WEBVTT
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The flow and effect of these changes, even though they're not legislated, the banks have already changed their calculators.
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On investment property lending, right now it's around 20-25% decrease.
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So if a customer was able to borrow a million bucks prior to these changes, now that customer can only borrow 800,000 or 750.
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That's massive.
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On the 12th of May 2026, the federal budget changed four things that affect how doctors buy property and how we structure and hold our investments.
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Investment lending has dropped from 19% growth rate in March 2026 down to 2.8% in August.
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So we're going to break down all four changes the way I'd explain it to my own kids.
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And the changes involve negative gearing, self-manageable fund lending, capital gains tax discount being replaced by indexation.
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The last one, the changes to family trust, double taxation and loss of CGT discount.
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These are big changes.
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Gone are the days when you just rely on your accountant telling you what to do.
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I think it's a time that if you are serious about investing, you need to understand your tax structures as well.
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If you don't understand tax structures at the end of the day, you may be actually working very, very hard, making good money, putting that towards your investments, but those investments are not leading you anywhere.
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This is Doctors Helping Doctors Grow.
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Let's get into it now.
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Okay, so we're back again, Shoes.
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Yes.
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Podcast number two.
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Yeah.
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We're in a strange environment at the moment.
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Yes.
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12th of May 2026 budget was announced, and that has given the whole nation reason to pause, reset, and re-educate ourselves about tax structures, negative gearing, super funds.
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Yes.
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Big, big changes that have actually come in.
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The Labor government has actually sort of shaken the industry quite a bit, uh, the economy quite a bit.
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Let's talk about those four major headlines.
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Obviously, I'm not an accountant, so everything is as per my layperson's understanding only.
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And if we can, can we draw on you uh on your experience of what you're seeing on the ground as a mortgage broker?
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Yes.
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And um how these changes have affected our borrowing capacity.
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Yeah, for sure.
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I mean, this kick disclamor is actually for both of us.
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Um, this is not a personal advice, this is just a general discussion of uh what we are seeing out there in the market and what our understanding of budget is.
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So it could be it could be 99% correct, it could be 70% correct, but um it could be absolutely wrong.
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And it's just an opinion for you.
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I think we've done a lot of research to make sure it's not absolutely wrong.
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But uh but yeah, but uh let's let's let's make uh let's make a dent at it and also let's try and sort of you know make it uh um broken down in such lemon terms that everyone can understand it.
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Yes.
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So let's let's talk about that.
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So let's make a make a conscious effort of of doing that now.
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All right, okay.
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So remembering the rule of I need my children to understand this.
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So all right, let's let's see.
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Laughlin and Million, let's see if you understand this.
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Let's go, let's go.
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All right.
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There are four changes.
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The first change is they are scrapping negative gearing on pre-existing properties.
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Massive one, yeah.
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But they're maintaining it for new drillings.
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Correct.
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Okay, so what impact have you seen on a lending level because of that?
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Massive, Anna, massive.
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So I'll tell you a little bit, uh, I'll give you the insight on how the calculations were worked earlier and how the calculations are being worked now.
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So anytime we actually do an investment property loan for a customer where the customer was actually buying an investment property, um, we were able to actually add back a negative gearing component.
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So all the bank calculators will actually have a negative gearing component that would actually just add back the interest that the customer was going to pay.
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So the customer was going to pay, let's say,$60,000 interest on a million dollar loan.
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Yes.
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That$60,000 will be actually added back to the servicing, which made the calculation for which made the income look higher.
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Of course.
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Yes.
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Uh not look higher, it made the income go higher.
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Go higher, yes.
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And because of the income going higher, it actually um helped the customer to borrow more.
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Yes.
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So um, once again, only for the investment property purchases.
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Now, a lot of doctors actually go out and they actually get investment property loans.
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Or they're in the term as investment property loans, but they're actually investment loans only.
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These could be for shares, these could be for any other investment, for example.
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Um, the negative gearing would never be added back for those kind of investments.
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The negative gearing would only be added back for the investment property purchases.
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Yeah.
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Which then meant that the borrowing capacity was lifted.
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Yes.
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And the customer will be actually go would be able to go out and buy a property that they actually wanted.
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Because they were going to get the negative gearing benefit of that as well, right?
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Now, the flow on effect of these changes, even though they're not legislated, the banks have already changed their calculators.
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Okay.
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And the flow-on effect of that, Anna, is that on investment property lending, right now it's around 20-25% decrease.
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So if a customer was able to borrow a million bucks prior to these changes, now that customer can only borrow 800,000 or 750,000.
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So that's massive.
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That's a massive change.
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That's a massive, massive change.
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So that has obviously now changed the budget range for a customer to go out and buy the investment property.
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You know, if the customer was able to afford$1.2 million property earlier, now they can only afford a million bucks.
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And that changes the market.
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If the customer was able to aim for X suburb, now they have to think of another suburb for them to be able to buy investment properties.
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But you asked me about the flow, the lending effects on the investment properties.
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Um, since the budget has been announced and the proposal proposals proposals have been made, what we are saying as brokers is that the investment property borrowing activity has gone down massively.
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As seeing people are no longer in the market to look for residential properties, established residential properties.
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Correct.
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So if I'm looking after, let's say 50 applications right now, and that's a that's a stat that we're talking about, I can count on one hand as to how many of those are investment property borrowings for residential property.
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So at the moment, actually, we're only really working with three or four.
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Um that's not much at all.
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That's not much at all.
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But even these investors, they're actually going out buying these investment properties, thinking that they're actually looking at a long-term view because they know that these changes may not actually stay on.
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And when the government changes, these changes will then be um taken away.
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Yes.
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Which means that they'll back on the um back on the negative gearing uh rules and hence why they'll be able to, you know, sort of clan negative gearing and this will be good.
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So these investors are being a bit more ambitious in the sense that they're they are thinking that hey, whenever when everyone is quiet, when everyone is fearful, that's the time we actually strike the hammer and we go hard at it.
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Yes.
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Um, but they're not buying they're not buying um fully marrying the rules that are being proposed right now.
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Okay, so there's two things you're saying there.
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Number one, there's been a huge decrease in um investor activity in established residential purchases and therefore lending.
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And number two, those who are the small handful who continue to buy these established properties are gambling on the fact that uh the labors are going to be kicked out, liberals will come in, and liberals will likely scrap these new changes.
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And this is going to be consistent for the rest of the four points that we're going to talk about, because that risk applies to all four changes that we can plan and restructure or structure our new investments in a new way to suit the current budget, which may or may not be retained if a new government comes in.
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The banks have reported that 90% there's a growth rate of around 19% in March of this year in investment property borrowing uh application.
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19% in March.
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In March.
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So pre-budget.
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Pre-budget.
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But in August, they've just sort of released the uh growth rate.
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That's that's gone down to 2.8%.
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So it's not just opinions or what you and I are talking about today.
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These are these these are all data-driven figures.
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And and it's quite unfortunate for like a lot of buyers' advocates, for example, who are actually just looking at helping customers, you know, um buy investment properties so they can actually grow their investment property portfolios, you know, a lot of that has actually sort of been impacted.
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Uh, and banks are also at the moment sort of crying for the fact that, hey, no one's borrowing.
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We're all feeling anxious, we're all feeling uncertain.
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Correct.
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And so everyone is sitting tight and watching this space.
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I must also say though, like um, I think historically um this was done back in I think 80s, 87 or 80, 85 in Australia, where the negative gearing was abolished, um, and it was actually brought back on.
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Yes.
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Um uh and uh and that was after two years.
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A similar thing had also happened in New Zealand as well in 2021, and it was back brought back on 2023.
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So historically speaking, uh there's a very good chance this could happen.
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But at the same time, one good thing that does come out of this, Anna, is that the construction rec construction um borrowing and the construction um sort of economy um has seen a record um high.
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Yeah, so it's gone up, but is it has it gone up in equivalent to the drop in resi activity?
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Hard for me to say from the numbers, but uh but what we actually sort of talk about is that the the construction lending is definitely seeing a significant.
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Yes.
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But then once again, a lot of people are actually saying that okay, yeah, construction's seeing an increase, but you know, as Australians, um, as the property investors, 70% of the market actually likes land, right?
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And when we're talking about the construction of new dwellings, these construction um projects on new dwellings are not land heavy.
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So if if someone was actually buying 700 square meters for the same price earlier as an established dwelling, now they're buying around 400 square meters for the same price, right?
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Because of new property and they're able to get the negative gearing benefits on it.
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Yeah.
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So that's why, you know, it's it's sort of, you know, um horses for courses really, but as Australians we like land.
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Yes.
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The investors love land because they because with land they can actually do a lot more.
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Um, and you know, they can sort of you know capitalize on the land value.
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Okay.
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So that's the impact of negative gearing.
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I've heard some buyers agencies say on their podcasts, those who do both Resi and commercials say that they've seen their Resi demand drop by 50 to 60 percent.
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Well, that's a big amount, Anna.
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That's that that's basically a business.
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Yes.
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They've seen their commercial arm go up, but their resis have really dropped since the budget announcement.
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That's a that's a that's a massive, massive uh decrease because that could basically wipe out a wipe out a full segment of a business, really.
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I mean, like how how are you supposed to look after the wages and things like that?
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And we've seen like, you know, some of the biggest buyers' advocacies in in Australia that have sort of you know gone insolvent, um, namely dash dot like Atlas property and things like that.
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So it's not a like it's it's it's it's a big shock to the to the to the industry.
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Um and it'd be interesting to see what sort of comes out of it.
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Yeah.
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It just seems like the government is making a lot of decisions without consultation um to the people that are actually making a difference in people's lives.
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And um, and uh, and yeah, it's it's probably one of those that's that's that's being criticized more than uh than what's being applauded.
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Yes, yeah.
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The second change was uh banks are no longer allowed to provide lending for residential properties in the self-managed super fund.
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Correct.
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Yeah.
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So that sales, that that boat's already sailed.
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So um the Labour government introduced this um rule uh that any residential contract signed before 10th of August will still be able to uh be signed as the purchaser being an SMSF, a self-managed super fund under limited recourse borrowing capacity.
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So LRB, LRBC, um uh or LRBA, they call it limited recourse borrowing arrangement.
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Once again, it's it's a a lot of sort of you know middle-aged people when they when they had enough money in their self-managed super funds, they were actually going out to buy investment established properties uh as residue properties that that could be sort of you know part of their self-manager super fund asset pool, um, that's been taken away as well.
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So that's a that's a big blow as well.
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Look, a lot of major banks, or not a lot of, all the major banks had already pulled out of the limited recourse borrowing arrangement in uh during the Royal Commission time in in Melbourne or in Australia, sorry.
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Um however, um this rule being introduced by the government is also a big one because because the major banks had pulled out of the self-managed super fund resilience, there was a lot of sort of non-major banks that actually come in.
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And these non-major banks were really sort of their their source of revenue was this, yeah.
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Uh which is which was, you know, now that's taken away from them.
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So we're gonna look at the collapse of a few.
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I think so, or like at least like many sort of redundancies and many sort of you know um employees losing their roles and things like that in these in these lending in these lending organizations in these banks.
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So it's it's a sad part, but at the same time, you know, it's the government is trying to achieve something, and I think it'll be interesting to see what the next 12 to 18 months bring in terms of data.
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Now, remembering that they're the whole purpose of the government doing this is they're trying to provide more residential properties to be available for first home buyers and and to keep it uh affordable and correct, so more of that.
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More Australians to be able to afford their homes, right?
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Like that that's what their um that's what their um purpose is, which is not achieved so far, uh may I say.
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Uh, but it'd be interesting to see what the government actually is able to achieve in the next 12 to 18 months.
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And I think that would decide the destiny of Labor government.
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Um, and and we'll see how we go.
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Um we should note though that um the LRBA uh or limited recourse borrowing arrangements or self-managed superphone lending uh is completely as it is, as it was earlier for commercial properties.
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Yeah, so that stays the same.
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You can still say you can still borrow for commercial property.
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You can still buy Resi.
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You can still fund it.
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You just can't go to a bank and ask for money for it.
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The banks can't provide it.
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So what this means is that Anna looks at buying a uh floor in a shopping center, uh, for her to be able to run Picton Family Medical Center or Norellan Medical Center, she can still buy that under her self-murder superfund.
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And which is the most uh common way of people using their SMSF uh for commercial property purchases.
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A lot of the businesses that sort of buy the commercial property, commercial properties under their self-merged super fund to be able to rent from that um commercial property.
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So let's say Anna Fam Self-Marned Superfund or Anna Fam Superfund will own a unit uh which will be then converted into a Norellan medical center.
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Norell and medical and skin.
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Norell and medical and skin.
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Um uh so then Ana Fam uh Proprietary Limited, which is a trading entity, will rent the clinic from that uh Solid Medical Fund, which is so which is gonna keep we which will actually stay the same.
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And that's how the that's how the government is sort of you know justifying that keep the commercial property should stay as it is in the submerged fund.
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Yes, they're only touching Brezi.
