realized gains, unrealized gains,
• 1:30
  Speaker 1: that is, paper gains, that's going to cause all sorts
• 1:33
  Speaker 1: of trouble down the track. Since I've got him in
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  Speaker 1: the studio, first of all, I just want to take
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  Speaker 1: the opportunity to ask him about how he sees investment
• 1:42
  Speaker 1: markets right now.
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  Speaker 2: How are you, Jeff James. I'm in good form, good,
• 1:47
  Speaker 2: a little bit stressed because I know everyone's going to
• 1:50
  Speaker 2: buy it in a couple of days time. And the
• 1:52
  Speaker 2: consequences what you said of this new tax, the tax
• 1:56
  Speaker 2: on unrealized guains, I think will be pretty devastating for
• 1:59
  Speaker 2: number people and probably not for the reasons people think
• 2:02
  Speaker 2: that we can talk about that lighter.
• 2:04
  Speaker 1: Yeah, yeah, we will. And first of all, we mentioned
• 2:07
  Speaker 1: how you run Wilson Asset Management and it has sort
• 2:10
  Speaker 1: of fingers and all sorts of pies these days, since
• 2:12
  Speaker 1: even since I told you last year, have a whole
• 2:14
  Speaker 1: range of funds. But tell me got feeling. I mean,
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  Speaker 1: one of the big debates at the moment is not
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  Speaker 1: just about Trump and tariffs and what's happened with the
• 2:22
  Speaker 1: share markets and how they're particularly volatile, but a sense
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  Speaker 1: that and a debate, open debate among the big super funds,
• 2:29
  Speaker 1: that this golden era that we've known all our lives
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  Speaker 1: for the US is the be all and end all
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  Speaker 1: of investment markets where it's seventy percent or so of
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  Speaker 1: the global index, that that might be coming to an
• 2:41
  Speaker 1: end waning, and that people shouldn't be in the US
• 2:44
  Speaker 1: as much as they used to be. That's you or
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  Speaker 1: me or anyone. What's your view on that?
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  Speaker 2: I think that's a little bit more on the extreme side.
• 2:52
  Speaker 2: I think no doubt over the next period of time.
• 2:56
  Speaker 2: If you're looking in the next six months, where would
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  Speaker 2: you prefer to have your mind? One of the places
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  Speaker 2: I prefer to have my money is actually in Australia.
• 3:05
  Speaker 2: When I look at countries, I try to look at
• 3:07
  Speaker 2: them similarly to how I look at companies. So if
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  Speaker 2: I'm buying shares in a company, like what we try
• 3:13
  Speaker 2: to do is buy undervalue growth companies when we can
• 3:16
  Speaker 2: see a catalyst is going to change the valuation. And
• 3:19
  Speaker 2: we've got a rating system, and on our rating system,
• 3:22
  Speaker 2: one of the significant parts of that rating system is management. Now,
• 3:27
  Speaker 2: if I looked at the US and thought, do I
• 3:29
  Speaker 2: want to invest in the US? I really like the business,
• 3:32
  Speaker 2: I like the structure, I like the entrepreneurial spirit, I
• 3:35
  Speaker 2: like a lot of things. But do I like the CEO?
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  Speaker 2: And how would I rate him? And we rate our
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  Speaker 2: CEOs out of ten, I'd probably rate him four. Okay,
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  Speaker 2: maybe I'm generous, right, he wouldn't rate a buy on
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  Speaker 2: our rating system. Okay, But the management is only a
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  Speaker 2: part of it, and that's probably about twenty five percent
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  Speaker 2: of our rating system. The other is the underlying the
• 4:01
  Speaker 2: position it is, and also the valuation you're paying. So
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  Speaker 2: the US is in a very good position the underlying earnings.
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  Speaker 2: Even though there's going to be a bit of pain
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  Speaker 2: in the short term with the economy when instruments continue
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  Speaker 2: to come down, then you've got a one of the
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  Speaker 2: biggest consumers globally. To me, medium long term, I'm still
• 4:24
  Speaker 2: positive about the US. The thing is, we've just got
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  Speaker 2: this bad CEO for four years. Let's hope it's twenty
• 4:31
  Speaker 2: four years.
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  Speaker 1: I've got to see. Yes, yes, he might be planning
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  Speaker 1: something different, all right, And tell me looking at the
• 4:39
  Speaker 1: ESX then on the raw numbers that is ourn X
• 4:43
  Speaker 1: estimate's GDP of the country, the dividend yield that the
• 4:47
  Speaker 1: AX doesn't seem to be outstanding the attractive this year.
