If investing with your family’s future in mind, recent Federal Government changes to negative gearing and Capital Gains Tax (CGT) are worth understanding and could influence how Australian families build wealth and secure how they pass it on.
It’s not about reacting quickly or making sweeping changes. It’s about staying informed and making thoughtful decisions with the right advice.
What’s changing?
Federal Government changes include:
- Removing the 50% CGT discount
- Replacing the 50% CGT discount with CPI indexation for applicable assets from 1 July 2027 and a minimum 30% effective tax rate on net capital gains on gains accruing from 1 July 2027
- Limiting the availability of negative gearing on residential investment properties to new developments
In simple terms, investments that rely heavily on capital growth—like residential properties, shares or managed funds—may become less tax-efficient, with outcomes varying based on inflation, investment structure, individual circumstances and timing.
Why this matters for investors
As the tax environment evolves, so too should the way you think about structuring wealth and investments.
For some investors, this may mean placing greater value on tax certainty and simplicity. For others, existing strategies may remain appropriate. There’s no one-size-fits-all answer—and that’s where financial advice becomes critical.
Where investment bonds fit
One structure that may be worth reviewing in this context is an investment bond.
As investment bonds sit outside the CGT system, they are largely unaffected by the upcoming tax changes.
Key features include:
- A capped tax-paid environment of up to 30%, less allowable tax offsets.
- No personal CGT implications when switching investments or transferring ownership
- Tax-free payments to beneficiaries in the event of death or serious illness
- No personal tax on withdrawals after 10 years (if conditions are met)
But it’s important to understand the trade-offs. Investment bonds aren’t right for everyone:
- Like any market-linked investment, returns are not guaranteed and depend on underlying assets
- If your marginal tax rate is below the bond’s internal tax rate, other structures may be more efficient
Supporting your family’s financial goals
Used thoughtfully, investment bonds can support a range of goals:
- Growing wealth over time
• A tax-paid structure can allow investments to compound without triggering personal CGT events along the way. - Simplifying family wealth planning
• They can provide a more straightforward alternative to complex structures like family trusts, depending on your needs. - Passing on wealth more efficiently
• Ownership can be transferred, and proceeds can be directed to beneficiaries without any CGT implications—helping streamline family support, succession planning and inheritance transfers. - Supporting education costs
• Education bonds may offer additional tax incentives when used for eligible education expenses.
What this means for you
These tax changes represent a shift—but not a reason for concern or rushed decisions.
Instead, they’re an opportunity to:
- Revisit your investment structure
- Check your strategy is still aligned to your goals
- Consider whether greater tax certainty or flexibility could benefit you
Most importantly, they highlight the value of taking a long-term, well-planned approach.
Next steps: start the conversation
Every family’s situation is different. A financial adviser can help you:
- Understand how the proposed changes may affect you
- Assess the pros and cons of different investment structures
- Build a plan to grow, protect and pass on wealth with confidence
A steady approach in a changing environment
At Australian Unity, we believe good investing is about more than chasing returns, it’s about creating confidence and control for you and your family.
Investment bonds can play a role in a well-balanced strategy offering simplicity, flexibility and a tax-effective way of building and securing wealth across generations.
Important information
Issued by Lifeplan Australia Friendly Society Limited ABN 78 087 649 492 AFS Licence number 237989 ('Lifeplan'), a wholly owned subsidiary of Australian Unity Limited ABN 23 087 648 888.
This information is general information only and is current at the time of publication. It does not take into account your objectives, financial situation or needs. Before acting on this information, please consider its appropriateness, having regard to your objectives, financial situation and needs. Before making investment decisions, you should read the applicable Product Disclosure Statements (PDS). The applicable PDS and the Target Market Determination (TMD) is available on our website. Past performance is not a reliable indicator of future performance.
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