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Commercial stays the same.
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Yes.
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But there are many benefits of actually buying commercial property in SMSF, I must say, because all these non-bank lenders that I'm referring to that that do self-managed superfund lending, they actually offer 80% loan-to-value ratio on commercial properties.
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80%.
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80% in SMSF.
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Uh, whereas outside of SMSF ecosystem, outside of SMSF environment, it's capped at 65 or 70%.
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Are they some major lenders that's offering 80%?
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No major lender does self-moder superfund lending.
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Okay.
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Um that was that was taken away.
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Or major major lenders withdrew from self-modered superfund lending at the Royal Commission time because major commercial and resi uh period.
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From the exception of NAB, uh who does self-modered super fund, but we're now going to technical terms.
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NAB private is the only major bank that does uh self-modered super fund lending, but that's the criteria is very, very stringent.
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The customer has to have has to be um at a certain level of net worth.
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Uh they should have a certain level of net liquid assets outside and inside the self-managed superfund.
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So if you hit all, if you tick all the boxes, you're allowed to be able to.
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What are those numbers?
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Uh roughly.
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Last time when I checked, I think it's around$20 million net worth uh for a customer to be able to uh qualify for a for a NAB SMSF.
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Why aren't the major lenders interested in lending the self-managed superfund?
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Very good question.
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I I never realized this.
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That's all that's a very good question, Anna.
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But let's go back to when the major banks withdrew from self-managed superfund lending, right?
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So in Royal Commission, there was a few, uh obviously the Royal Commission was set up, you know, in in in around 2013, 14 um year.
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Um to and and the Royal Commission basically said that, hey, anyone that's been impacted by bank wrongdoings, please come and talk to us.
00:18:22.640 --> 00:18:24.799
We're here to hear, we're here to listen to you.
00:18:24.960 --> 00:18:29.359
Um, and then we'll see what we can do from our side to be able to get you the right outcome.
00:18:29.599 --> 00:18:37.920
And a few of the customers actually went back to the bank and there was a lot of noise that was created about the banks not doing the right thing by the self-mother super funds.
00:18:38.000 --> 00:18:45.839
Now, superannuation in general is a very highly compliant ecosystem, right?
00:18:46.240 --> 00:18:54.720
It's made, it's the the purpose of superannuation is for the uh person to be able to have enough money for retirement, right?
00:18:54.799 --> 00:18:57.680
So hence why the rules are very stringent.
00:18:57.759 --> 00:19:04.000
There's only so much that you can do with a self-mounted superfund or any superannuation fund in general.
00:19:04.640 --> 00:19:11.279
So what had happened was the banks had given wrong advice um uh prior to all commission.
00:19:11.440 --> 00:19:16.000
And because of that wrong advice, some of the customers had actually lost their homes.
00:19:16.319 --> 00:19:16.640
Right.
00:19:16.880 --> 00:19:38.480
So, uh, like for example, there was a case where the the banker and the financial planner together had said that, hey, you sell your property and you buy a motel uh and you actually um live in that motel, uh, and you can actually, because this is an investment, because you can run a business out of that, the income generating, you can buy that under your self-management fund.
00:19:39.039 --> 00:19:41.759
But the customer said, We don't have enough money to put the deposit.
00:19:41.920 --> 00:19:47.599
And the banker said, sell your property, sell your principal place of residence, get the deposit, and then actually just buy that motel.
00:19:47.759 --> 00:19:48.720
And then you live in it.
00:19:48.880 --> 00:19:54.400
That provides you a uh place to live in, at the same time brings you a source of income as well.
00:19:55.119 --> 00:20:01.039
But the self-management fund rules are very, very um stringent, very, very, very tight.
00:20:01.359 --> 00:20:06.720
You have to only buy an investment, you cannot use that property to live in.
00:20:06.960 --> 00:20:13.359
Another thing also is there's also um uh now, this is probably where my knowledge may be tested.
00:20:13.440 --> 00:20:17.119
I don't think the self-management fund actually allows you to buy a business.
00:20:17.599 --> 00:20:25.759
But the bank at the time had basically said that something along the lines of the fact that hey, you can buy a business as well as investing property and so on and so forth.
00:20:26.000 --> 00:20:26.240
Right.
00:20:26.480 --> 00:20:54.559
So um, so that was obviously sort of brought to the light, and and because of that, you know, um because of that, the the the complaint was lodged, and and because of that, obviously the the what actually came out of it was that a lot of major banks decided that because of the high high compliance and uh low uh margin on error, uh it's probably a good idea for us to just withdraw from the from the from the lending altogether.
00:20:54.880 --> 00:20:57.359
That's why the major banks sort of just took away from it.
00:20:57.599 --> 00:20:57.759
Okay.
00:20:58.000 --> 00:20:58.640
Simple as that.
00:20:58.880 --> 00:20:59.119
Okay.
00:20:59.440 --> 00:21:04.559
So that was the reason why the major banks sort of withdrew from the um self-managed superfund lending.
00:21:04.720 --> 00:21:16.720
Um and uh and and since then a lot of the non-bank lenders sort of came into the market and they're the ones that sort of created a product for the customers to go out and actually get get money in self-managed super funds.
00:21:16.960 --> 00:21:18.079
I see, I see.
00:21:18.240 --> 00:21:21.200
So we've got only the what's the term you used?
00:21:21.440 --> 00:21:22.240
LRBA.
00:21:22.799 --> 00:21:26.799
So the tertiary, second tier, third tier, the non-banks.
00:21:27.680 --> 00:21:34.400
So the non-bank players, of which there are some that specialize in uh SMSF lending only.
00:21:34.640 --> 00:21:35.039
Correct.
00:21:35.359 --> 00:21:38.319
This has pretty much just wiped out their business model.
00:21:38.960 --> 00:21:44.960
You asked me earlier uh which major bank, if any, is still still um active in this uh field.
00:21:45.119 --> 00:21:47.039
Uh so from my understanding is NAB.
00:21:47.200 --> 00:21:52.160
And the other one that actually also allows for it to a certain degree is Bank of Queensland.
00:21:52.480 --> 00:22:11.599
Not a major bank, but also a very reputable bank who a lot of customers go to, but at the same time, Bank of Queen Design also have a very tight sort of, you know, prerequisites that you have to be able to hit before you can be considered first lines with them.
00:22:11.839 --> 00:22:13.680
And I think that's wise, isn't it?
00:22:13.920 --> 00:22:25.680
Because this is meant to be an individual's safety net or source of income once they're no longer actively working to produce an income.
00:22:26.000 --> 00:22:26.240
100%.
00:22:27.279 --> 00:22:28.799
So cash flow is really important.
00:22:29.119 --> 00:22:31.599
Yeah, the latter third of their life.
00:22:31.920 --> 00:22:32.319
100%.
00:22:32.640 --> 00:22:49.039
And the story that I told you earlier about that customer losing their home is a pretty important one because, you know, this person would have actually sort of bought a property, paid it out, pet it out as much as they have could they could at that time and sold the property.
00:22:49.119 --> 00:22:57.920
But because their employment was was not the same in that stage of their life, they couldn't go out and get another loan to be able to buy another home.
00:22:58.799 --> 00:23:16.319
And, you know, just I think any major bank in Australia or any bank in general or any financial institution in general, one thing that they are very, very, very alert about is that they can never lend irresponsibly to a person.
00:23:16.559 --> 00:23:16.880
Yes.
00:23:17.440 --> 00:23:18.000
To a person.
00:23:18.960 --> 00:23:22.480
If it's a company, the banks actually work with a different set of rules.
00:23:22.720 --> 00:23:23.039
Right.
00:23:23.359 --> 00:23:30.480
But if if it's a person, and if there's an individual that's associated to a loan, the the set of rules are different.
00:23:30.559 --> 00:23:38.799
They're actually governed by this policy called NCCP, which is actually a legal policy, a national credit credit code.
00:23:39.359 --> 00:23:40.799
And that's the that's the reason why.
00:23:41.119 --> 00:23:42.880
So there's greater protection for the individual.
00:23:43.200 --> 00:23:43.440
100%.
00:23:43.759 --> 00:23:43.839
Yeah.
00:23:44.000 --> 00:23:44.559
So any bank.
00:23:44.960 --> 00:23:45.519
Rightfully so.
00:23:45.680 --> 00:23:46.480
Yeah, rightfully so.
00:23:46.960 --> 00:23:52.799
Any financial institution will actually make as many efforts as they can to make sure that they are lending responsibly.
00:23:52.960 --> 00:23:57.519
So there's a there's a there's a term called responsible lending when it comes to these things.
00:23:57.759 --> 00:23:58.160
Yeah.
00:23:58.480 --> 00:23:59.519
Fantastic.
00:23:59.920 --> 00:24:03.759
Um so that's the self-manager fund.
00:24:04.079 --> 00:24:05.759
Self-management fund changes.
00:24:06.160 --> 00:24:18.960
So the third change, Shuberm, is that uh the capital gains tax discount is going to be replaced by what's called the indexation method.
00:24:19.279 --> 00:24:19.759
Yes.
00:24:20.000 --> 00:24:25.680
Now I might talk through this very slowly with you if I can, because I'm still wrapping my head around it.
00:24:26.079 --> 00:24:26.400
For sure.
00:24:26.480 --> 00:24:39.119
And I think that's the reason why this is being condemned, because it's not something that's easy to understand compared to what we had before, which was you buy a property, you hold it for 12 months, you get a 50% discount of the CGT after 12 months.
00:24:39.359 --> 00:24:41.119
But now we're talking indexation.
00:24:41.200 --> 00:24:44.000
So like every year the inflation could be different.
00:24:44.160 --> 00:24:44.400
Yes.
00:24:44.559 --> 00:24:52.720
And depending on how many years you actually own the property, um, you know, you'll be actually taxed on the indexation side.
00:24:52.799 --> 00:24:55.839
Uh, but yeah, you I would love to hear what you understand from it.
00:24:56.160 --> 00:25:06.640
So if you've made a million dollars and that's your gain, then under the CGT method and you've held it for more than a year, then you're only going to be taxed on half of the gains.
00:25:06.799 --> 00:25:09.359
So you'll be taxed on$500,000.
00:25:10.160 --> 00:25:10.480
Yes.
00:25:10.640 --> 00:25:12.480
So half the gain, that's straight up.
00:25:12.640 --> 00:25:13.279
Yeah.
00:25:14.000 --> 00:25:22.640
But under indexation, instead of halving it, every year it lifts your cost base by inflation.
00:25:22.799 --> 00:25:27.279
So let's say in that particular year the the inflation was 4%.
00:25:27.920 --> 00:25:31.359
Then 4% of a million is 40,000.
00:25:31.920 --> 00:25:32.319
Yes.
00:25:32.480 --> 00:25:35.519
So your cost base goes from 1 million to 1 million and 40,000.
00:25:35.759 --> 00:25:36.079
Yeah.
00:25:36.240 --> 00:25:39.359
So cost base is now$1,040,000.
00:25:40.160 --> 00:25:44.799
So you're going to be taxed on$960,000.
00:25:45.440 --> 00:25:46.880
So you're taxed on all of it?
00:25:47.200 --> 00:25:47.759
Pretty much.
00:25:47.839 --> 00:25:47.920
Yeah.
00:25:48.160 --> 00:25:48.720
For that year.
00:25:49.039 --> 00:25:49.279
Yeah.
00:25:49.440 --> 00:25:52.559
So$500,000 versus$960,000.
00:25:52.720 --> 00:25:53.839
That's nearly double Anna.
00:25:54.079 --> 00:25:54.559
Yeah.
00:25:54.799 --> 00:25:56.720
So it doesn't make sense to flip anymore.
00:25:57.039 --> 00:25:57.440
100%.
00:25:57.759 --> 00:26:00.319
And obviously, neither of us is a tax agent.
00:26:00.640 --> 00:26:06.559
So if the if the listeners want to get more clarity around it, they should just talk to their accountants and run their actual numbers.
00:26:06.880 --> 00:26:08.880
I think the accountants are confused too.
00:26:08.960 --> 00:26:10.799
But yes, talk to your accountants.
00:26:11.839 --> 00:26:28.160
So you can see now why you'll hear people talking about um under the indexation method, people are going to hold on to their properties for longer because the numbers only become advantageous if you've held on to an asset for 10 years or more.
00:26:29.759 --> 00:26:39.680
Because once you do the math on indexation over 10 years, then the numbers may be somewhat superior to the CGT discount.
00:26:39.920 --> 00:26:40.720
It's complicated.
00:26:40.880 --> 00:26:43.359
I think even the accountants are saying it's complicated.
00:26:43.519 --> 00:26:45.359
I'm not quite sure how to calculate this.
00:26:45.440 --> 00:26:46.960
We'll have to get our heads around it.
00:26:47.119 --> 00:26:47.519
Correct.
00:26:47.839 --> 00:26:48.480
But it's not easy.
00:26:49.519 --> 00:26:51.680
A proposal be a proposal has been made.