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  Speaker 1: What is it that you like?
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  Speaker 2: No, I mean it's a fair comment. I suppose what's
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  Speaker 2: my view on the market per se, and this includes
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  Speaker 2: global markets. We've all learned, and we've been around the
• 5:00
  Speaker 2: markets long enough is it's very hard to market time
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  Speaker 2: and I can never guess the top of the bottom,
• 5:05
  Speaker 2: and I don't think anyone really can. And what you
• 5:08
  Speaker 2: learn is it's really time in the market rather than
• 5:11
  Speaker 2: timing of the market. And so that's the logic. But
• 5:15
  Speaker 2: if you wanted to time the market a little bit
• 5:17
  Speaker 2: and watch your view, I think things are going to be.
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  Speaker 2: You know, I remember my dad who's now somewhere else,
• 5:24
  Speaker 2: passed away, but he loved the selling may and go away.
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  Speaker 2: Oh yes, we're just in May. Looking at the US market,
• 5:31
  Speaker 2: it is a bit of a selling may and go away.
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  Speaker 2: The economic numbers are going to be very challenging over
• 5:37
  Speaker 2: the next month or two, and we're going to see
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  Speaker 2: a lot of the negative impacts from the Trump taroff tantrums. Now,
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  Speaker 2: if I was in the US, anything I want for
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  Speaker 2: the next two or three months, I'll be.
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  Speaker 1: Buying now, right, So why is that, Jeff.
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  Speaker 2: Well, not shares, but no, this is actually just consumables, okay,
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  Speaker 2: because it takes about fifty to fifty five days for
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  Speaker 2: the inventores to dry.
• 6:03
  Speaker 1: Up, and then the tariff extra sort of procula through
• 6:06
  Speaker 1: the systems that.
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  Speaker 2: Well, effectively, anything you're buying from China, like they got
• 6:10
  Speaker 2: turned off a few weeks ago, So anything that's made
• 6:13
  Speaker 2: in China in fifty to fifty five days from the
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  Speaker 2: day they were turned off, there's going to be no stock.
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  Speaker 2: I think the next month or two from a US
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  Speaker 2: perspective is going to be very challenging. Our higher inflation
• 6:28
  Speaker 2: maybe like lack of inventory. You know, there's going to
• 6:31
  Speaker 2: be a lot of confusion from CEOs you're better off.
• 6:34
  Speaker 2: When does that uncertainty sit on the sideline? I still
• 6:37
  Speaker 2: think medium long term it's positive and it all work
• 6:39
  Speaker 2: its way out. But then if you look back at Australia,
• 6:43
  Speaker 2: we're going to be exported deflation from particularly China, so
• 6:47
  Speaker 2: our products if anything, might become cheaper.
• 6:50
  Speaker 1: You mean our televisions and are got to come down.
• 6:53
  Speaker 2: Yeah, exactly, it could. Well, like maybe it's not deflationary,
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  Speaker 2: but it's definitely not inflationary from ours.
• 7:00
  Speaker 1: Yeah, they've got the prices will be stable. Tell me
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  Speaker 1: what you think about the there's a theory abroad of
• 7:06
  Speaker 1: course also that one of the reasons the ASX is
• 7:09
  Speaker 1: holding up so well is not so much the raw numbers,
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  Speaker 1: but that global fund managers see us as a safe
• 7:17
  Speaker 1: place and that's one of the reasons. For instance, they
• 7:19
  Speaker 1: come well bank is defining all criticism, all speculation, and
• 7:23
  Speaker 1: it's sitting up there at one hundred and sixty bucks
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  Speaker 1: when people think its value with thirty percent lower. What's
• 7:28
  Speaker 1: your view?
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  Speaker 2: I think the valuation is probably a lot lower than lower.
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  Speaker 1: Is that right? Okay to me?
• 7:34
  Speaker 2: Unfortunately it's the passive money, like it's trading on what
• 7:37
  Speaker 2: three and a half times assets. But just going back
• 7:40
  Speaker 2: to Australia on the big picture, Yes, you know how
• 7:43
  Speaker 2: the market is forecasting say three or four in straight
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  Speaker 2: cuts on our information, and we've just created a new
• 7:51
  Speaker 2: fund where income maximizer when known for being equity people.
• 7:56
  Speaker 2: We've employed some people that used to work at the
• 7:58
  Speaker 2: Reserve Bank, et cetera, helping us on the debt side.
