Capital Gains Tax and Investment Bonds

Research evidence excerpt

Capital Gains Tax and Investment Bonds

Australia | Diversified Financials

Generation Development EquityMayResearch11, 2026

COMPANY UPDATECapital Gains Tax and Investment Bonds

Tomorrow's Federal Budget is expected to include an overhaul of the RATING BUY

50% Capital Gains Tax Discount, which is likely to improve the relative PRICE AUD3.57^

attractiveness of GDG's investment bond offering. If the capital gains PRICE TARGET | % TO PT AUD6.35 | +78%

discount is reduced or removed, and if legislated, the relative economics 52W HIGH-LOW AUD7.77 - AUD3.43

shift in favor of investment bonds, where capital gains are not explicitly split FLOAT (%) | ADV MM (USD) 87.1% | 9.11

out and therefore do not attract a discount. MARKET CAP AUD1.4B | AUD1.4B

TICKER GDG AU

What the Fed Govt is Expected to Announce: Tomorrow's Federal Budget is expected to ^Prior trading day's closing price unless otherwise noted.

feature a trio of tax reforms that, if enacted, would change the relative economics of investment

bonds by eroding the tax advantages afforded to other investment structures.

FY (Jun) CHANGE TO JEFe JEF vs CONS

Why the Capital Gains Discount Matters: The May-26 budget is widely expected to abolish the 2026 2027 2026 2027

50% CGT discount which was introduced in 1999. This is likely to be replaced by an inflation

EPS* NA NA -7% -12%

indexing system, where the cost-base is adjusted for inflation and capital gains are taxed at

NP* NA NA NA NA

the investor's full marginal tax rate. Importantly, Investment Bonds are taxed at up to 30% on

all earnings, with no distinction between capital gain and income. With tax lot management

2026 (AUD) 1Half 2Half FY

and franking credits effective tax rate are typically lower than 30%. In short, the advantage

NP* -- -- 40