00:26:52.720 --> 00:26:55.279
There's every chance of it being legislated.
00:26:55.359 --> 00:26:59.839
And I think we should make it very clear to the audience that this is not legislated yet, right?
00:27:00.000 --> 00:27:04.079
Even though my claude this morning said that it's legislated, but it's not.
00:27:04.240 --> 00:27:09.920
But uh it's gone down to the lower house, it still has to go to the upper house for final.
00:27:10.480 --> 00:27:11.440
Uh final approval.
00:27:11.599 --> 00:27:16.640
But yeah, I mean, it's it seems like, and the accountants are all thinking that it will be legislated.
00:27:16.960 --> 00:27:24.000
Um, funny thing though, I actually had a customer recently where they were talking to um a bar's advocate.
00:27:24.400 --> 00:27:30.240
And this bar's advocate had said, um, no, no, no, look, these things are not going to be legislated.
00:27:30.400 --> 00:27:34.799
Nah, let's just assume that this is going to be the old rules only, and then we'll just sort of go ahead.
00:27:34.960 --> 00:27:37.200
So there's a lot of that happening as well.
00:27:37.279 --> 00:27:43.039
And it's very important for the audience to understand that please do not make assumptions in that way.
00:27:43.200 --> 00:27:53.119
And it's very, very important that you actually sort of, you know, get a professional advice from a reputable accountant uh rather than listening to anyone that that thinks that they're no better than government.
00:27:53.440 --> 00:27:55.839
That's actually a really interesting point.
00:27:56.000 --> 00:27:57.359
The budget's been announced.
00:27:57.519 --> 00:28:03.200
I had assumed that everyone is acting like this is legislated when it's not.
00:28:03.440 --> 00:28:12.079
And here you're telling me that someone else is saying, actually, it's not legislated, it's never gonna be happened, it's never gonna happen, act like it will never happen.
00:28:12.319 --> 00:28:14.000
It's speculation in any case.
00:28:14.240 --> 00:28:14.559
I know.
00:28:14.880 --> 00:28:19.440
Um so we're all acting as if this has passed, it hasn't as yet.
00:28:19.599 --> 00:28:19.920
Yeah.
00:28:20.319 --> 00:28:26.640
Um so so when it comes to restructuring, I think everyone's holding on tight.
00:28:26.799 --> 00:28:30.559
Uh we've got a we've got time to restructure anyway.
00:28:30.799 --> 00:28:31.039
We do.
00:28:31.359 --> 00:28:36.640
But it's more the uncertainty that it's caused with new structures.
00:28:36.799 --> 00:28:46.319
If I'm buying a new property under which structure or which entity am I going to buy it under, I think that's where the gambling or speculation is coming in, to your point.
00:28:46.480 --> 00:28:46.640
Yeah.
00:28:46.880 --> 00:28:59.440
Yeah, and may I also say quickly, Anna, I think like once again, it's reflecting in what the investment property purchasing, uh, what this is doing the investment property purchasing right now, and what this is doing the investment property lending at the moment.
00:28:59.839 --> 00:29:05.039
But I must also say a lot of the customers that we are seeing at the moment are having a bit of a shift in paradigm.
00:29:05.200 --> 00:29:15.119
And what they're actually thinking now is if they were going to look at buying, buying, let's say, one or two other investment properties, they're now sort of changing their mentality a little bit.
00:29:15.200 --> 00:29:19.759
And they're thinking, you know what, why don't we actually upgrade in this environment?
00:29:20.000 --> 00:29:23.759
Because the auction clearance rate clearance rates are the lowest at the moment.
00:29:23.920 --> 00:29:29.119
Um, you know, in in Melbourne, we've actually seen 40% uh drop in some of the clearance rates.
00:29:29.359 --> 00:29:32.480
Clearance rates to be to be 40% in some weeks, sometimes even lower.
00:29:32.799 --> 00:29:33.519
What was it before?
00:29:33.759 --> 00:29:47.920
Uh oh, I mean, like in a normal market, if we're looking at like 65, 70% uh clearance rates, but uh but we're seeing the lowest clearance rates, which actually means, although the stock is at minimum level as well, but whatever is out there is quite undervalued.
00:29:48.319 --> 00:29:48.480
Right?
00:29:48.559 --> 00:29:51.039
So we're we're seeing a buyers market.
00:29:51.119 --> 00:30:14.079
So we actually're actually seeing a lot of our clients that are living in, let's say, for example, a$2 million house uh and they they've they've got a growing family and they don't like the area where they're living right now, they want to be able to go out and buy a$2.5 million house, sometimes even$3 million house, because they know that right now is the time for them to be able to grab the land at the lowest square square meter way.
00:30:14.480 --> 00:30:14.880
Yeah, right.
00:30:14.960 --> 00:30:15.119
Okay.
00:30:15.440 --> 00:30:16.960
So that's what's happening on the ground.
00:30:17.200 --> 00:30:18.160
That's what's happening on the ground.
00:30:18.400 --> 00:30:35.839
So we're we're actually serving a lot of the clients that are buying, that are upgrading, that are looking to sort of, you know, go from uh a smaller property to a slightly larger property and so on and so forth in a better area rather than having seeing a lot of the investment property activity.
00:30:36.079 --> 00:30:40.079
So these are the ripple effects that you're actually seeing from what's some of what's being announced in the budget.
00:30:40.319 --> 00:30:40.559
Yeah.
00:30:40.720 --> 00:30:42.799
But I'm going to digress on that point too.
00:30:42.960 --> 00:30:52.240
Not only are people um buying land and upgrading their home as a result, um, but also the RESI strategy has changed.
00:30:52.319 --> 00:30:54.000
But I'll save that for another podcast.
00:30:54.240 --> 00:30:54.799
Yeah, for sure.
00:30:54.880 --> 00:30:55.039
Yeah.
00:30:55.200 --> 00:30:56.240
For sure, that sounds good.
00:30:56.480 --> 00:31:10.880
So the fourth change shoots, which is, in my opinion, the most important and impactful change and not a positive impact in any way, is the changes to the discretionary or family trust.
00:31:11.200 --> 00:31:15.039
Okay, so there are two changes on there.
00:31:15.440 --> 00:31:26.400
Um firstly, they are now putting a 30% tax at the trust level that that never used to exist before.
00:31:26.559 --> 00:31:28.960
So 30% on the trust.
00:31:29.279 --> 00:31:46.160
And then when the money is distributed um to say a bucket company or to an individual, then the bucket company or the individual need to pay their tax notional tax rate on top of that 30%.
00:31:46.640 --> 00:31:51.440
Now, if it's a company and it's already at 30%, then it's 30% that stays unchanged.
00:31:51.519 --> 00:31:56.240
But if the individual's on 47%, then they pay their top up of 17%.
00:31:57.119 --> 00:32:08.079
Now, in the past, if there was a beneficiary that was under the 30% tax rate, let's say I wanted to distribute it to my 18-year-old children who are on a 15% tax rate.
00:32:08.240 --> 00:32:19.279
If the trust had already paid 30%, then you think that you'd be able to pass that on and maybe get 15% uh of the tax back, but that is not the case.
00:32:19.440 --> 00:32:25.599
And so if I was distributing it to say Lachlan, who's at 15%, then he'd only be taxed at 15%.
00:32:26.480 --> 00:32:38.079
Now it'll be, or at a company level, if the company was was um taxed at 30% and it went to a shareholder at 15%, then you get a 15% credit.
00:32:38.160 --> 00:32:38.319
Yeah.
00:32:38.480 --> 00:32:44.160
But in this case, under a discretionary trust, what they're proposing is the trust has paid the 30%.
00:32:44.720 --> 00:32:52.880
If I distribute it to a beneficiary at 15%, then tough nut, that 30% is your new tax rate.
00:32:53.599 --> 00:32:53.839
Yeah.
00:32:54.000 --> 00:33:03.839
So it's now become a minimum that if you buy an asset under a discretionary trust, then you know that you're going to pay a minimum of 30%.
00:33:04.880 --> 00:33:09.440
But here's the kicker one could always argue, well, why not buy it under a company?
00:33:09.519 --> 00:33:15.279
And we'll go on to talk about the alternative structures, because that's at 30% as well.
00:33:15.839 --> 00:33:27.839
Well, the discretionary trust currently has got the capital gains tax discount applied to it if you were to sell that asset and have held onto it for more than 12 months.
00:33:28.079 --> 00:33:30.480
Well, they're removing that as well.
00:33:31.119 --> 00:33:37.680
So now there's very little benefit in holding anything under a discretionary trust.
00:33:38.079 --> 00:33:38.319
Correct.
00:33:38.400 --> 00:33:38.559
Yes.
00:33:39.200 --> 00:33:47.200
So from the borrowing perspective as well, Anna, what we're actually seeing also is the banks have actually changed the goalposts around how they um lend to corporate.
00:33:47.519 --> 00:33:48.400
How or how much?
00:33:48.640 --> 00:33:50.319
Um how and how much as well.
00:33:50.400 --> 00:33:50.960
They're both.
00:33:51.039 --> 00:33:54.960
So the policy as well as the, and obviously LVR is a part of the policy.
00:33:55.039 --> 00:33:55.440
Yeah.
00:33:55.599 --> 00:33:58.720
Um, how and how much they actually lend to the trusts.
00:33:58.960 --> 00:34:02.960
So, you know, all the major banks have got their own set of rules they want to play by.
00:34:03.119 --> 00:34:10.480
When a customer approaches them and says they've actually bought a pro bought a property under a uh discretionary trust uh or a corporate trustee.
00:34:10.960 --> 00:34:13.679
So not all banks are actually playing in that field anymore.
00:34:13.760 --> 00:34:19.760
And it's becoming harder and harder for the brokers to be able to find funding solutions for the customers that are buying under discretionary trust.
00:34:20.000 --> 00:34:30.239
So it's not just the government that's actually making it making it hard for their consumers to buy under corporate trust slash corporate trustee, um, but it's also the banks as well.
00:34:30.400 --> 00:34:38.079
So overall, it's not looking very good for the property purchases being done under a non-individual structure per se.
00:34:38.400 --> 00:34:38.719
Okay.
00:34:39.039 --> 00:34:39.760
Interesting.
00:34:40.159 --> 00:34:40.639
Interesting.
00:34:40.880 --> 00:34:41.199
Okay.
00:34:41.440 --> 00:34:43.760
So what options are left?
00:34:43.920 --> 00:34:50.880
That's what my peers and I have been discussing back in our clinics uh or at home.
00:34:51.119 --> 00:34:58.239
A couple of concerns now, which is what do we do with our assets under our current structures?
00:34:58.400 --> 00:34:58.639
Yeah.
00:34:58.960 --> 00:35:00.880
Do we restructure?
00:35:01.119 --> 00:35:08.000
And for me personally, I've spoken to my accountants about this, and we're just going to sit tight because we've got time.
00:35:08.719 --> 00:35:19.280
Um, we've got till the 1st of July 2027 uh to restructure without any capital gains tax implications because restructuring means a sale.
00:35:19.440 --> 00:35:47.519
So for the doctors or my children listening, uh, if we change the ownership of, let's say, um, of a house that's that was owned by Anafam Family Trust under a corporate trustee, and now it's going to be changed into my personal name or into a company structure, then that's effectively a sale of an asset from one owner or one entity to another owner or another entity.
00:35:47.679 --> 00:36:00.239
And the government's saying there will be a rollover provisions where you're going to be given a timeline to do that without us um uh charging you any capital gains tax.
00:36:00.480 --> 00:36:01.039
Yes.
00:36:01.599 --> 00:36:19.599
The caveat to that is that if it's a property, and I'm property heavy, if it's a property that I'm rolling over, there may be land tax implications in the sale, and that's at the state government level, and we don't know what the state government will do in that instance.
00:36:19.920 --> 00:36:20.159
Correct.
00:36:20.239 --> 00:36:21.599
I mean, I'm in Victoria right now.
00:36:21.679 --> 00:36:24.559
I don't I don't see the land tax where it's at right now.
00:36:24.639 --> 00:36:28.400
I don't see the land tax changing a lot for the next 10 years anyway.
00:36:28.559 --> 00:36:40.239
So obviously we were the most locked state in uh in the in the world during COVID, and we've we've got a fair amount of debt that the kind that the government is obviously trying to you know sort of recoup from the land tax side of things.
00:36:40.400 --> 00:36:42.400
So it'll be very interesting to see what happens.
00:36:42.719 --> 00:36:43.039
Yeah.
00:36:43.199 --> 00:36:52.719
So I'm gonna sit tight uh and watch this space for a little bit longer before I restructure any existing um assets.
00:36:53.119 --> 00:36:59.199
So that's one uh point of contention or perplexity.
00:36:59.519 --> 00:37:11.119
And then the second thing is well, if I am going to acquire or buy new assets, under which entity will I buy it under?
00:37:11.440 --> 00:37:23.599
And the options that's left would be to buy it under my personal name, to buy it under a company structure, or to buy it under a unit trust.
