Budget a “tax grab” that punishes aspiration and deters investment

• Budget shifts more tax burden onto middle Australia under the guise of reform
• New settings risk discouraging investment, productivity and entrepreneurship
• Small business and ordinary investors face higher tax rates

Australia’s largest accounting body CPA Australia says the Federal Budget delivers a tax grab, not tax reform, placing a heavier burden on ordinary Australians, while undermining investment, productivity and business confidence. 

CPA Australia Tax Lead Jenny Wong said the government’s changes to capital gains tax (CGT) and investment settings would disproportionately impact mum-and-dad investors, small business owners and younger Australians trying to build wealth.

“This is not tax reform – it’s a revenue measure that shifts more of the burden onto middle Australia,” Ms Wong said.

“For anyone looking to invest, grow a business or take on risk, the message is clear – the government will take at least 30 per cent, regardless of the outcome.”

“That effectively creates a minimum tax on aspiration, and it sends the wrong signal at a time when Australia should be encouraging investment, not discouraging it.”

Ms Wong said the changes cut directly against the government’s stated ambition to lift productivity and support economic growth.

“Productivity depends on investment – particularly in higher-growth areas like start-ups, innovation and expanding businesses,” she said.

“These changes make that equation harder. If you’re taking a risk, building something, investing in growth – you’re handing over a significant portion of that return.”

“That is a clear disincentive. It reduces the incentive to invest in the kinds of businesses that drive long-term productivity and job creation.”

CPA Australia warned that the measures risk pushing capital and talent offshore, particularly at a time when global competition for investment and people is intensifying.

“Why would you build and grow a business here when other markets are more supportive of investment and innovation?” Ms Wong said.

“We risk losing not just capital, but our most ambitious and entrepreneurial talent.”

CPA Australia said the increased complexity of the tax system would disproportionately favour wealthier, more sophisticated investors, further entrenching inequality.

“The more complicated the system becomes, the more it advantages those with access to advice and the ability to restructure,” Ms Wong said.

“This is not levelling the playing field – it’s tilting it even further in one direction.

“Those with the resources to navigate complexity will adjust. Ordinary Australians will simply pay more.”

Ms Wong said the changes risk narrowing pathways to financial independence, particularly for younger Australians.

“For many younger people, the ability to invest, take risks and build wealth is already challenging,” she said.

“Increasingly, they are being pushed towards one pathway – earning a salary, buying a home if they can, and relying on super for retirement. That’s a pretty narrow definition of opportunity for Australians,” Ms Wong added. 

“Intergenerational equity matters, but today’s proposed changes won’t deliver it and go some way to making it worse.”

“Younger Australians want options to create wealth – not just from wages. What is there in these reforms that helps young people create a future in our country?”

“Intergenerational equity is shaped by more than tax policy. Deficits and rising government debt also places a burden on future generations, making it important to address the drivers of government spending growth.” 

CPA Australia said this Budget fails to deliver meaningful support for small business at a time of ongoing economic pressure.

“While there are some positive measures, they are outweighed by broader changes that increase the tax burden and complexity for business owners,” Ms Wong said.

“For small business operators – particularly those using trust structures – this means higher effective tax rates and less flexibility.”

“Small businesses are already dealing with rising costs and uncertainty. This doesn’t improve confidence or encourage investment.”

Ms Wong said the absence of stronger measures to lift digital capability and productivity among small businesses was a missed opportunity.

While much of the debate has centred on housing, CPA Australia said the impact of the changes extends right across the economy.

“These settings don’t just affect property – they influence where Australians choose to invest more broadly,” Ms Wong said.

“That includes investment in new businesses, expansion and innovation. All the talk of productivity and growth falls short if the system discourages the very behaviour that drives it.”

Ms Wong said the overall design of the changes raises questions about fairness and Australia’s global competitiveness.

“It is difficult to reconcile a system where ordinary Australians face higher effective tax rates on investment, while more sophisticated investors can restructure,” she said.

“The more complex and restrictive the system becomes, the more it benefits those at the top end. At the same time, it risks undermining confidence in Australia as a place to invest and grow.”

CPA Australia said the Budget represents a missed opportunity to deliver meaningful, long-term tax reform.

“This was an opportunity to simplify the system, support investment and improve productivity,” Ms Wong said.

“Instead, we’ve seen changes that raise revenue, increase complexity and discourage risk-taking. Genuine tax reform should expand opportunity – not limit it.

“Increasing deficits – not just at Federal but also State level – just means a greater burden on future taxpayers, rather than less.

“This budget doesn’t address Australia’s over-reliance on income taxes. It focuses more on taxing capital and risk, less on workers. Without addressing these critical issues, productivity will remain subdued, investment may be discouraged and our international competitiveness weakened.

“On the other hand, the Treasurer’s productivity package is coming out as one of the positives of this budget, as it builds on the momentum started at the government’s economic reform roundtable.  
 
“Concepts like “tell-us once” approach to government services and embedding productivity in the practice and performance of regulators send an important signal that the government is serious about reducing red tape.”

 

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Adrienne Biscontin
External Affairs Lead
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