• 8:01
  Speaker 2: The income maximizer has equity and debt, and we're getting
• 8:04
  Speaker 2: really good information on the dead side. Now we would
• 8:07
  Speaker 2: be saying there's going to be five or six interest
• 8:10
  Speaker 2: rate cuts in Australia, we think it is going to
• 8:13
  Speaker 2: be signifantly more similarary and more positive for equities than
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  Speaker 2: the market's anticipating. We think that's very good quality information
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  Speaker 2: that we're getting there.
• 8:24
  Speaker 1: Right when we look at the expectations for interest rates,
• 8:27
  Speaker 1: there's something rare. Three to four is the most I've heard. Yes,
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  Speaker 1: what is it that is suggesting that they could be
• 8:33
  Speaker 1: deeper than the consensus?
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  Speaker 2: Now, speaking to people very close to the decision making process,
• 8:39
  Speaker 2: we think they are obviously concerned from an Australian context,
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  Speaker 2: about the fact that we have deflation and they are
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  Speaker 2: not concerned about inflation at all. So that's a big change.
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  Speaker 2: So they are ready to cut whenever they can.
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  Speaker 1: Okay, and then this then underpins an optimistic view of
• 9:00
  Speaker 1: Australian share price valuations. Okay, but reversing that in some ways.
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  Speaker 1: The bell Weather stock for our market is Comebank, and
• 9:09
  Speaker 1: I didn't mean to talk about one stock, but banks generally,
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  Speaker 1: you think the true valuation is more than thirty percent
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  Speaker 1: lower than where they are. At the same time, we've
• 9:16
  Speaker 1: got stimminus coming, so that valuation might remain academic one percent.
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  Speaker 2: People are going to go for yield. I go for
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  Speaker 2: the banks. Shall the passive money. We think it's that
• 9:27
  Speaker 2: phenomenal amount of money that is passive these days. So
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  Speaker 2: to me, that's been a big driver of the significant
• 9:35
  Speaker 2: overvaluation of Combank.
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  Speaker 1: Okay, very interesting, Jeff, Thank you. Look, I think we'll
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  Speaker 1: go for a break and we will come back and
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  Speaker 1: talk about the issue at hand for all investors ultimately,
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  Speaker 1: if they don't make some changes to the plan tax
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  Speaker 1: back in a moment. Hello, Welcome back to The Australian's
• 10:03
  Speaker 1: Money Puzzle podcast. James Kirby talking to Jeff Wilson of
• 10:07
  Speaker 1: Wilson Asset Management. Now, folks, to introduce the issue. You
• 10:11
  Speaker 1: may have heard, I'm sure you have that there's a
• 10:14
  Speaker 1: lot of controversy around a new supertax which is planned
• 10:18
  Speaker 1: by the government, and the government plans to reintroduce this
• 10:22
  Speaker 1: tax or at least have a second go at bringing
• 10:24
  Speaker 1: it in if they're re elected. It looks very likely
• 10:27
  Speaker 1: they will be re elected. So here's the thing. It's
• 10:29
  Speaker 1: a tax on earnings in SUPER above three million. Most
• 10:34
  Speaker 1: people say, well, who cares?
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  Speaker 2: You know?
• 10:36
  Speaker 1: How many people have earning above three million per capita?
• 10:40
  Speaker 1: I might add per capita, right, so that's like a
• 10:43
  Speaker 1: couple could have six million. But the thing is, well,
• 10:45
  Speaker 1: what most people I have found I'm going to ask
• 10:47
  Speaker 1: Jeff this I have found in almost everyone I speak to.
• 10:50
  Speaker 1: It's not that they're crazy angry about attacks. It's the
• 10:54
  Speaker 1: scheme and nature and design of this tax. Jeff, could
• 10:58
  Speaker 1: you explain what's so problem about the plan tax to
• 11:02
  Speaker 1: basically tax wealthy people and super who have earnings above
• 11:06
  Speaker 1: three million.
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  Speaker 2: I don't think anyone is concerned that they've increased double
• 11:12
  Speaker 2: the tax rate on people that have more than three
• 11:14
  Speaker 2: million dollars in SUPER. I mean one of the big
• 11:17
  Speaker 2: concerns is for younger people, people that worked hard, people
• 11:21
  Speaker 2: that have their money in Super. The fact that that
• 11:24
  Speaker 2: three million dollars isn't indexed.