00:37:24.239 --> 00:37:32.639
So I've had to go and kind of study what the entry, exit, and holding costs would be under each one.
00:37:33.360 --> 00:37:43.920
Uh I never understood the company structure and I had zero idea about unit trust up until I studied it very recently.
00:37:44.000 --> 00:37:44.079
Yes.
00:37:44.239 --> 00:37:59.039
Uh and I've landed on the fact that I would roll over my big businesses where I have partners into a unit trust if I don't already have one.
00:37:59.280 --> 00:38:01.039
So that's a potential thinking.
00:38:01.280 --> 00:38:08.880
And the reason for that is that a unit trust still retains its 50% capital gains tax discount.
00:38:09.119 --> 00:38:26.960
So if I have, so in my businesses, if I am going to sell more shares, you know, um, because currently, you know, I own 100% in some of them and a less percent in others, but I am still a major shareholder in most of them.
00:38:27.199 --> 00:38:36.400
If I'm going to sell off more shares, then I'd like to receive a capital gains tax discount on any profits that I've made.
00:38:36.559 --> 00:38:43.599
So that's where a unit trust seems um uh attractive for me in that situation.
00:38:43.920 --> 00:38:58.480
The one thing that makes it not attractive would be the fact that the beneficiaries and the percentage ownership of each beneficiary has to be fixed year in, year out.
00:38:58.639 --> 00:39:00.880
There's no flexibility like a discretionary trust.
00:39:01.039 --> 00:39:10.079
So we said before how a discretionary trust, you can change the percentage of how much distribution you want to give to each person or each entity year in, year out.
00:39:10.559 --> 00:39:12.880
Well, under a unit trust, that's fixed.
00:39:13.119 --> 00:39:23.519
So if I've decided that Ana FAM only gets 50% under that unit trust, then you're only entitled to 50% of distribution goes.
00:39:23.840 --> 00:39:26.000
Yes, I can't change that percentage year in, year out.
00:39:26.239 --> 00:39:30.960
And that's where partnerships and syndicate holdings, I think the unit trust makes sense.
00:39:31.280 --> 00:39:55.840
Yeah, and may I say actually, like, I mean, even prior to this coming in, Anna, a lot of the customers that I serve, which was sort of more institutional level, um, they are actually already operating their unit trust structures because what they will have is the structure that they will sort of, you know, keep in place is there'll be there'll be a unit trust, and then there'll be like different family trusts of uh different partners that are actually sort of part of that part of that structure.
00:39:56.000 --> 00:40:14.559
So like Anafam family trust would be, well, the unit uh unit holders, and depending on what uh what units you negotiate, uh in the in the board meeting or whatever, in the constitutional unit trust, and then someone else, for example, Schulmbasker family trust would actually have a different uh set of unit holding and so on and so forth.
00:40:14.639 --> 00:40:18.159
That that's that's a very sort of common structure that's also being utilized right now as well.
00:40:18.480 --> 00:40:25.119
Um especially when you start to give out shares in your business to other um partners.
00:40:25.679 --> 00:40:26.800
Yeah, yeah.
00:40:27.039 --> 00:40:31.840
So so that's the unit trust um pathway.
00:40:32.000 --> 00:40:52.159
And then the new darling of tax structures now seems to be the company PTY L2D uh tax structure, where um, you know, one would have a holding company which would loan money to an investing company, which would then use those funds to purchase property shares, etc.
00:40:52.400 --> 00:40:52.719
etc.
00:40:53.360 --> 00:40:56.079
So that's where we're at.
00:40:56.239 --> 00:41:08.639
Certainly, um, my son is almost 20 years old, Shuberm, and I've had to go through this exercise exercise mentally because Lochlan has recently come to me to say, you know, Mum, I've got a bit of savings.
00:41:08.800 --> 00:41:11.280
Um, I'd like to buy shares.
00:41:11.840 --> 00:41:13.039
What should I do?
00:41:13.199 --> 00:41:19.920
And I said, can you hold on tight while I have a chat to our accountant about what's best?
00:41:20.079 --> 00:41:25.679
Um, and I've landed on a company structure for him rather than his personal name.
00:41:25.920 --> 00:41:32.719
Um and I've decided to do that because I'm thinking long-term for him.
00:41:32.800 --> 00:41:53.280
Yeah, and I'd like him to invest under a company structure which is kind of capped at 30% tax rate, assuming it's a trading, um non-trading entity uh only, um, and assuming that over time his income trajectory should put him in in the 47% tax bracket and not the 30%.
00:41:53.599 --> 00:41:54.400
So that's number one.
00:41:54.559 --> 00:41:57.760
And number two, I want that asset protection for him.
00:41:58.079 --> 00:42:06.800
Um, so for that reason, um I've structured him or I've put I've advised him to buy his shares under a company structure.
00:42:06.960 --> 00:42:08.480
And he loves the name that we came up with.
00:42:08.639 --> 00:42:09.119
Oh, what was that?
00:42:09.280 --> 00:42:11.360
Lucklinho investing co.
00:42:12.960 --> 00:42:14.000
Did you like that, Ryan?
00:42:15.119 --> 00:42:16.000
That's what I said.
00:42:16.159 --> 00:42:21.519
Um, yes, so so that's the landscape that we're in with the current changes.
00:42:21.920 --> 00:42:31.679
I think I think what we're sort of, you know, summarizing this as is that at the end of the day, gone are the days when you just rely on your accountant telling you what to do.
00:42:31.840 --> 00:42:37.440
I think it's a time that if you are serious about investing, you need to understand your tax structures as well.
00:42:37.679 --> 00:42:48.159
If you don't understand tax structures, at the end of the day, you may be actually working very, very hard, making good money, uh, putting that towards your investments, but those investments are not leading you anywhere.
00:42:48.480 --> 00:42:59.679
Uh, because come the tax time, a lot of that will be taken away by the government, and uh and and you will be left with you know minimal profits when the whole purpose of investing is to make profits.
00:42:59.920 --> 00:43:08.400
Well, I'm gonna take it one step further, and I may sound a bit controversial when I say this, but my peers are intelligent human beings, right?
00:43:08.880 --> 00:43:13.760
It it that academically they're very good with facts.
00:43:14.159 --> 00:43:25.199
And once they're educated about something, I would envision that they ought to be able to hold a nice robust debate with their advisors, i.e.
00:43:25.360 --> 00:43:28.000
their accountants, about tax structures.
00:43:28.960 --> 00:43:38.800
Because accountants are humans as well, and their interpretation and understanding of the changes may vary from individual to individual.
00:43:38.960 --> 00:43:48.559
And how they believe things ought to be structured would vary from individual to individual, even though the legislation and the document is exactly the same.
00:43:49.119 --> 00:43:59.760
So I really highly encourage my peers to be educated so that they can have robust discussions and challenge their advisors and just have a really good understanding.
00:43:59.920 --> 00:44:04.960
I mean, we give our patients informed consent and allow them to make the decision.
00:44:05.119 --> 00:44:17.360
I encourage my peers to do the same, hold the same robust conversations with their advisors, be well informed and make the decision and have control over those decisions.
00:44:17.760 --> 00:44:18.159
For sure.
00:44:18.320 --> 00:44:18.800
I agree.
00:44:18.960 --> 00:44:20.639
I I I totally agree with that.
00:44:20.800 --> 00:44:23.679
And I think that sort of sums up the whole episode really nicely.
00:44:24.320 --> 00:44:29.679
We've discussed about all the budget announcements that have sort of happened out of a good amount of detail.
00:44:29.760 --> 00:44:32.559
And I hope that we've actually added some value for our uh listeners.
00:44:32.800 --> 00:44:33.840
Yeah, hope so too.
00:44:33.920 --> 00:44:50.159
So four changes negative gearing, no limited recourse borrowing for Resi in the self-management fund, capital gains tax discount is being replaced by indexation, discretionary trust is no longer the darling, but company tax structures seem to be.
00:44:50.559 --> 00:44:53.039
And that's the end of podcast two.
00:44:53.440 --> 00:44:54.239
How good is that, Anna?
00:44:54.320 --> 00:44:54.880
Hi, five.
00:44:57.519 --> 00:44:58.400
See you next time.
00:44:58.639 --> 00:45:00.079
Looking forward to see you soon.
00:00:00.160 --> 00:00:06.160
The flow and effect of these changes, even though they're not legislated, the banks have already changed their calculators.
00:00:06.320 --> 00:00:10.400
On investment property lending, right now it's around 20-25% decrease.
00:00:10.560 --> 00:00:19.199
So if a customer was able to borrow a million bucks prior to these changes, now that customer can only borrow 800,000 or 750.
00:00:19.519 --> 00:00:20.160
That's massive.
00:00:20.320 --> 00:00:32.240
On the 12th of May 2026, the federal budget changed four things that affect how doctors buy property and how we structure and hold our investments.
00:00:32.479 --> 00:00:41.359
Investment lending has dropped from 19% growth rate in March 2026 down to 2.8% in August.
00:00:41.600 --> 00:00:47.039
So we're going to break down all four changes the way I'd explain it to my own kids.
00:00:47.119 --> 00:00:56.719
And the changes involve negative gearing, self-manageable fund lending, capital gains tax discount being replaced by indexation.
00:00:56.960 --> 00:01:03.039
The last one, the changes to family trust, double taxation and loss of CGT discount.
00:01:03.119 --> 00:01:04.000
These are big changes.
00:01:04.239 --> 00:01:08.959
Gone are the days when you just rely on your accountant telling you what to do.
00:01:09.120 --> 00:01:14.400
I think it's a time that if you are serious about investing, you need to understand your tax structures as well.
00:01:14.560 --> 00:01:23.920
If you don't understand tax structures at the end of the day, you may be actually working very, very hard, making good money, putting that towards your investments, but those investments are not leading you anywhere.
00:01:24.159 --> 00:01:26.159
This is Doctors Helping Doctors Grow.
00:01:26.560 --> 00:01:27.599
Let's get into it now.
00:01:29.120 --> 00:01:31.519
Okay, so we're back again, Shoes.
00:01:31.760 --> 00:01:31.920
Yes.
00:01:32.159 --> 00:01:33.200
Podcast number two.
00:01:33.359 --> 00:01:33.519
Yeah.
00:01:33.760 --> 00:01:36.400
We're in a strange environment at the moment.
00:01:36.560 --> 00:01:36.799
Yes.
00:01:37.040 --> 00:01:53.519
12th of May 2026 budget was announced, and that has given the whole nation reason to pause, reset, and re-educate ourselves about tax structures, negative gearing, super funds.
00:01:53.840 --> 00:01:54.079
Yes.
00:01:54.319 --> 00:01:56.159
Big, big changes that have actually come in.
00:01:56.480 --> 00:02:02.480
The Labor government has actually sort of shaken the industry quite a bit, uh, the economy quite a bit.
00:02:02.879 --> 00:02:05.840
Let's talk about those four major headlines.
00:02:06.159 --> 00:02:12.639
Obviously, I'm not an accountant, so everything is as per my layperson's understanding only.
00:02:12.960 --> 00:02:19.599
And if we can, can we draw on you uh on your experience of what you're seeing on the ground as a mortgage broker?
00:02:19.759 --> 00:02:20.080
Yes.
00:02:20.400 --> 00:02:25.680
And um how these changes have affected our borrowing capacity.
00:02:25.919 --> 00:02:26.400
Yeah, for sure.
00:02:26.479 --> 00:02:28.639
I mean, this kick disclamor is actually for both of us.
00:02:28.719 --> 00:02:36.240
Um, this is not a personal advice, this is just a general discussion of uh what we are seeing out there in the market and what our understanding of budget is.
00:02:36.400 --> 00:02:43.039
So it could be it could be 99% correct, it could be 70% correct, but um it could be absolutely wrong.
00:02:43.280 --> 00:02:44.479
And it's just an opinion for you.
00:02:44.719 --> 00:02:47.599
I think we've done a lot of research to make sure it's not absolutely wrong.
00:02:47.759 --> 00:02:58.000
But uh but yeah, but uh let's let's let's make uh let's make a dent at it and also let's try and sort of you know make it uh um broken down in such lemon terms that everyone can understand it.
00:02:58.159 --> 00:02:58.319
Yes.
00:02:58.479 --> 00:02:59.520
So let's let's talk about that.
00:02:59.680 --> 00:03:02.719
So let's make a make a conscious effort of of doing that now.
00:03:03.039 --> 00:03:03.840
All right, okay.
00:03:04.000 --> 00:03:07.439
So remembering the rule of I need my children to understand this.
00:03:07.680 --> 00:03:08.879
So all right, let's let's see.
00:03:09.120 --> 00:03:11.039
Laughlin and Million, let's see if you understand this.
00:03:11.599 --> 00:03:12.240
Let's go, let's go.
00:03:12.800 --> 00:03:13.199
All right.
00:03:13.360 --> 00:03:14.400
There are four changes.
00:03:14.560 --> 00:03:21.280
The first change is they are scrapping negative gearing on pre-existing properties.
