The federal government’s proposed capital gains tax (CGT) changes are facing scrutiny, particularly regarding their impact on young Australians investing in exchange-traded funds (ETFs). Outlined in the recent federal budget, the new measures replace the existing 50 per cent CGT discount with an inflation-indexation model and impose a minimum tax rate of 30 per cent on gains from shares and property. While the budget aimed to improve intergenerational equity, critics argue these revisions could disproportionately affect the younger generations it intended to assist. Public sentiment highlights this concern, using AI-generated examples to illustrate perceived unfairness.
Betashares, a leading Australian provider of exchange-traded funds (ETFs), offers diversified investment options enabling investors to gain exposure to markets and sectors efficiently. Its chief executive, Alex Vynokur, has voiced strong opposition, focusing on the potential disadvantage for young investors “saving up” to “get ahead in life.” This concern persists despite Betashares data indicating that while Gen Z and Millennials form a substantial client base, the fastest-growing cohort of ETF investors is the over-65s. Personal finance content creator Sophie Hong, 26, confirmed this among her young followers, who “feel betrayed” that tax changes extend to accessible investment vehicles like ETFs.
Nonetheless, some industry figures suggest the changes may not significantly curb overall ETF demand, projected to surge by nearly 20 per cent in 2026. State Street Investment Management senior strategist Clive Maguchu posits that proposed limitations on negatively geared property could make financial assets more appealing. However, the composition of ETF demand might shift. University of Sydney economics senior lecturer Christian Gillitzer noted that higher taxation on capital gains could encourage investors to favour dividend-paying stocks over growth assets. University students also indicated they would rethink high-risk investments, potentially moving towards bonds. Treasurer Jim Chalmers argues the flat CGT discount under-compensated for inflation, though Betashares modelling suggests some investors could be slightly worse off.