• 11:26
  Speaker 1: To explain to people why that's a big problem. It
• 11:29
  Speaker 1: means that every year, as inflation kicks in more and
• 11:33
  Speaker 1: more people get into the net, So three million if
• 11:36
  Speaker 1: it isn't index in effect they say in ten years time,
• 11:40
  Speaker 1: that's going to be two millions a day or one
• 11:42
  Speaker 1: half inter the day. Is it is going to come down,
• 11:44
  Speaker 1: So bas it's going to come down and trap more
• 11:45
  Speaker 1: people every year. That's a big problem, isn't it that
• 11:47
  Speaker 1: it's not indexed.
• 11:48
  Speaker 2: One oundred percent? And we did a little white paper
• 11:51
  Speaker 2: for discussion that we published this week, and in it
• 11:55
  Speaker 2: we talked about Anthony Albernici. I mean, he's in a
• 11:59
  Speaker 2: defined benefit scheme so he doesn't get impacted by this,
• 12:02
  Speaker 2: but it's nearly the equivalent of him having half a
• 12:05
  Speaker 2: million dollars in today's dollars in super So eventually, if
• 12:09
  Speaker 2: you're young enough, everyone will get caught because of inflation.
• 12:13
  Speaker 2: So I'm lucky. I suppose I come in the category.
• 12:17
  Speaker 2: You probably do two James in the boomer category.
• 12:19
  Speaker 1: Just about.
• 12:22
  Speaker 2: We've done well. And to me, how can a government
• 12:27
  Speaker 2: disadvantage the younger people that are in theory going to
• 12:30
  Speaker 2: have more of the tax burden to look after us
• 12:32
  Speaker 2: in our old age.
• 12:33
  Speaker 1: Because they've got to put thirty percent to effectively thirty
• 12:36
  Speaker 1: percent on super for people coming down the line. But
• 12:39
  Speaker 1: the issue that's driving people people are literally enraged about
• 12:43
  Speaker 1: is that the tax, the new tax. Specifically, folks, Okay,
• 12:47
  Speaker 1: the new tax is fifteen percent for over three million
• 12:51
  Speaker 1: on top of the existing fifteen percent for over two million, right,
• 12:53
  Speaker 1: so it's thirty percent over three million. Effectively, put fifteen
• 12:56
  Speaker 1: percent the new tax. This is daft the way it's just,
• 13:00
  Speaker 1: but it's got to be applied on realized games. Can
• 13:04
  Speaker 1: you explain to the everyday investor what that means, Jeff,
• 13:07
  Speaker 1: and it's complications?
• 13:09
  Speaker 2: Yes, Okay, So if I was fortunate enough, I'm sixty
• 13:13
  Speaker 2: seven now, but say twenty seven years ago when I
• 13:16
  Speaker 2: started my business, so I didn't Yeah, I put some
• 13:20
  Speaker 2: of them my money in Super. I didn't have much
• 13:22
  Speaker 2: money in Super then, and maybe I put it in
• 13:24
  Speaker 2: some shares of Promticus and I think they were trading
• 13:29
  Speaker 2: around sixty or seventy cents. Then now say I put
• 13:32
  Speaker 2: one hundred thousand dollars in Yeah, I don't know the
• 13:34
  Speaker 2: exact numbers, but that would be now tens of millions
• 13:38
  Speaker 2: of dollars.
• 13:38
  Speaker 1: Yeah, you hit the jackpot.
• 13:39
  Speaker 2: So then what would happen is I added myself managed
• 13:43
  Speaker 2: Super fun. Of course, I've got more than that three
• 13:46
  Speaker 2: million dollars and I want to keep it for the
• 13:49
  Speaker 2: rest of my life because I think he's such a
• 13:51
  Speaker 2: great manager and it's going to keep going well. But
• 13:55
  Speaker 2: the government saying, now, no, you can't. Well you can,
• 13:59
  Speaker 2: but you've got to pay thirty percent tax on the
• 14:01
  Speaker 2: increase in value above the three million dollars. So how
• 14:05
  Speaker 2: are you going to pay that tax? You either pay
• 14:07
  Speaker 2: me personally, so I've got to go and borrow money
• 14:09
  Speaker 2: and I don't want to do that and pay or
• 14:12
  Speaker 2: I've got to get the money out of my super
• 14:13
  Speaker 2: fund and I don't want to sell my shares.
• 14:16
  Speaker 1: So it's a paper again, you haven't got the money.
• 14:18
  Speaker 1: It's a paper gain. And pro Medicus, for all we know,
• 14:21
  Speaker 1: could have a scandal and it could fall fifty percent one.