00:03:21.599 --> 00:03:22.240
Massive one, yeah.
00:03:22.400 --> 00:03:25.360
But they're maintaining it for new drillings.
00:03:25.680 --> 00:03:26.080
Correct.
00:03:26.319 --> 00:03:33.360
Okay, so what impact have you seen on a lending level because of that?
00:03:33.840 --> 00:03:35.199
Massive, Anna, massive.
00:03:35.280 --> 00:03:42.479
So I'll tell you a little bit, uh, I'll give you the insight on how the calculations were worked earlier and how the calculations are being worked now.
00:03:43.039 --> 00:03:56.159
So anytime we actually do an investment property loan for a customer where the customer was actually buying an investment property, um, we were able to actually add back a negative gearing component.
00:03:56.240 --> 00:04:03.360
So all the bank calculators will actually have a negative gearing component that would actually just add back the interest that the customer was going to pay.
00:04:03.520 --> 00:04:07.919
So the customer was going to pay, let's say,$60,000 interest on a million dollar loan.
00:04:08.000 --> 00:04:08.159
Yes.
00:04:08.319 --> 00:04:14.560
That$60,000 will be actually added back to the servicing, which made the calculation for which made the income look higher.
00:04:14.800 --> 00:04:15.120
Of course.
00:04:15.199 --> 00:04:15.439
Yes.
00:04:15.520 --> 00:04:17.600
Uh not look higher, it made the income go higher.
00:04:17.839 --> 00:04:18.480
Go higher, yes.
00:04:18.720 --> 00:04:23.519
And because of the income going higher, it actually um helped the customer to borrow more.
00:04:23.680 --> 00:04:24.079
Yes.
00:04:24.399 --> 00:04:28.399
So um, once again, only for the investment property purchases.
00:04:28.560 --> 00:04:32.800
Now, a lot of doctors actually go out and they actually get investment property loans.
00:04:33.040 --> 00:04:37.439
Or they're in the term as investment property loans, but they're actually investment loans only.
00:04:37.519 --> 00:04:42.639
These could be for shares, these could be for any other investment, for example.
00:04:42.800 --> 00:04:46.800
Um, the negative gearing would never be added back for those kind of investments.
00:04:46.959 --> 00:04:50.959
The negative gearing would only be added back for the investment property purchases.
00:04:51.120 --> 00:04:51.439
Yeah.
00:04:51.680 --> 00:04:54.959
Which then meant that the borrowing capacity was lifted.
00:04:55.040 --> 00:04:55.279
Yes.
00:04:55.439 --> 00:05:00.079
And the customer will be actually go would be able to go out and buy a property that they actually wanted.
00:05:00.240 --> 00:05:02.959
Because they were going to get the negative gearing benefit of that as well, right?
00:05:03.120 --> 00:05:09.519
Now, the flow on effect of these changes, even though they're not legislated, the banks have already changed their calculators.
00:05:09.600 --> 00:05:09.759
Okay.
00:05:10.000 --> 00:05:17.199
And the flow-on effect of that, Anna, is that on investment property lending, right now it's around 20-25% decrease.
00:05:17.439 --> 00:05:26.560
So if a customer was able to borrow a million bucks prior to these changes, now that customer can only borrow 800,000 or 750,000.
00:05:27.120 --> 00:05:28.319
So that's massive.
00:05:28.560 --> 00:05:29.439
That's a massive change.
00:05:29.519 --> 00:05:30.879
That's a massive, massive change.
00:05:31.040 --> 00:05:37.360
So that has obviously now changed the budget range for a customer to go out and buy the investment property.
00:05:37.519 --> 00:05:42.879
You know, if the customer was able to afford$1.2 million property earlier, now they can only afford a million bucks.
00:05:43.120 --> 00:05:44.639
And that changes the market.
00:05:44.879 --> 00:05:53.199
If the customer was able to aim for X suburb, now they have to think of another suburb for them to be able to buy investment properties.
00:05:53.360 --> 00:05:57.279
But you asked me about the flow, the lending effects on the investment properties.
00:05:57.519 --> 00:06:14.079
Um, since the budget has been announced and the proposal proposals proposals have been made, what we are saying as brokers is that the investment property borrowing activity has gone down massively.
00:06:14.399 --> 00:06:21.120
As seeing people are no longer in the market to look for residential properties, established residential properties.
00:06:21.439 --> 00:06:21.759
Correct.
00:06:22.160 --> 00:06:34.879
So if I'm looking after, let's say 50 applications right now, and that's a that's a stat that we're talking about, I can count on one hand as to how many of those are investment property borrowings for residential property.
00:06:35.199 --> 00:06:38.480
So at the moment, actually, we're only really working with three or four.
00:06:38.720 --> 00:06:40.319
Um that's not much at all.
00:06:40.560 --> 00:06:41.360
That's not much at all.
00:06:41.600 --> 00:06:54.079
But even these investors, they're actually going out buying these investment properties, thinking that they're actually looking at a long-term view because they know that these changes may not actually stay on.
00:06:54.160 --> 00:06:58.879
And when the government changes, these changes will then be um taken away.
00:06:59.040 --> 00:06:59.199
Yes.
00:06:59.439 --> 00:07:07.519
Which means that they'll back on the um back on the negative gearing uh rules and hence why they'll be able to, you know, sort of clan negative gearing and this will be good.
00:07:07.600 --> 00:07:18.480
So these investors are being a bit more ambitious in the sense that they're they are thinking that hey, whenever when everyone is quiet, when everyone is fearful, that's the time we actually strike the hammer and we go hard at it.
00:07:18.560 --> 00:07:18.879
Yes.
00:07:19.040 --> 00:07:28.800
Um, but they're not buying they're not buying um fully marrying the rules that are being proposed right now.
00:07:29.040 --> 00:07:31.199
Okay, so there's two things you're saying there.
00:07:31.360 --> 00:07:42.560
Number one, there's been a huge decrease in um investor activity in established residential purchases and therefore lending.
00:07:42.800 --> 00:07:57.040
And number two, those who are the small handful who continue to buy these established properties are gambling on the fact that uh the labors are going to be kicked out, liberals will come in, and liberals will likely scrap these new changes.
00:07:57.199 --> 00:08:19.839
And this is going to be consistent for the rest of the four points that we're going to talk about, because that risk applies to all four changes that we can plan and restructure or structure our new investments in a new way to suit the current budget, which may or may not be retained if a new government comes in.
00:08:20.160 --> 00:08:28.560
The banks have reported that 90% there's a growth rate of around 19% in March of this year in investment property borrowing uh application.
00:08:28.959 --> 00:08:30.639
19% in March.
00:08:30.879 --> 00:08:31.199
In March.
00:08:31.519 --> 00:08:32.240
So pre-budget.
00:08:32.639 --> 00:08:33.200
Pre-budget.
00:08:34.000 --> 00:08:37.600
But in August, they've just sort of released the uh growth rate.
00:08:37.840 --> 00:08:39.919
That's that's gone down to 2.8%.
00:08:40.720 --> 00:08:44.320
So it's not just opinions or what you and I are talking about today.
00:08:44.480 --> 00:08:47.279
These are these these are all data-driven figures.
00:08:47.919 --> 00:09:02.960
And and it's quite unfortunate for like a lot of buyers' advocates, for example, who are actually just looking at helping customers, you know, um buy investment properties so they can actually grow their investment property portfolios, you know, a lot of that has actually sort of been impacted.
00:09:03.039 --> 00:09:07.440
Uh, and banks are also at the moment sort of crying for the fact that, hey, no one's borrowing.
00:09:08.399 --> 00:09:10.960
We're all feeling anxious, we're all feeling uncertain.
00:09:11.200 --> 00:09:11.519
Correct.
00:09:11.759 --> 00:09:15.120
And so everyone is sitting tight and watching this space.
00:09:15.440 --> 00:09:28.480
I must also say though, like um, I think historically um this was done back in I think 80s, 87 or 80, 85 in Australia, where the negative gearing was abolished, um, and it was actually brought back on.
00:09:28.639 --> 00:09:28.879
Yes.
00:09:29.120 --> 00:09:32.559
Um uh and uh and that was after two years.
00:09:32.799 --> 00:09:39.200
A similar thing had also happened in New Zealand as well in 2021, and it was back brought back on 2023.
00:09:39.279 --> 00:09:43.519
So historically speaking, uh there's a very good chance this could happen.
00:09:43.679 --> 00:09:56.080
But at the same time, one good thing that does come out of this, Anna, is that the construction rec construction um borrowing and the construction um sort of economy um has seen a record um high.
00:09:56.320 --> 00:10:01.840
Yeah, so it's gone up, but is it has it gone up in equivalent to the drop in resi activity?
00:10:02.240 --> 00:10:08.879
Hard for me to say from the numbers, but uh but what we actually sort of talk about is that the the construction lending is definitely seeing a significant.
00:10:09.759 --> 00:10:09.919
Yes.
00:10:10.159 --> 00:10:22.080
But then once again, a lot of people are actually saying that okay, yeah, construction's seeing an increase, but you know, as Australians, um, as the property investors, 70% of the market actually likes land, right?
00:10:22.159 --> 00:10:29.519
And when we're talking about the construction of new dwellings, these construction um projects on new dwellings are not land heavy.
00:10:30.480 --> 00:10:40.000
So if if someone was actually buying 700 square meters for the same price earlier as an established dwelling, now they're buying around 400 square meters for the same price, right?
00:10:40.159 --> 00:10:44.720
Because of new property and they're able to get the negative gearing benefits on it.
00:10:44.799 --> 00:10:44.960
Yeah.
00:10:45.200 --> 00:10:51.200
So that's why, you know, it's it's sort of, you know, um horses for courses really, but as Australians we like land.
00:10:51.360 --> 00:10:51.600
Yes.
00:10:51.840 --> 00:10:56.240
The investors love land because they because with land they can actually do a lot more.
00:10:56.559 --> 00:11:00.240
Um, and you know, they can sort of you know capitalize on the land value.
00:11:00.559 --> 00:11:00.879
Okay.
00:11:01.200 --> 00:11:03.840
So that's the impact of negative gearing.
00:11:04.080 --> 00:11:17.360
I've heard some buyers agencies say on their podcasts, those who do both Resi and commercials say that they've seen their Resi demand drop by 50 to 60 percent.
00:11:17.679 --> 00:11:19.120
Well, that's a big amount, Anna.
00:11:19.360 --> 00:11:20.960
That's that that's basically a business.
00:11:21.279 --> 00:11:21.440
Yes.
00:11:21.600 --> 00:11:27.200
They've seen their commercial arm go up, but their resis have really dropped since the budget announcement.
00:11:27.519 --> 00:11:34.960
That's a that's a that's a massive, massive uh decrease because that could basically wipe out a wipe out a full segment of a business, really.
00:11:35.120 --> 00:11:38.559
I mean, like how how are you supposed to look after the wages and things like that?
00:11:38.720 --> 00:11:48.080
And we've seen like, you know, some of the biggest buyers' advocacies in in Australia that have sort of you know gone insolvent, um, namely dash dot like Atlas property and things like that.
00:11:48.159 --> 00:11:53.279
So it's not a like it's it's it's it's a big shock to the to the to the industry.
00:11:53.440 --> 00:11:56.159
Um and it'd be interesting to see what sort of comes out of it.
00:11:56.320 --> 00:11:56.480
Yeah.
00:11:56.799 --> 00:12:05.440
It just seems like the government is making a lot of decisions without consultation um to the people that are actually making a difference in people's lives.
00:12:05.600 --> 00:12:14.159
And um, and uh, and yeah, it's it's probably one of those that's that's that's being criticized more than uh than what's being applauded.
00:12:14.399 --> 00:12:15.120
Yes, yeah.
00:12:15.519 --> 00:12:26.320
The second change was uh banks are no longer allowed to provide lending for residential properties in the self-managed super fund.
00:12:26.720 --> 00:12:27.039
Correct.
00:12:27.200 --> 00:12:27.360
Yeah.
00:12:27.519 --> 00:12:29.919
So that sales, that that boat's already sailed.
00:12:30.240 --> 00:12:50.720
So um the Labour government introduced this um rule uh that any residential contract signed before 10th of August will still be able to uh be signed as the purchaser being an SMSF, a self-managed super fund under limited recourse borrowing capacity.
00:12:50.879 --> 00:12:57.600
So LRB, LRBC, um uh or LRBA, they call it limited recourse borrowing arrangement.
00:12:57.759 --> 00:13:17.360
Once again, it's it's a a lot of sort of you know middle-aged people when they when they had enough money in their self-managed super funds, they were actually going out to buy investment established properties uh as residue properties that that could be sort of you know part of their self-manager super fund asset pool, um, that's been taken away as well.
00:13:17.440 --> 00:13:19.279
So that's a that's a big blow as well.
00:13:19.440 --> 00:13:31.200
Look, a lot of major banks, or not a lot of, all the major banks had already pulled out of the limited recourse borrowing arrangement in uh during the Royal Commission time in in Melbourne or in Australia, sorry.
