Investors who purchased the 20 most popular Australian stocks six years ago would face nearly double the tax under Labor's proposed capital gains tax (CGT) changes, according to new analysis by Stockspot founder Chris Brycki.
How the Changes Work
The controversial federal budget reforms, currently under Senate review, would replace the blanket 50% CGT discount with inflation indexation and introduce a minimum 30% CGT rate. CGT applies to profits from selling assets held over 12 months, including property, shares, businesses, and cryptocurrency.
Real-World Impact on Popular Stocks
Brycki analyzed a hypothetical $10,000 investment in each of the 20 most popular ASX shares and ETFs from April 2020 to June 2026. Under the new system, taxable gains rose by 82% compared to the current regime. The portfolio generated $309,370 in nominal gains from a $200,000 investment, but after inflation adjustment, real economic gain was $271,370.
Under the current system, taxable gain was $154,685 after applying capital losses and the 50% discount. Under the proposed framework, taxable gain jumps to $280,870—higher than the total real economic gain—resulting in $131,009 in tax, or a 48% effective tax rate. That is approximately $58,000 more than under existing rules.
Why Investors Are Penalized
Brycki noted that under the indexation model, gains are indexed but real losses are not fully recognized. This means investors are penalized whether their portfolio performs well or poorly. Strong portfolios see winners become more taxable, while weaker portfolios lose the ability to offset losses properly.
For example, 15 of the 20 investments generated returns above inflation, while only five produced losses. The unusable nominal losses were only about $10,000, but because winners were substantial, tax increased by 70–80%.
Comparison with Current System
Currently, the maximum CGT rate is effectively capped at 23.5% (half the top marginal rate). The new indexation method removes that cap, potentially raising the effective rate to 47% for assets that significantly outperform inflation. The Financial Services Council warns this could give Australia the highest effective CGT rate in the OECD, surpassing Denmark (42%), Chile (40%), and Norway (37.8%).
Treasury vs. Reality
Treasury modeling used a single stock matching ASX index performance, suggesting the current discount undercompensated for inflation. However, experts argue this ignores how real investors hold multiple stocks with a few big winners and many losers. Under indexation, capital gains and losses are calculated on different cost bases—gains on indexed cost, losses on original cost. As inflation rises, this gap widens, creating what BetaShares' Cameron Gleeson calls "the triangle of sadness." Former Treasury official Geoff Francis estimates some diversified portfolios could see effective CGT rates up to 60%.
Which Investors Are Hit Hardest
Experts say the changes disproportionately affect investors with diversified portfolios of directly owned shares, compared to pooled vehicles like ETFs that net gains internally. Brycki noted that high-dividend ETFs might be punished least, as dividends become more valuable than reinvestment. This could pressure boards to pay dividends rather than invest in growth.
More than half of Australian adults (10.2 million) own investments outside super or primary residence, per an ASX study. About 7% of tax filers report net capital gains annually, around 1.1 million individuals.
Political Outlook
The Senate inquiry ends June 22, with a narrow window for passage before winter sitting ends July 2. Labor needs Greens support after the Coalition rejected the changes. Brycki urged policymakers to reconsider a system that increases taxable gains for long-term investors by over 80%, warning it risks discouraging a new generation of investors.