• 14:24
  Speaker 2: Dred percent and at the end of June, you know,
• 14:26
  Speaker 2: like we've seen the volatility in the market we've had recently,
• 14:29
  Speaker 2: and pro Medicus did fall tens of dollars, and they
• 14:33
  Speaker 2: work it out of the end of June, and then
• 14:36
  Speaker 2: crashes tend to be in October, like remember the eighty
• 14:39
  Speaker 2: seven crash, in the eighty.
• 14:40
  Speaker 1: Nine crash, Yes, sure, so.
• 14:42
  Speaker 2: I've got to pay tax on this pretend gain. Yes,
• 14:46
  Speaker 2: and then by the time I'm ready to pay the tax,
• 14:50
  Speaker 2: the share price could have fallen thirty or forty percent.
• 14:53
  Speaker 2: And to me, it's more brutal than that. It will
• 14:55
  Speaker 2: destroy all the risk taking. It's the unintended consequences. And
• 15:01
  Speaker 2: there's four point two trillion dollars in superannuation that supports that.
• 15:06
  Speaker 2: It's the lifeblood of the Australian economy. Currently. I'm talking
• 15:11
  Speaker 2: to you from a technology hub and I was talking
• 15:14
  Speaker 2: to the founder of this technology hub and he was
• 15:18
  Speaker 2: saying that fifty to sixty percent of their money that
• 15:22
  Speaker 2: they get people putting into these exciting startups is from superannuation,
• 15:28
  Speaker 2: self managed superannuation. I know an individual who put two
• 15:32
  Speaker 2: million dollars into a technology business. He's the major funder,
• 15:35
  Speaker 2: the major shareholder. It's now worth thirty million dollars. And
• 15:40
  Speaker 2: he said, what can I do. I can't sell, there's
• 15:44
  Speaker 2: no liquidity, the company doesn't make any money.
• 15:46
  Speaker 1: Yeah, he can't sell, but he's going to be taxed
• 15:50
  Speaker 1: under this plan every year for the paper improvement and
• 15:54
  Speaker 1: the value of the business. And this is the CrOx
• 15:56
  Speaker 1: of the issue, isn't it this is what everyone is
• 15:58
  Speaker 1: curious about. So, but it seems the government is dead
• 16:01
  Speaker 1: set on this unrealized gains. Well, maybe we'll briefly say
• 16:05
  Speaker 1: that the theories as to why they are. One theory
• 16:07
  Speaker 1: was that the big super funds couldn't give individual member numbers,
• 16:11
  Speaker 1: so they just went with a disc Another theory that
• 16:14
  Speaker 1: you it's a theory is that they said, well, really,
• 16:17
  Speaker 1: well to people who have more than three million and
• 16:18
  Speaker 1: supertend to have lots of different money in different places,
• 16:21
  Speaker 1: and so we want to make sure we capture it.
• 16:23
  Speaker 1: But you said, look, you can put them all into
• 16:25
  Speaker 1: one fund and nominate that fund and people will be
• 16:27
  Speaker 1: honest in that and they'll have to. But the thing
• 16:30
  Speaker 1: is cut to the chase. Your whole premise is that
• 16:33
  Speaker 1: they should just tax actual gains is common practice across
• 16:38
  Speaker 1: the super system. But when I look at my own
• 16:41
  Speaker 1: SMSF Jeff, and I'm sure everyone's is the same, and
• 16:43
  Speaker 1: I'm not retired far from it, But the actual gains
• 16:47
  Speaker 1: in my SMS each year and the unrealized gains, the
• 16:51
  Speaker 1: actual gain is only a fraction of the unrealized games
• 16:53
  Speaker 1: on a good year like it was last year. So
• 16:55
  Speaker 1: in the government saying if we just tax actual gains,
• 16:58
  Speaker 1: we won't get the money we're looking for.
• 17:00
  Speaker 2: Well, unfortunately, what they don't realize is they're not going
• 17:03
  Speaker 2: to get the money they're looking for anyway. Okay, right,
• 17:06
  Speaker 2: what is that because everyone changes their behavior. Yes, and
• 17:11
  Speaker 2: we've done a study and we actually think the negative
• 17:13
  Speaker 2: impact on the Australian economy will be ninety four point
• 17:18
  Speaker 2: five billion dollars. And that's people not investing in technology
• 17:23
  Speaker 2: companies which employ people, et cetera, et cetera. And also
• 17:28
  Speaker 2: on our analysis, we think a lot of people will
• 17:31
  Speaker 2: take their money out of super I think everyone who
• 17:34
  Speaker 2: was a tax on realized gains everyone sort of accepted, hey,
• 17:39
  Speaker 2: look we've had a very good run. It's been very
• 17:41
  Speaker 2: good for us. We're happy to pay more tax. The
• 17:44
  Speaker 2: fact that it's on unrealized gains is now changing everyone's behavior.