00:13:31.519 --> 00:13:48.240
Um however, um this rule being introduced by the government is also a big one because because the major banks had pulled out of the self-managed super fund resilience, there was a lot of sort of non-major banks that actually come in.
00:13:48.320 --> 00:13:53.600
And these non-major banks were really sort of their their source of revenue was this, yeah.
00:13:53.759 --> 00:13:56.240
Uh which is which was, you know, now that's taken away from them.
00:13:57.120 --> 00:13:59.440
So we're gonna look at the collapse of a few.
00:14:00.000 --> 00:14:11.519
I think so, or like at least like many sort of redundancies and many sort of you know um employees losing their roles and things like that in these in these lending in these lending organizations in these banks.
00:14:11.679 --> 00:14:21.519
So it's it's a sad part, but at the same time, you know, it's the government is trying to achieve something, and I think it'll be interesting to see what the next 12 to 18 months bring in terms of data.
00:14:21.759 --> 00:14:35.279
Now, remembering that they're the whole purpose of the government doing this is they're trying to provide more residential properties to be available for first home buyers and and to keep it uh affordable and correct, so more of that.
00:14:35.679 --> 00:14:38.399
More Australians to be able to afford their homes, right?
00:14:38.480 --> 00:14:45.039
Like that that's what their um that's what their um purpose is, which is not achieved so far, uh may I say.
00:14:45.200 --> 00:14:50.480
Uh, but it'd be interesting to see what the government actually is able to achieve in the next 12 to 18 months.
00:14:50.559 --> 00:14:53.679
And I think that would decide the destiny of Labor government.
00:14:53.759 --> 00:14:56.080
Um, and and we'll see how we go.
00:14:56.240 --> 00:15:08.559
Um we should note though that um the LRBA uh or limited recourse borrowing arrangements or self-managed superphone lending uh is completely as it is, as it was earlier for commercial properties.
00:15:08.799 --> 00:15:09.919
Yeah, so that stays the same.
00:15:10.000 --> 00:15:13.200
You can still say you can still borrow for commercial property.
00:15:13.519 --> 00:15:14.480
You can still buy Resi.
00:15:15.039 --> 00:15:16.159
You can still fund it.
00:15:16.240 --> 00:15:18.720
You just can't go to a bank and ask for money for it.
00:15:18.960 --> 00:15:19.840
The banks can't provide it.
00:15:20.399 --> 00:15:34.320
So what this means is that Anna looks at buying a uh floor in a shopping center, uh, for her to be able to run Picton Family Medical Center or Norellan Medical Center, she can still buy that under her self-murder superfund.
00:15:34.559 --> 00:15:41.120
And which is the most uh common way of people using their SMSF uh for commercial property purchases.
00:15:41.279 --> 00:15:51.279
A lot of the businesses that sort of buy the commercial property, commercial properties under their self-merged super fund to be able to rent from that um commercial property.
00:15:51.440 --> 00:16:01.759
So let's say Anna Fam Self-Marned Superfund or Anna Fam Superfund will own a unit uh which will be then converted into a Norellan medical center.
00:16:02.080 --> 00:16:03.360
Norell and medical and skin.
00:16:04.399 --> 00:16:05.759
Norell and medical and skin.
00:16:06.480 --> 00:16:20.559
Um uh so then Ana Fam uh Proprietary Limited, which is a trading entity, will rent the clinic from that uh Solid Medical Fund, which is so which is gonna keep we which will actually stay the same.
00:16:20.720 --> 00:16:26.960
And that's how the that's how the government is sort of you know justifying that keep the commercial property should stay as it is in the submerged fund.
00:16:27.120 --> 00:16:28.480
Yes, they're only touching Brezi.
00:16:28.720 --> 00:16:29.759
Commercial stays the same.
00:16:30.000 --> 00:16:30.240
Yes.
00:16:30.559 --> 00:16:44.399
But there are many benefits of actually buying commercial property in SMSF, I must say, because all these non-bank lenders that I'm referring to that that do self-managed superfund lending, they actually offer 80% loan-to-value ratio on commercial properties.
00:16:44.639 --> 00:16:44.879
80%.
00:16:45.360 --> 00:16:47.600
80% in SMSF.
00:16:47.759 --> 00:16:54.399
Uh, whereas outside of SMSF ecosystem, outside of SMSF environment, it's capped at 65 or 70%.
00:16:55.039 --> 00:16:57.120
Are they some major lenders that's offering 80%?
00:16:58.000 --> 00:17:00.480
No major lender does self-moder superfund lending.
00:17:00.720 --> 00:17:00.799
Okay.
00:17:00.960 --> 00:17:02.399
Um that was that was taken away.
00:17:02.559 --> 00:17:11.599
Or major major lenders withdrew from self-modered superfund lending at the Royal Commission time because major commercial and resi uh period.
00:17:12.000 --> 00:17:17.759
From the exception of NAB, uh who does self-modered super fund, but we're now going to technical terms.
00:17:18.160 --> 00:17:27.359
NAB private is the only major bank that does uh self-modered super fund lending, but that's the criteria is very, very stringent.
00:17:27.599 --> 00:17:31.440
The customer has to have has to be um at a certain level of net worth.
00:17:31.519 --> 00:17:37.039
Uh they should have a certain level of net liquid assets outside and inside the self-managed superfund.
00:17:37.200 --> 00:17:40.079
So if you hit all, if you tick all the boxes, you're allowed to be able to.
00:17:40.480 --> 00:17:41.440
What are those numbers?
00:17:41.599 --> 00:17:42.400
Uh roughly.
00:17:42.960 --> 00:17:51.200
Last time when I checked, I think it's around$20 million net worth uh for a customer to be able to uh qualify for a for a NAB SMSF.
00:17:51.599 --> 00:17:55.200
Why aren't the major lenders interested in lending the self-managed superfund?
00:17:55.519 --> 00:17:56.240
Very good question.
00:17:56.480 --> 00:17:57.599
I I never realized this.
00:17:57.680 --> 00:17:59.519
That's all that's a very good question, Anna.
00:17:59.680 --> 00:18:04.079
But let's go back to when the major banks withdrew from self-managed superfund lending, right?
00:18:04.240 --> 00:18:14.319
So in Royal Commission, there was a few, uh obviously the Royal Commission was set up, you know, in in in around 2013, 14 um year.
00:18:14.559 --> 00:18:22.480
Um to and and the Royal Commission basically said that, hey, anyone that's been impacted by bank wrongdoings, please come and talk to us.
00:18:22.640 --> 00:18:24.799
We're here to hear, we're here to listen to you.
00:18:24.960 --> 00:18:29.359
Um, and then we'll see what we can do from our side to be able to get you the right outcome.
00:18:29.599 --> 00:18:37.920
And a few of the customers actually went back to the bank and there was a lot of noise that was created about the banks not doing the right thing by the self-mother super funds.
00:18:38.000 --> 00:18:45.839
Now, superannuation in general is a very highly compliant ecosystem, right?
00:18:46.240 --> 00:18:54.720
It's made, it's the the purpose of superannuation is for the uh person to be able to have enough money for retirement, right?
00:18:54.799 --> 00:18:57.680
So hence why the rules are very stringent.
00:18:57.759 --> 00:19:04.000
There's only so much that you can do with a self-mounted superfund or any superannuation fund in general.
00:19:04.640 --> 00:19:11.279
So what had happened was the banks had given wrong advice um uh prior to all commission.
00:19:11.440 --> 00:19:16.000
And because of that wrong advice, some of the customers had actually lost their homes.
00:19:16.319 --> 00:19:16.640
Right.
00:19:16.880 --> 00:19:38.480
So, uh, like for example, there was a case where the the banker and the financial planner together had said that, hey, you sell your property and you buy a motel uh and you actually um live in that motel, uh, and you can actually, because this is an investment, because you can run a business out of that, the income generating, you can buy that under your self-management fund.
00:19:39.039 --> 00:19:41.759
But the customer said, We don't have enough money to put the deposit.
00:19:41.920 --> 00:19:47.599
And the banker said, sell your property, sell your principal place of residence, get the deposit, and then actually just buy that motel.
00:19:47.759 --> 00:19:48.720
And then you live in it.
00:19:48.880 --> 00:19:54.400
That provides you a uh place to live in, at the same time brings you a source of income as well.
00:19:55.119 --> 00:20:01.039
But the self-management fund rules are very, very um stringent, very, very, very tight.
00:20:01.359 --> 00:20:06.720
You have to only buy an investment, you cannot use that property to live in.
00:20:06.960 --> 00:20:13.359
Another thing also is there's also um uh now, this is probably where my knowledge may be tested.
00:20:13.440 --> 00:20:17.119
I don't think the self-management fund actually allows you to buy a business.
00:20:17.599 --> 00:20:25.759
But the bank at the time had basically said that something along the lines of the fact that hey, you can buy a business as well as investing property and so on and so forth.
00:20:26.000 --> 00:20:26.240
Right.
00:20:26.480 --> 00:20:54.559
So um, so that was obviously sort of brought to the light, and and because of that, you know, um because of that, the the the complaint was lodged, and and because of that, obviously the the what actually came out of it was that a lot of major banks decided that because of the high high compliance and uh low uh margin on error, uh it's probably a good idea for us to just withdraw from the from the from the lending altogether.
00:20:54.880 --> 00:20:57.359
That's why the major banks sort of just took away from it.
00:20:57.599 --> 00:20:57.759
Okay.
00:20:58.000 --> 00:20:58.640
Simple as that.
00:20:58.880 --> 00:20:59.119
Okay.
00:20:59.440 --> 00:21:04.559
So that was the reason why the major banks sort of withdrew from the um self-managed superfund lending.
00:21:04.720 --> 00:21:16.720
Um and uh and and since then a lot of the non-bank lenders sort of came into the market and they're the ones that sort of created a product for the customers to go out and actually get get money in self-managed super funds.
00:21:16.960 --> 00:21:18.079
I see, I see.
00:21:18.240 --> 00:21:21.200
So we've got only the what's the term you used?
00:21:21.440 --> 00:21:22.240
LRBA.
00:21:22.799 --> 00:21:26.799
So the tertiary, second tier, third tier, the non-banks.
00:21:27.680 --> 00:21:34.400
So the non-bank players, of which there are some that specialize in uh SMSF lending only.
00:21:34.640 --> 00:21:35.039
Correct.
00:21:35.359 --> 00:21:38.319
This has pretty much just wiped out their business model.
00:21:38.960 --> 00:21:44.960
You asked me earlier uh which major bank, if any, is still still um active in this uh field.
00:21:45.119 --> 00:21:47.039
Uh so from my understanding is NAB.
00:21:47.200 --> 00:21:52.160
And the other one that actually also allows for it to a certain degree is Bank of Queensland.
00:21:52.480 --> 00:22:11.599
Not a major bank, but also a very reputable bank who a lot of customers go to, but at the same time, Bank of Queen Design also have a very tight sort of, you know, prerequisites that you have to be able to hit before you can be considered first lines with them.
00:22:11.839 --> 00:22:13.680
And I think that's wise, isn't it?
00:22:13.920 --> 00:22:25.680
Because this is meant to be an individual's safety net or source of income once they're no longer actively working to produce an income.
00:22:26.000 --> 00:22:26.240
100%.
00:22:27.279 --> 00:22:28.799
So cash flow is really important.
00:22:29.119 --> 00:22:31.599
Yeah, the latter third of their life.
00:22:31.920 --> 00:22:32.319
100%.
00:22:32.640 --> 00:22:49.039
And the story that I told you earlier about that customer losing their home is a pretty important one because, you know, this person would have actually sort of bought a property, paid it out, pet it out as much as they have could they could at that time and sold the property.
00:22:49.119 --> 00:22:57.920
But because their employment was was not the same in that stage of their life, they couldn't go out and get another loan to be able to buy another home.
00:22:58.799 --> 00:23:16.319
And, you know, just I think any major bank in Australia or any bank in general or any financial institution in general, one thing that they are very, very, very alert about is that they can never lend irresponsibly to a person.
00:23:16.559 --> 00:23:16.880
Yes.
00:23:17.440 --> 00:23:18.000
To a person.
00:23:18.960 --> 00:23:22.480
If it's a company, the banks actually work with a different set of rules.
00:23:22.720 --> 00:23:23.039
Right.
00:23:23.359 --> 00:23:30.480
But if if it's a person, and if there's an individual that's associated to a loan, the the set of rules are different.
00:23:30.559 --> 00:23:38.799
They're actually governed by this policy called NCCP, which is actually a legal policy, a national credit credit code.
00:23:39.359 --> 00:23:40.799
And that's the that's the reason why.
00:23:41.119 --> 00:23:42.880
So there's greater protection for the individual.
00:23:43.200 --> 00:23:43.440
100%.
00:23:43.759 --> 00:23:43.839
Yeah.
00:23:44.000 --> 00:23:44.559
So any bank.
00:23:44.960 --> 00:23:45.519
Rightfully so.
