Investment bond providers poised to take advantage of CGT discount shakeup
Investment bond providers like Generation Development Group and Australian Unity expect to benefit if the government slashes the CGT discount.
Investment bond providers are expected to be the beneficiaries of any federal government move to slash the capital gains tax (CGT) discount on investment properties, with major financial services companies prepared to compete for market share.
The Albanese government has not confirmed whether the upcoming May budget will include a reduction in the CGT discount but Treasury has been actively modelling a shift to 33%, from the current 50%, amid concerns about the housing market. Already, companies such as Generation Development Group (GDG) and Australian Unity have indicated this presents growth potential.
GDG chief executive Grant Hackett told investors the change poses an even bigger opportunity than previously anticipated changes to superannuation rules that would have doubled the tax rate on earnings of balances above $3 million. GDG, which has $5.2 billion in investment bond funds under management, says investors would receive a bigger tax discount when using investment bonds.
“It’s a big advantage [for us]. If the CGT discount gets halved down to 25% it means the tax arbitrage that you receive between our structure versus the other structures that you might invest in will be materially greater,” Hackett said.