• 17:48
  Speaker 2: You mentioned we've got one hundred and thirty thousand investors
• 17:51
  Speaker 2: that we manage money on their behalf. I've had hundreds
• 17:55
  Speaker 2: of them contacting us. There was one I was talking
• 17:58
  Speaker 2: to just the other day. He's a grandfather, worked hard
• 18:02
  Speaker 2: all his life, had his self managed super fun. He's
• 18:05
  Speaker 2: got a reasonable amount of money in that self managed
• 18:07
  Speaker 2: super fund. He said, what I'm going to do is
• 18:10
  Speaker 2: I'm going to take it all out down to the
• 18:11
  Speaker 2: three million dollars. He's in his early eighties where he
• 18:14
  Speaker 2: can do that without any penalties. He said, I'm probably
• 18:17
  Speaker 2: too old to upgrade my own principal place of residence,
• 18:20
  Speaker 2: which is no tax. Yes, what I'm going to do
• 18:23
  Speaker 2: is I'm going to give the money to my grandchildren
• 18:26
  Speaker 2: to buy their principal place of residence.
• 18:28
  Speaker 1: Yes.
• 18:29
  Speaker 2: So it's actually going to be negative. And we've seen
• 18:31
  Speaker 2: this in the UK. The UK increased the capital gains tax.
• 18:35
  Speaker 2: I think it was close different rates, but close to
• 18:37
  Speaker 2: twenty percent. So you'd think, oh, if you've increased the
• 18:41
  Speaker 2: capital gains tax by twenty percent, you'd be receiving twenty
• 18:44
  Speaker 2: percent more tax. The numbers just came out the other day.
• 18:48
  Speaker 2: The tax take is down the equivalent of three billion
• 18:53
  Speaker 2: Australian dollars. It's down ten.
• 18:55
  Speaker 1: Percent because people changed, because people knew it was coming
• 18:58
  Speaker 1: and they said, listen, I'm going to have that. Okay,
• 19:01
  Speaker 1: what about you mentioned in your paper about Norway where
• 19:04
  Speaker 1: they had a particular specific unrealized gains tax and the
• 19:08
  Speaker 1: money just flooded out of the country.
• 19:10
  Speaker 2: I mean, just what a disaster for any risk take
• 19:13
  Speaker 2: to me, the effect will be as significant. So everyone
• 19:17
  Speaker 2: works out, hey, we don't want to take significant risk
• 19:19
  Speaker 2: in inliquate assets. We're not going to back any Australian.
• 19:22
  Speaker 2: We're not going to support Campbell or Alassian in their
• 19:25
  Speaker 2: early days. And what exactly happened with the unrealized caval
• 19:30
  Speaker 2: gains tax in Norway their first unicorn, the first person
• 19:34
  Speaker 2: that has crowded a company worth a billion dollars but
• 19:38
  Speaker 2: it made no money. He was one of the co founders,
• 19:41
  Speaker 2: a big shareholder, and he was going to have to
• 19:42
  Speaker 2: pay tax on a theoretical value that he couldn't do,
• 19:48
  Speaker 2: and he left. He left Norway. And I think that
• 19:50
  Speaker 2: people with the greatest amount of money, I think one
• 19:53
  Speaker 2: hundred of them have left Norway. The impact on Australia
• 19:57
  Speaker 2: will be seeing multiples of what they might get from
• 20:02
  Speaker 2: the people that get trapped, you know, like the technology investor.
• 20:06
  Speaker 2: I said, also, I had a farmer that rang me
• 20:09
  Speaker 2: the other day. You know, there's three thousand and five
• 20:12
  Speaker 2: hundred farms. These are sort of generational farms that the
• 20:17
  Speaker 2: people have put them in the super fun there's three thousand,
• 20:20
  Speaker 2: five hundred above three million that will be caught by this,
• 20:23
  Speaker 2: So there'll be three thousand, five hundred farms for sale.
• 20:26
  Speaker 2: I had someone a farmer ring me the other day.
• 20:29
  Speaker 2: He's got a farm about eight k out of Goldwin.
