Australian Equity Strategy

Research evidence excerpt

Australian Equity Strategy

Macquarie Equity Research Australian Equity Strategy

Top market-relevant budget measures

1. Capital Gains Tax (CGT) Discount Overhaul - 50% CGT discount will be replaced with

an inflation indexed discount and a minimum tax rate of 30%. The 30% minimum was

a negative surprise. The changes are positive for bonds (less future tax expenditure),

but likely negative for asset prices near term. The changes likely encourage a shift to

superannuation funds, or (in a period of inflation), holding assets longer.

2. Negative Gearing Limited to New Builds - Investors will not be able to deduct

property losses against other income, except for newly built homes. Investments made

before Budget night are grandfathered. Demand for established homes by investors

will fall, pressuring prices. This is positive for first-home buyers, owner-occupiers and

new home builders/developers. Like the CGT reform, this is a structural adjustment that

broadens the tax base.

3. Housing Supply & Affordability Measures - Initiatives aimed at boosting housing

construction and help an additional 75,000 Australians become homeowners over the

next decade. Measures include $2b Housing Infrastructure Facility and Foreign Buyer

Ban Extension (to mid-2029).

4. Working Australians Tax Offset (WATO) & Work-Related Deduction Simplification -

Tax relief for wage earners, including a new $250 annual offset and an optional $1,000

instant deduction for work expenses. This is a small positive for consumer discretionary

and staples, but likely offset by the impact of rate hikes and property tax increases.

5. Small Business Tax Relief Package - Measures to boost investment and cash flow,

including permanent loss cary-back rules, a permanent $20k instant asset write off, and