00:23:45.680 --> 00:23:46.480
Yeah, rightfully so.
00:23:46.960 --> 00:23:52.799
Any financial institution will actually make as many efforts as they can to make sure that they are lending responsibly.
00:23:52.960 --> 00:23:57.519
So there's a there's a there's a term called responsible lending when it comes to these things.
00:23:57.759 --> 00:23:58.160
Yeah.
00:23:58.480 --> 00:23:59.519
Fantastic.
00:23:59.920 --> 00:24:03.759
Um so that's the self-manager fund.
00:24:04.079 --> 00:24:05.759
Self-management fund changes.
00:24:06.160 --> 00:24:18.960
So the third change, Shuberm, is that uh the capital gains tax discount is going to be replaced by what's called the indexation method.
00:24:19.279 --> 00:24:19.759
Yes.
00:24:20.000 --> 00:24:25.680
Now I might talk through this very slowly with you if I can, because I'm still wrapping my head around it.
00:24:26.079 --> 00:24:26.400
For sure.
00:24:26.480 --> 00:24:39.119
And I think that's the reason why this is being condemned, because it's not something that's easy to understand compared to what we had before, which was you buy a property, you hold it for 12 months, you get a 50% discount of the CGT after 12 months.
00:24:39.359 --> 00:24:41.119
But now we're talking indexation.
00:24:41.200 --> 00:24:44.000
So like every year the inflation could be different.
00:24:44.160 --> 00:24:44.400
Yes.
00:24:44.559 --> 00:24:52.720
And depending on how many years you actually own the property, um, you know, you'll be actually taxed on the indexation side.
00:24:52.799 --> 00:24:55.839
Uh, but yeah, you I would love to hear what you understand from it.
00:24:56.160 --> 00:25:06.640
So if you've made a million dollars and that's your gain, then under the CGT method and you've held it for more than a year, then you're only going to be taxed on half of the gains.
00:25:06.799 --> 00:25:09.359
So you'll be taxed on$500,000.
00:25:10.160 --> 00:25:10.480
Yes.
00:25:10.640 --> 00:25:12.480
So half the gain, that's straight up.
00:25:12.640 --> 00:25:13.279
Yeah.
00:25:14.000 --> 00:25:22.640
But under indexation, instead of halving it, every year it lifts your cost base by inflation.
00:25:22.799 --> 00:25:27.279
So let's say in that particular year the the inflation was 4%.
00:25:27.920 --> 00:25:31.359
Then 4% of a million is 40,000.
00:25:31.920 --> 00:25:32.319
Yes.
00:25:32.480 --> 00:25:35.519
So your cost base goes from 1 million to 1 million and 40,000.
00:25:35.759 --> 00:25:36.079
Yeah.
00:25:36.240 --> 00:25:39.359
So cost base is now$1,040,000.
00:25:40.160 --> 00:25:44.799
So you're going to be taxed on$960,000.
00:25:45.440 --> 00:25:46.880
So you're taxed on all of it?
00:25:47.200 --> 00:25:47.759
Pretty much.
00:25:47.839 --> 00:25:47.920
Yeah.
00:25:48.160 --> 00:25:48.720
For that year.
00:25:49.039 --> 00:25:49.279
Yeah.
00:25:49.440 --> 00:25:52.559
So$500,000 versus$960,000.
00:25:52.720 --> 00:25:53.839
That's nearly double Anna.
00:25:54.079 --> 00:25:54.559
Yeah.
00:25:54.799 --> 00:25:56.720
So it doesn't make sense to flip anymore.
00:25:57.039 --> 00:25:57.440
100%.
00:25:57.759 --> 00:26:00.319
And obviously, neither of us is a tax agent.
00:26:00.640 --> 00:26:06.559
So if the if the listeners want to get more clarity around it, they should just talk to their accountants and run their actual numbers.
00:26:06.880 --> 00:26:08.880
I think the accountants are confused too.
00:26:08.960 --> 00:26:10.799
But yes, talk to your accountants.
00:26:11.839 --> 00:26:28.160
So you can see now why you'll hear people talking about um under the indexation method, people are going to hold on to their properties for longer because the numbers only become advantageous if you've held on to an asset for 10 years or more.
00:26:29.759 --> 00:26:39.680
Because once you do the math on indexation over 10 years, then the numbers may be somewhat superior to the CGT discount.
00:26:39.920 --> 00:26:40.720
It's complicated.
00:26:40.880 --> 00:26:43.359
I think even the accountants are saying it's complicated.
00:26:43.519 --> 00:26:45.359
I'm not quite sure how to calculate this.
00:26:45.440 --> 00:26:46.960
We'll have to get our heads around it.
00:26:47.119 --> 00:26:47.519
Correct.
00:26:47.839 --> 00:26:48.480
But it's not easy.
00:26:49.519 --> 00:26:51.680
A proposal be a proposal has been made.
00:26:52.720 --> 00:26:55.279
There's every chance of it being legislated.
00:26:55.359 --> 00:26:59.839
And I think we should make it very clear to the audience that this is not legislated yet, right?
00:27:00.000 --> 00:27:04.079
Even though my claude this morning said that it's legislated, but it's not.
00:27:04.240 --> 00:27:09.920
But uh it's gone down to the lower house, it still has to go to the upper house for final.
00:27:10.480 --> 00:27:11.440
Uh final approval.
00:27:11.599 --> 00:27:16.640
But yeah, I mean, it's it seems like, and the accountants are all thinking that it will be legislated.
00:27:16.960 --> 00:27:24.000
Um, funny thing though, I actually had a customer recently where they were talking to um a bar's advocate.
00:27:24.400 --> 00:27:30.240
And this bar's advocate had said, um, no, no, no, look, these things are not going to be legislated.
00:27:30.400 --> 00:27:34.799
Nah, let's just assume that this is going to be the old rules only, and then we'll just sort of go ahead.
00:27:34.960 --> 00:27:37.200
So there's a lot of that happening as well.
00:27:37.279 --> 00:27:43.039
And it's very important for the audience to understand that please do not make assumptions in that way.
00:27:43.200 --> 00:27:53.119
And it's very, very important that you actually sort of, you know, get a professional advice from a reputable accountant uh rather than listening to anyone that that thinks that they're no better than government.
00:27:53.440 --> 00:27:55.839
That's actually a really interesting point.
00:27:56.000 --> 00:27:57.359
The budget's been announced.
00:27:57.519 --> 00:28:03.200
I had assumed that everyone is acting like this is legislated when it's not.
00:28:03.440 --> 00:28:12.079
And here you're telling me that someone else is saying, actually, it's not legislated, it's never gonna be happened, it's never gonna happen, act like it will never happen.
00:28:12.319 --> 00:28:14.000
It's speculation in any case.
00:28:14.240 --> 00:28:14.559
I know.
00:28:14.880 --> 00:28:19.440
Um so we're all acting as if this has passed, it hasn't as yet.
00:28:19.599 --> 00:28:19.920
Yeah.
00:28:20.319 --> 00:28:26.640
Um so so when it comes to restructuring, I think everyone's holding on tight.
00:28:26.799 --> 00:28:30.559
Uh we've got a we've got time to restructure anyway.
00:28:30.799 --> 00:28:31.039
We do.
00:28:31.359 --> 00:28:36.640
But it's more the uncertainty that it's caused with new structures.
00:28:36.799 --> 00:28:46.319
If I'm buying a new property under which structure or which entity am I going to buy it under, I think that's where the gambling or speculation is coming in, to your point.
00:28:46.480 --> 00:28:46.640
Yeah.
00:28:46.880 --> 00:28:59.440
Yeah, and may I also say quickly, Anna, I think like once again, it's reflecting in what the investment property purchasing, uh, what this is doing the investment property purchasing right now, and what this is doing the investment property lending at the moment.
00:28:59.839 --> 00:29:05.039
But I must also say a lot of the customers that we are seeing at the moment are having a bit of a shift in paradigm.
00:29:05.200 --> 00:29:15.119
And what they're actually thinking now is if they were going to look at buying, buying, let's say, one or two other investment properties, they're now sort of changing their mentality a little bit.
00:29:15.200 --> 00:29:19.759
And they're thinking, you know what, why don't we actually upgrade in this environment?
00:29:20.000 --> 00:29:23.759
Because the auction clearance rate clearance rates are the lowest at the moment.
00:29:23.920 --> 00:29:29.119
Um, you know, in in Melbourne, we've actually seen 40% uh drop in some of the clearance rates.
00:29:29.359 --> 00:29:32.480
Clearance rates to be to be 40% in some weeks, sometimes even lower.
00:29:32.799 --> 00:29:33.519
What was it before?
00:29:33.759 --> 00:29:47.920
Uh oh, I mean, like in a normal market, if we're looking at like 65, 70% uh clearance rates, but uh but we're seeing the lowest clearance rates, which actually means, although the stock is at minimum level as well, but whatever is out there is quite undervalued.
00:29:48.319 --> 00:29:48.480
Right?
00:29:48.559 --> 00:29:51.039
So we're we're seeing a buyers market.
00:29:51.119 --> 00:30:14.079
So we actually're actually seeing a lot of our clients that are living in, let's say, for example, a$2 million house uh and they they've they've got a growing family and they don't like the area where they're living right now, they want to be able to go out and buy a$2.5 million house, sometimes even$3 million house, because they know that right now is the time for them to be able to grab the land at the lowest square square meter way.
00:30:14.480 --> 00:30:14.880
Yeah, right.
00:30:14.960 --> 00:30:15.119
Okay.
00:30:15.440 --> 00:30:16.960
So that's what's happening on the ground.
00:30:17.200 --> 00:30:18.160
That's what's happening on the ground.
00:30:18.400 --> 00:30:35.839
So we're we're actually serving a lot of the clients that are buying, that are upgrading, that are looking to sort of, you know, go from uh a smaller property to a slightly larger property and so on and so forth in a better area rather than having seeing a lot of the investment property activity.
00:30:36.079 --> 00:30:40.079
So these are the ripple effects that you're actually seeing from what's some of what's being announced in the budget.
00:30:40.319 --> 00:30:40.559
Yeah.
00:30:40.720 --> 00:30:42.799
But I'm going to digress on that point too.
00:30:42.960 --> 00:30:52.240
Not only are people um buying land and upgrading their home as a result, um, but also the RESI strategy has changed.
00:30:52.319 --> 00:30:54.000
But I'll save that for another podcast.
00:30:54.240 --> 00:30:54.799
Yeah, for sure.
00:30:54.880 --> 00:30:55.039
Yeah.
00:30:55.200 --> 00:30:56.240
For sure, that sounds good.
00:30:56.480 --> 00:31:10.880
So the fourth change shoots, which is, in my opinion, the most important and impactful change and not a positive impact in any way, is the changes to the discretionary or family trust.
00:31:11.200 --> 00:31:15.039
Okay, so there are two changes on there.
00:31:15.440 --> 00:31:26.400
Um firstly, they are now putting a 30% tax at the trust level that that never used to exist before.
00:31:26.559 --> 00:31:28.960
So 30% on the trust.
00:31:29.279 --> 00:31:46.160
And then when the money is distributed um to say a bucket company or to an individual, then the bucket company or the individual need to pay their tax notional tax rate on top of that 30%.
00:31:46.640 --> 00:31:51.440
Now, if it's a company and it's already at 30%, then it's 30% that stays unchanged.
00:31:51.519 --> 00:31:56.240
But if the individual's on 47%, then they pay their top up of 17%.
00:31:57.119 --> 00:32:08.079
Now, in the past, if there was a beneficiary that was under the 30% tax rate, let's say I wanted to distribute it to my 18-year-old children who are on a 15% tax rate.
00:32:08.240 --> 00:32:19.279
If the trust had already paid 30%, then you think that you'd be able to pass that on and maybe get 15% uh of the tax back, but that is not the case.
00:32:19.440 --> 00:32:25.599
And so if I was distributing it to say Lachlan, who's at 15%, then he'd only be taxed at 15%.
00:32:26.480 --> 00:32:38.079
Now it'll be, or at a company level, if the company was was um taxed at 30% and it went to a shareholder at 15%, then you get a 15% credit.
00:32:38.160 --> 00:32:38.319
Yeah.
00:32:38.480 --> 00:32:44.160
But in this case, under a discretionary trust, what they're proposing is the trust has paid the 30%.
00:32:44.720 --> 00:32:52.880
If I distribute it to a beneficiary at 15%, then tough nut, that 30% is your new tax rate.
00:32:53.599 --> 00:32:53.839
Yeah.
00:32:54.000 --> 00:33:03.839
So it's now become a minimum that if you buy an asset under a discretionary trust, then you know that you're going to pay a minimum of 30%.
00:33:04.880 --> 00:33:09.440
But here's the kicker one could always argue, well, why not buy it under a company?
00:33:09.519 --> 00:33:15.279
And we'll go on to talk about the alternative structures, because that's at 30% as well.