• 20:32
  Speaker 2: He had alone on it. During the GFC the banks
• 20:35
  Speaker 2: called in the lane. He nearly went under. He sold
• 20:37
  Speaker 2: half the farm, and then he did, I'm not going
• 20:40
  Speaker 2: to get caught again. So what did he do? He
• 20:43
  Speaker 2: put in hisself managed super fun He thought he was
• 20:45
  Speaker 2: safe for the rest of his life.
• 20:46
  Speaker 1: That's probably the extreme version, isn't it. Where you got
• 20:49
  Speaker 1: a farm, it's a relatively little return on assets in
• 20:53
  Speaker 1: the farm is but the assets go up because the
• 20:55
  Speaker 1: landry value said, doesn't mean you're going to sell it,
• 20:57
  Speaker 1: but you'd have to pay tax on it. Okay, I
• 20:59
  Speaker 1: think people will understand that now, Jeff.
• 21:01
  Speaker 2: Yes.
• 21:01
  Speaker 1: So here's the thing. Is there any chance we'll assume
• 21:04
  Speaker 1: the government get back in. We know the treasure has
• 21:06
  Speaker 1: said it's unfinished business. He is determined to bring this in.
• 21:10
  Speaker 1: He needs the revenue. It's one of the few big
• 21:12
  Speaker 1: ticket revenue items. There was some alternatives proposed. One is
• 21:16
  Speaker 1: actual just tax actual gains, which was your one. What
• 21:19
  Speaker 1: about the notion of a deeming rate like they have
• 21:23
  Speaker 1: for pensions anyway?
• 21:24
  Speaker 2: Yeah, Look, anything, I'm incredibly open.
• 21:27
  Speaker 1: Anything is better than what's on the table.
• 21:29
  Speaker 2: Anything that taxing a profit that you might never make
• 21:32
  Speaker 2: or may never have. Yeah, and destroying people's livelihoods and
• 21:36
  Speaker 2: impacting significantly the entrepreneurial spirit of Australia which we've flourished
• 21:42
  Speaker 2: on for tens of hundreds of years.
• 21:45
  Speaker 1: Okay, And it sounds to me your campaign's really only
• 21:48
  Speaker 1: starting because it's alda start again, isn't it.
• 21:51
  Speaker 2: Well one hundred percent. The unfortunate thing is we actually
• 21:54
  Speaker 2: started when it was announced in February twenty three. And
• 22:00
  Speaker 2: on any reason it's getting a lot of airplane now
• 22:03
  Speaker 2: is they've already got it through one House and they've
• 22:06
  Speaker 2: got to get it through the Senate. And we've been
• 22:08
  Speaker 2: talking to the various cross benches each of the parties.
• 22:12
  Speaker 2: We send a letter to the two and twenty eight politicians.
• 22:15
  Speaker 2: We're going to send our report to them. We're trying
• 22:18
  Speaker 2: to work out whether we send it before the election
• 22:20
  Speaker 2: are after. The reason it's getting a lot of play
• 22:23
  Speaker 2: this week is obviously PI is an election and the
• 22:25
  Speaker 2: beautiful thing is it's bringing it to everyone's front of mind,
• 22:28
  Speaker 2: and from my perspective is the government they actually should
• 22:31
  Speaker 2: lose the election on this. Now, the election occurs on
• 22:35
  Speaker 2: the weekend. Whatever happens happens, but we've got to keep
• 22:38
  Speaker 2: fighting to have it stopped going through the Senate. And
• 22:42
  Speaker 2: what we need is the Libs there, We need Pocock,
• 22:45
  Speaker 2: we need Lamby and the Cross benches to hold firm
• 22:48
  Speaker 2: because it's only by one vote and.
• 22:50
  Speaker 1: Of course those numbers might be turned upside down in
• 22:53
  Speaker 1: the election. Okay, we leave that for the moment. We'll
• 22:56
  Speaker 1: be back in a moment. We have some quick questions
• 22:57
  Speaker 1: and Jeff's going to stay with us, which I'm delighted
• 23:00
  Speaker 1: to be able to have him to cover these all.
