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"Ludicrous": Investors declare war on Labor's tax changes ⚔️💸 · Money News

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  S1: The Wilson Asset Management have launched a petition today on
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  S1: behalf of their 130,000 individual shareholders. Mr. Wilson has called
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  S1: Labor's changes to the tax system and the changes to
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  S1: capital gains tax, and the discount that is applied since
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  S1: 1999 as economic vandalism. And the government, he says, is
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  S1: understanding just how many Aussies are affected directly by these changes.
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  S1: You can sign that petition, by the way, on the
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  S1: website Wilson Asset management.com.au. Geoff Wilson from Wilson Asset Management
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  S1: is on the line for us tonight. Geoff, good evening
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  S1: and thanks for your time.
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  S2: Thanks, James.
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  S1: I know this is your field, but you must be
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  S1: surprised at just how ferocious the reaction has been to
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  S1: the budget from all sectors, not just in shares or
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  S1: start up, but a lot of small businesses and average
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  S1: Joes that just have a small investment portfolio. The reaction
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  S1: has been enormous.
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  S2: Yeah. And like every Australian we want to achieve and
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  S2: we want to inspire something about Australia. It's having a
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  S2: fair go, being able to achieve things. You know, the
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  S2: land of milk and honey. I was talking to a
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  S2: young lady this morning in her early 30s that, you know,
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  S2: I was trying to explain to an unrealized capital gains
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  S2: about a year ago. And she was, you know, she's
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  S2: a strong labor supporter and she's, you know, sort of
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  S2: didn't really want to get into that debate. I'm talking
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  S2: to her this morning and said, look, what do you
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  S2: think about the budget and what they're doing? She was
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  S2: thinking about starting up her own business, you know, with
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  S2: a friend a couple of months ago, and she just
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  S2: said it's appalling. And that is it's everyone that has
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  S2: any aspirations in life, which is, I think nearly all Australians,
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  S2: you know, they see the government's just putting a roadblock up.
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  S2: The frustrating thing is, you know, the politicians that have
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  S2: got their negatively geared houses, they keep them. You know,
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  S2: myself it's got a negative geared house. I keep it
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  S2: you know there's no negative impact on me. It's actually
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  S2: been the budget was actually a budget for the boomers
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  S2: in terms of inequity. The inequity isn't with the young people.
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  S2: It's everything was done helps the boomers and everything. All
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  S2: the new taxes sort of kneecap young Australians that are
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  S2: trying to get ahead.
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  S1: It's been described in some sectors or sections of Australia
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  S1: as a rich whinge. How would you respond to that
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  S1: assessment about this issue?
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  S2: Yeah. Incredibly naive. What they need to do is go
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  S2: and speak to everyday Australians because I've I've just I've
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  S2: never seen this strong a reaction on anything like back
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  S2: in 2018, 2019, you know, we ran a very successful
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  S2: grassroots campaign on, you know, the negative impact that the
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  S2: Bill shorten in opposition wanted to bring in about franking.
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  S2: And that like, that was a lot of effort and,
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  S2: you know, communicating to people. And then a year ago,
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  S2: it was the, you know, the crazy, The tax on
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  S2: a profit. You may never make the tax on unrealized gains.
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  S2: And that again was complex to explain to people effectively this.
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  S2: Now since the budget, our social media or newspapers or
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  S2: even the you know, just the discussion, um, has just
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  S2: gone off like wildfire.
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  S1: Can you just explain in very simple terms, because the
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  S1: last time I spoke to you, I asked you what
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  S1: the impact would be potentially on the ASX and our
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  S1: property market. And there was a story at the weekend
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  S1: in the Financial Review, uh, actually last Thursday that said that, um,
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  S1: people that had a diversified portfolio of individual shares could
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  S1: face tax rates 50% higher than Treasury calculated. And as
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  S1: a result, a lot of people would be considering moving
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  S1: to index funds or low fee exchange traded funds provided
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  S1: by the likes of Vanguard and BlackRock. Can you just
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  S1: explain for a moment why you believe that would be
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  S1: the case if someone has individual shares is taking more risk. Why?
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  S1: They'd be taxed more.
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  S2: First of all, I'll declare my interest. We're against this now.
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  S2: We want it stopped. And in structures that you are
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  S2: saying that will benefit from this, you know, like ETFs. Well,
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  S2: most of the money we manage are in listed investment companies.
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  S2: Um which means um you, you will be shielded from this,
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  S2: this negative impact. And broadly what it means is say,
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  S2: if you happen to buy ten individual companies and say,
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  S2: you know, five of them, you know, went really well
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  S2: and went up, you know, a lot in a 12
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  S2: month or 18 month period or even a longer period.