00:33:15.839 --> 00:33:27.839
Well, the discretionary trust currently has got the capital gains tax discount applied to it if you were to sell that asset and have held onto it for more than 12 months.
00:33:28.079 --> 00:33:30.480
Well, they're removing that as well.
00:33:31.119 --> 00:33:37.680
So now there's very little benefit in holding anything under a discretionary trust.
00:33:38.079 --> 00:33:38.319
Correct.
00:33:38.400 --> 00:33:38.559
Yes.
00:33:39.200 --> 00:33:47.200
So from the borrowing perspective as well, Anna, what we're actually seeing also is the banks have actually changed the goalposts around how they um lend to corporate.
00:33:47.519 --> 00:33:48.400
How or how much?
00:33:48.640 --> 00:33:50.319
Um how and how much as well.
00:33:50.400 --> 00:33:50.960
They're both.
00:33:51.039 --> 00:33:54.960
So the policy as well as the, and obviously LVR is a part of the policy.
00:33:55.039 --> 00:33:55.440
Yeah.
00:33:55.599 --> 00:33:58.720
Um, how and how much they actually lend to the trusts.
00:33:58.960 --> 00:34:02.960
So, you know, all the major banks have got their own set of rules they want to play by.
00:34:03.119 --> 00:34:10.480
When a customer approaches them and says they've actually bought a pro bought a property under a uh discretionary trust uh or a corporate trustee.
00:34:10.960 --> 00:34:13.679
So not all banks are actually playing in that field anymore.
00:34:13.760 --> 00:34:19.760
And it's becoming harder and harder for the brokers to be able to find funding solutions for the customers that are buying under discretionary trust.
00:34:20.000 --> 00:34:30.239
So it's not just the government that's actually making it making it hard for their consumers to buy under corporate trust slash corporate trustee, um, but it's also the banks as well.
00:34:30.400 --> 00:34:38.079
So overall, it's not looking very good for the property purchases being done under a non-individual structure per se.
00:34:38.400 --> 00:34:38.719
Okay.
00:34:39.039 --> 00:34:39.760
Interesting.
00:34:40.159 --> 00:34:40.639
Interesting.
00:34:40.880 --> 00:34:41.199
Okay.
00:34:41.440 --> 00:34:43.760
So what options are left?
00:34:43.920 --> 00:34:50.880
That's what my peers and I have been discussing back in our clinics uh or at home.
00:34:51.119 --> 00:34:58.239
A couple of concerns now, which is what do we do with our assets under our current structures?
00:34:58.400 --> 00:34:58.639
Yeah.
00:34:58.960 --> 00:35:00.880
Do we restructure?
00:35:01.119 --> 00:35:08.000
And for me personally, I've spoken to my accountants about this, and we're just going to sit tight because we've got time.
00:35:08.719 --> 00:35:19.280
Um, we've got till the 1st of July 2027 uh to restructure without any capital gains tax implications because restructuring means a sale.
00:35:19.440 --> 00:35:47.519
So for the doctors or my children listening, uh, if we change the ownership of, let's say, um, of a house that's that was owned by Anafam Family Trust under a corporate trustee, and now it's going to be changed into my personal name or into a company structure, then that's effectively a sale of an asset from one owner or one entity to another owner or another entity.
00:35:47.679 --> 00:36:00.239
And the government's saying there will be a rollover provisions where you're going to be given a timeline to do that without us um uh charging you any capital gains tax.
00:36:00.480 --> 00:36:01.039
Yes.
00:36:01.599 --> 00:36:19.599
The caveat to that is that if it's a property, and I'm property heavy, if it's a property that I'm rolling over, there may be land tax implications in the sale, and that's at the state government level, and we don't know what the state government will do in that instance.
00:36:19.920 --> 00:36:20.159
Correct.
00:36:20.239 --> 00:36:21.599
I mean, I'm in Victoria right now.
00:36:21.679 --> 00:36:24.559
I don't I don't see the land tax where it's at right now.
00:36:24.639 --> 00:36:28.400
I don't see the land tax changing a lot for the next 10 years anyway.
00:36:28.559 --> 00:36:40.239
So obviously we were the most locked state in uh in the in the world during COVID, and we've we've got a fair amount of debt that the kind that the government is obviously trying to you know sort of recoup from the land tax side of things.
00:36:40.400 --> 00:36:42.400
So it'll be very interesting to see what happens.
00:36:42.719 --> 00:36:43.039
Yeah.
00:36:43.199 --> 00:36:52.719
So I'm gonna sit tight uh and watch this space for a little bit longer before I restructure any existing um assets.
00:36:53.119 --> 00:36:59.199
So that's one uh point of contention or perplexity.
00:36:59.519 --> 00:37:11.119
And then the second thing is well, if I am going to acquire or buy new assets, under which entity will I buy it under?
00:37:11.440 --> 00:37:23.599
And the options that's left would be to buy it under my personal name, to buy it under a company structure, or to buy it under a unit trust.
00:37:24.239 --> 00:37:32.639
So I've had to go and kind of study what the entry, exit, and holding costs would be under each one.
00:37:33.360 --> 00:37:43.920
Uh I never understood the company structure and I had zero idea about unit trust up until I studied it very recently.
00:37:44.000 --> 00:37:44.079
Yes.
00:37:44.239 --> 00:37:59.039
Uh and I've landed on the fact that I would roll over my big businesses where I have partners into a unit trust if I don't already have one.
00:37:59.280 --> 00:38:01.039
So that's a potential thinking.
00:38:01.280 --> 00:38:08.880
And the reason for that is that a unit trust still retains its 50% capital gains tax discount.
00:38:09.119 --> 00:38:26.960
So if I have, so in my businesses, if I am going to sell more shares, you know, um, because currently, you know, I own 100% in some of them and a less percent in others, but I am still a major shareholder in most of them.
00:38:27.199 --> 00:38:36.400
If I'm going to sell off more shares, then I'd like to receive a capital gains tax discount on any profits that I've made.
00:38:36.559 --> 00:38:43.599
So that's where a unit trust seems um uh attractive for me in that situation.
00:38:43.920 --> 00:38:58.480
The one thing that makes it not attractive would be the fact that the beneficiaries and the percentage ownership of each beneficiary has to be fixed year in, year out.
00:38:58.639 --> 00:39:00.880
There's no flexibility like a discretionary trust.
00:39:01.039 --> 00:39:10.079
So we said before how a discretionary trust, you can change the percentage of how much distribution you want to give to each person or each entity year in, year out.
00:39:10.559 --> 00:39:12.880
Well, under a unit trust, that's fixed.
00:39:13.119 --> 00:39:23.519
So if I've decided that Ana FAM only gets 50% under that unit trust, then you're only entitled to 50% of distribution goes.
00:39:23.840 --> 00:39:26.000
Yes, I can't change that percentage year in, year out.
00:39:26.239 --> 00:39:30.960
And that's where partnerships and syndicate holdings, I think the unit trust makes sense.
00:39:31.280 --> 00:39:55.840
Yeah, and may I say actually, like, I mean, even prior to this coming in, Anna, a lot of the customers that I serve, which was sort of more institutional level, um, they are actually already operating their unit trust structures because what they will have is the structure that they will sort of, you know, keep in place is there'll be there'll be a unit trust, and then there'll be like different family trusts of uh different partners that are actually sort of part of that part of that structure.
00:39:56.000 --> 00:40:14.559
So like Anafam family trust would be, well, the unit uh unit holders, and depending on what uh what units you negotiate, uh in the in the board meeting or whatever, in the constitutional unit trust, and then someone else, for example, Schulmbasker family trust would actually have a different uh set of unit holding and so on and so forth.
00:40:14.639 --> 00:40:18.159
That that's that's a very sort of common structure that's also being utilized right now as well.
00:40:18.480 --> 00:40:25.119
Um especially when you start to give out shares in your business to other um partners.
00:40:25.679 --> 00:40:26.800
Yeah, yeah.
00:40:27.039 --> 00:40:31.840
So so that's the unit trust um pathway.
00:40:32.000 --> 00:40:52.159
And then the new darling of tax structures now seems to be the company PTY L2D uh tax structure, where um, you know, one would have a holding company which would loan money to an investing company, which would then use those funds to purchase property shares, etc.
00:40:52.400 --> 00:40:52.719
etc.
00:40:53.360 --> 00:40:56.079
So that's where we're at.
00:40:56.239 --> 00:41:08.639
Certainly, um, my son is almost 20 years old, Shuberm, and I've had to go through this exercise exercise mentally because Lochlan has recently come to me to say, you know, Mum, I've got a bit of savings.
00:41:08.800 --> 00:41:11.280
Um, I'd like to buy shares.
00:41:11.840 --> 00:41:13.039
What should I do?
00:41:13.199 --> 00:41:19.920
And I said, can you hold on tight while I have a chat to our accountant about what's best?
00:41:20.079 --> 00:41:25.679
Um, and I've landed on a company structure for him rather than his personal name.
00:41:25.920 --> 00:41:32.719
Um and I've decided to do that because I'm thinking long-term for him.
00:41:32.800 --> 00:41:53.280
Yeah, and I'd like him to invest under a company structure which is kind of capped at 30% tax rate, assuming it's a trading, um non-trading entity uh only, um, and assuming that over time his income trajectory should put him in in the 47% tax bracket and not the 30%.
00:41:53.599 --> 00:41:54.400
So that's number one.
00:41:54.559 --> 00:41:57.760
And number two, I want that asset protection for him.
00:41:58.079 --> 00:42:06.800
Um, so for that reason, um I've structured him or I've put I've advised him to buy his shares under a company structure.
00:42:06.960 --> 00:42:08.480
And he loves the name that we came up with.
00:42:08.639 --> 00:42:09.119
Oh, what was that?
00:42:09.280 --> 00:42:11.360
Lucklinho investing co.
00:42:12.960 --> 00:42:14.000
Did you like that, Ryan?
00:42:15.119 --> 00:42:16.000
That's what I said.
00:42:16.159 --> 00:42:21.519
Um, yes, so so that's the landscape that we're in with the current changes.
00:42:21.920 --> 00:42:31.679
I think I think what we're sort of, you know, summarizing this as is that at the end of the day, gone are the days when you just rely on your accountant telling you what to do.
00:42:31.840 --> 00:42:37.440
I think it's a time that if you are serious about investing, you need to understand your tax structures as well.
00:42:37.679 --> 00:42:48.159
If you don't understand tax structures, at the end of the day, you may be actually working very, very hard, making good money, uh, putting that towards your investments, but those investments are not leading you anywhere.
00:42:48.480 --> 00:42:59.679
Uh, because come the tax time, a lot of that will be taken away by the government, and uh and and you will be left with you know minimal profits when the whole purpose of investing is to make profits.
00:42:59.920 --> 00:43:08.400
Well, I'm gonna take it one step further, and I may sound a bit controversial when I say this, but my peers are intelligent human beings, right?
00:43:08.880 --> 00:43:13.760
It it that academically they're very good with facts.
00:43:14.159 --> 00:43:25.199
And once they're educated about something, I would envision that they ought to be able to hold a nice robust debate with their advisors, i.e.
00:43:25.360 --> 00:43:28.000
their accountants, about tax structures.
00:43:28.960 --> 00:43:38.800
Because accountants are humans as well, and their interpretation and understanding of the changes may vary from individual to individual.
00:43:38.960 --> 00:43:48.559
And how they believe things ought to be structured would vary from individual to individual, even though the legislation and the document is exactly the same.
00:43:49.119 --> 00:43:59.760
So I really highly encourage my peers to be educated so that they can have robust discussions and challenge their advisors and just have a really good understanding.
00:43:59.920 --> 00:44:04.960
I mean, we give our patients informed consent and allow them to make the decision.
00:44:05.119 --> 00:44:17.360
I encourage my peers to do the same, hold the same robust conversations with their advisors, be well informed and make the decision and have control over those decisions.
00:44:17.760 --> 00:44:18.159
For sure.
00:44:18.320 --> 00:44:18.800
I agree.
00:44:18.960 --> 00:44:20.639
I I I totally agree with that.
00:44:20.800 --> 00:44:23.679
And I think that sort of sums up the whole episode really nicely.
00:44:24.320 --> 00:44:29.679
We've discussed about all the budget announcements that have sort of happened out of a good amount of detail.
00:44:29.760 --> 00:44:32.559
And I hope that we've actually added some value for our uh listeners.
00:44:32.800 --> 00:44:33.840
Yeah, hope so too.
00:44:33.920 --> 00:44:50.159
So four changes negative gearing, no limited recourse borrowing for Resi in the self-management fund, capital gains tax discount is being replaced by indexation, discretionary trust is no longer the darling, but company tax structures seem to be.
00:44:50.559 --> 00:44:53.039
And that's the end of podcast two.
00:44:53.440 --> 00:44:54.239
How good is that, Anna?
00:44:54.320 --> 00:44:54.880
Hi, five.
00:44:57.519 --> 00:44:58.400
See you next time.
00:44:58.639 --> 00:45:00.079
Looking forward to see you soon.