• 23:02
  Speaker 1: Right back in the moment. Hello, Welcome back to The
• 23:14
  Speaker 1: Australian's Money Puzzle. James Kirby here with Jeff Wilson. Okay, Jeff,
• 23:18
  Speaker 1: we take listener questions every week. I just have kept
• 23:20
  Speaker 1: two for you. Actually one listen to question. I'll just
• 23:23
  Speaker 1: briefly read it, but you might well. I think most
• 23:27
  Speaker 1: people are mystified by this. And even though you're an
• 23:30
  Speaker 1: experienced for manager, I bet you don't have the answer,
• 23:32
  Speaker 1: or at least you don't have the answer that the
• 23:34
  Speaker 1: banks would try and justify it. What happens to money
• 23:37
  Speaker 1: in the banking system when there are transfers on public holidays.
• 23:41
  Speaker 1: This is from Paul. My daughter transferred money that left
• 23:44
  Speaker 1: for Saint George account on Good Friday, and it had
• 23:46
  Speaker 1: not arrived in my account by Tuesday, the twenty second
• 23:49
  Speaker 1: of April, that's six days later. I asked the bank
• 23:51
  Speaker 1: what happened, and they said they do not process transferreds
• 23:54
  Speaker 1: on weekends or public holidays. I asked where the money
• 23:58
  Speaker 1: was kept for those five days. I was told they
• 24:00
  Speaker 1: couldn't answer that. The bank is obviously doing very well
• 24:03
  Speaker 1: from this archaic practice. Now, once upon a time, when
• 24:06
  Speaker 1: money was pushed around, perhaps carried in little paper bags
• 24:09
  Speaker 1: from one bank to another, we could understand a couple
• 24:12
  Speaker 1: of days. It's now I expect a bush of a button.
• 24:15
  Speaker 1: I expect it takes about two microseconds from money beta transferred.
• 24:19
  Speaker 1: Is that the answer? Do you reckon, Jefford? Do you
• 24:21
  Speaker 1: know anything else?
• 24:22
  Speaker 2: Yeah? I think that's a good answer, and to me,
• 24:24
  Speaker 2: that's right. Who made the interest over that period of time?
• 24:27
  Speaker 1: There's a lot of money washing around.
• 24:29
  Speaker 2: I know that's what he's got to drill down with.
• 24:31
  Speaker 2: I mean someone would have Yeah, that's probably pretty good analysis.
• 24:34
  Speaker 2: Find out who made the money and invest in them.
• 24:38
  Speaker 1: That sounds like a bank, all right. Gary asks what
• 24:42
  Speaker 1: are the best defensive stocks on the ASX during this
• 24:45
  Speaker 1: very wild period on the share market? Yeah, asked that
• 24:47
  Speaker 1: all the time. Of course, I don't know if you
• 24:49
  Speaker 1: want to go quite selective on stocks, but you could
• 24:51
  Speaker 1: talk about sectors whatever.
• 24:52
  Speaker 2: Yeah, I think I think more big picture, like our
• 24:55
  Speaker 2: view is the interest rates dropping. There's going to be
• 24:58
  Speaker 2: more interest right falls over the next twelve months than
• 25:01
  Speaker 2: the market's anticipating. So there, what you want is you
• 25:07
  Speaker 2: want those high yielding, defensive stocks, you know that will
• 25:10
  Speaker 2: benefit from lower interest rates. I haven't got any individual stocks, shirt,
• 25:16
  Speaker 2: We've got twenty people back at the office that drill
• 25:19
  Speaker 2: down in the individual stocks. A more bigger picture of
• 25:22
  Speaker 2: these days.
• 25:23
  Speaker 1: Okay, but high yielding stocks in good shape obviously with
• 25:26
  Speaker 1: decent fundamentals as well. Okay, very good. Hey, great to
• 25:32
  Speaker 1: have you on the show, Jeff, and thank you very
• 25:33
  Speaker 1: much for coming on.
• 25:35
  Speaker 2: I thank you, James. I've really enjoyed it, and I
• 25:38
  Speaker 2: really appreciate everything. You've done in terms of keeping the
• 25:42
  Speaker 2: Australian community up to date with investing, and you've been
• 25:46
  Speaker 2: a great voice insanity. You know where there can be
• 25:50
  Speaker 2: a lot of insanity out there.
• 25:53
  Speaker 1: I'm flattered by the same part at least. Okay, thank
• 25:56
  Speaker 1: you very much, love you to have you, and love
• 25:57
  Speaker 1: you to have Jeff on the show that was Jeffs Management.
• 26:01
  Speaker 1: Keep the correspondence coming, please love to have some more questions.
• 26:05
  Speaker 1: We have unusually a bit of space to answer more questions,
• 26:08
  Speaker 1: so let's have them the Money Puzzle at the Australian
• 26:11
  Speaker 1: dot com dot au. Talk to you soon.