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  S2: And the other five went up a little bit. But
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  S2: you actually made no money. You actually lost money if
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  S2: you indexed for inflation, you know, say if inflation's, you know,
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  S2: say 3%, you know, your cost base goes from $1
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  S2: to $1 three. So if your share price had gone,
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  S2: it just stayed at $1. In real terms, you haven't
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  S2: made any money. But another share had gone from $1
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  S2: to $2 over that period. Then you'd pay a big
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  S2: tax on that. But the one that you were that
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  S2: you were sort of down relatively 3%, you can't offset
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  S2: that against the one you've made the big profit on. Um,
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  S2: and that's, that's what they're basically saying. So it's actually
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  S2: becomes a disadvantage to actually own individual companies. Um, and
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  S2: that is just ludicrous. You know, we've got 7.7 million
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  S2: Australians that own shares in their own name. Yeah. It's
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  S2: insanity that that a, that a government will bring would
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  S2: bring in something to effectively discourage individuals from investing in
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  S2: companies they want out, rather than they're forcing those individuals
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  S2: to pay someone like myself, a fund manager or the
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  S2: ETF providers to manage their their money. And I did some,
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  S2: you know, some quick maths and like the cost to people,
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  S2: you know, over, over a period of time, you know,
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  S2: could be billions of dollars. Um, and it's just a
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  S2: cost that's been created because of the government's greed.
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  S1: I'd say on that, Jeff, that if the government had said,
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  S1: we're going to overhaul these taxes and all that money
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  S1: is going to be directed into income tax reform, and
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  S1: we're going to do something serious about bracket creep and
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  S1: address all of the tax brackets. It would be harder
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  S1: to justify when it was benefiting a whole lot more people,
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  S1: in my view, or if these changes were only for
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  S1: the property market and the property market was going to
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  S1: go down and allowing young people to go in. I mean,
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  S1: but this is all to cover off for record levels
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  S1: of government spending, outrageous spending from governments and running deficits
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  S1: every year between now and 2036, 2037. And they've found
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  S1: a new honey pot that they believe hasn't been taxed
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  S1: enough 100%.
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  S2: And I think that's what makes everyone scared is, you know,
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  S2: a year ago, they lied to us. Um, and they've
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  S2: done this and, and, you know, now that everyone's thinking, okay,
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  S2: where do I put my money? I put it in
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  S2: a house. I own that now my principal place of residence,
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  S2: which is tax free. Um, or I put into superannuation. Well,
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  S2: they're going to go after that. And you know, there's
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  S2: a lot of talk that if they win the next election, uh, then,
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  S2: you know, they could well be on the, on the agenda.
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  S1: Do you think there is any sensible argument just finally
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  S1: that trusts are not being taxed enough and people are
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  S1: avoiding paying tax through trusts at any level? I would
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  S1: have thought at some stage, by the time the money
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  S1: gets into a trust. The individual has paid tax in
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  S1: many cases the highest rates of tax to me.
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  S2: Unfortunately, what they've done, and I don't know whether Jim
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  S2: Chalmers and his team are really smart or really stupid. Uh,
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  S2: and again, you know, I assume the Treasury people are
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  S2: really smart. Um, because what they're doing with trusts, effectively
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  S2: a company, our Paul Keating, bought it in the franking.
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  S2: So you don't get double taxed if you have money
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  S2: in the company. Now what they've done all these people,
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  S2: the small businesses have started up trusts, etc. that money
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  S2: is going to be taxed at 30% and then there
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  S2: is no franking attached to it. So you could be
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  S2: paying above 60% tax on that money that's gone into
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  S2: the trust. You know, how can you have a society
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  S2: that does that, that has a certain set of rules,
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  S2: allows everyone to play by those rules and then changes
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  S2: the rules and effectively traps you in there. And the
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  S2: billions of dollars of stamp duty that's going to have
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  S2: to be paid for any assets or properties that are
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  S2: in those trusts to be transferred from the trust into
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  S2: a company name or, or an individual's name, like it
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  S2: is just it is just a horrendous situation.
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  S1: The Prime Minister and the government are quietly considering the
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  S1: possibility of a carve out for the tech sector in
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  S1: relation to capital gains tax and the discount that currently applies.
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  S1: I've had a look at what that could involve. I
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  S1: think that's inadequate. I don't know why the tech sector
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  S1: deserves a free ride, and other start ups or small
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  S1: businesses don't deserve the same thing. If you're going to
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  S1: give it to the tech sector, it needs to be
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  S1: given to all start ups, in my view.
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  S2: Well, it actually should be given to every Australian company.
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  S2: You know. Don't we want to make Australia strong? Isn't
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  S2: our biggest productivity isn't our biggest problem our productivity problem.
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  S2: So why just give it to a small sector or
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  S2: a small group? You need to give it to every
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  S2: Australian company. It is just, it is just, um, you know,
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  S2: just incredibly disappointing that a government will perform like this. And,
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  S2: and to say like, things were leaked last week that,
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  S2: you know, they're trying to the government is now trying
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  S2: to blame Treasury that initially they were only going to
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  S2: do it for property. And then Treasury suggested a month
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  S2: or so ago, do it for all assets. Hey, have
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  S2: some spine. Stand up for what's right. You know, if
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  S2: you're going to do it for property, just do it
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  S2: for property and cut out every other business. Don't try
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  S2: to slice a little bit out and give one little
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  S2: segment of the Australian economy, you know, some relative free
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  S2: kick at the expense of everyone else.
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  S1: Very well said, Jeff. I really appreciate your time.
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  S2: Thanks, James.
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  S1: That's fund manager Geoff Wilson, by the way, if you'd
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  S1: like to sign that petition, the website is Wilson Asset management.com.au.