When the Federal Budget proposed sweeping changes to capital gains tax, trust taxation and negative gearing, many business owners immediately started asking the same question: what should I do now?
For owners holding pre-CGT assets, established property portfolios or long-standing trust structures, the prospect of significant tax reform has created uncertainty. Some are questioning whether structures that have worked for years will still make sense in the future. Others are wondering whether they should be making changes before the new rules arrive.
According to Jonathan Scholes, head of partnerships and referral at Findex, the biggest mistake business owners can make right now is treating proposed changes as though they’re already law.
Business owners are no strangers to tax reform, but Scholes says the scale of the proposed changes makes this period unusual.
The reforms potentially touch everything from property investment and trust structures to succession planning, retirement strategies and the way wealth is passed between generations. Adding to the complexity is the fact that different measures are proposed to take effect at different points over the coming years.
“I’ve been doing the job for almost 30 years and this is the biggest change I’ve ever seen in my working life,” he says.
Property portfolios built through negative gearing and trust structures are among the areas generating the most questions as business owners try to understand what the proposed changes could mean for their long-term plans.
“I think the uncertainty, to tell you the truth, is the biggest challenge,” says Scholes.
While many business owners are keen to get ahead of the proposed reforms, Scholes says making major decisions before legislation is finalised could prove costly.
“One of the biggest examples we’re seeing is people looking to sell property because they’re worried about their structure,” he says. “There may be tax relief or rollover relief that allows you to change your ownership structure without selling the asset.”
Scholes says there are still too many unknowns for business owners to assume the proposed changes will be implemented exactly as they’re currently drafted.
“Tax should never be a driver of an investment.”
For now, his advice to clients is straightforward.
“There’s nothing you can do right now. You’ve just got to hold fire and wait for these changes to come through.”
Waiting doesn’t mean sitting on your hands.
Instead, Scholes recommends using this time to understand existing structures, identify potential areas of exposure and gather the information needed to make informed decisions once legislation is finalised.
“What we’ve started doing with our clients is really saying, ‘Well, this is where you may be exposed’,” he says.
That process starts with taking stock of how the business is currently structured and understanding where proposed changes may have an impact.
“Sit down with your accountant and work through your structure and where your exposure may be,” says Scholes. “Understand your current position and your tax position so you have a clear framework. When the time comes to make a decision, you’ll already have the data you need rather than scrambling to find it.
“The more you can be prepared now with the right data, the better off you’re going to be when it comes to decision-making time.”
While many of the finer details are still being debated, Scholes believes the broader direction is becoming clear.
“The government is intending to tax assets more heavily and align that treatment more closely with the way income is taxed,” he says. “I think that’s the reality we all have to face up to and then work out how we best structure our position to do the best we possibly can in a different tax environment.”
For business owners, that means resisting the urge to react to every headline and focusing instead on understanding their current position. The legislation may still be taking shape, but the businesses best placed to respond will be the ones that have already done the groundwork.
Not sure whether your current business structure, succession plan or wealth strategy is still the right fit? Explore how Findex Business Advisory helps business owners prepare for what’s next.
Rebel Wylie is a journalist and storyteller who loves finding the human angle inside complex topics and real-life experiences. She has created editorial and commercial content spanning business, lifestyle, parenting, health and culture for leading Australian media brands including News Corp Australia, Mamamia, ARE Media, Daily Mail Australia and Kidspot, and enjoys helping brands tell stories that feel engaging, thoughtful and genuinely human.
The work Findex does spans people, businesses, industries, countries, even continents. But wherever they work and whomever they work with, their clients are the centre of what they do. Their stories form the heart and soul of their business. As fierce advocates for their clients’ success, Findex empower its clients with the tools to write their story the way they want it to be. And they’re very proud to share a few of those stories through Your Story is Our Business.
