Virtually all Australian brokerages win out under major tax concessions
Australia’s mortgage broking industry is celebrating the major capital gains tax (CGT) policy reversal announced by Labor on Thursday.
Facing widespread public and political outcry of sweeping CGT overhauls announced in the May Budget, prime minister Anthony Albanese declared that the concession threshold for small businesses will be lifted fivefold – from $2 million to $10 million in annual turnover.
The concession has huge implications for the thousands of Australian mortgage brokers, many of whom are small business owners themselves.
"They backpedalled like I've never seen before," said Joseph Daoud (pictured, top of page, left), founder of It’s Simple Finance. "It's a complete backflip. There's no other words around it."
For Daoud, the practical significance of the revised threshold is hard to overstate. At $10 million in annual revenue, the exemption shields the overwhelming majority of Australian brokerages from the CGT discount changes.
"If your brokerage is doing $10 million revenue a year, you've got probably the best brokerage in Australia," he said. "Most brokerages that are operating under 20 people – pretty much every single brokerage – are captured in these rollbacks. Effectively, that's what's happened."
Daoud credited the outcome to a sustained campaign of public pressure, including his own billboard advertising stunt, small business roundtables and a press conference alongside opposition leader Angus Taylor.
He told MPA he had been prepared to escalate. "I had commercials ready for next week. We got them approved and everything. But I'm so happy I can get back to work now.”
Daoud is broadly supportive of other changes announced in the Budget, including the removal of negative gearing benefits for existing properties and changes to the CGT discount on property.
“They needed to do something to incentivise people to focus on new builds, new properties… So I don't mind those changes." His objection, he said, was always about scope. "What I did not like – and I'm going to keep saying this – is they went for everything. How dare you just attack every single item."
Looking ahead, Daoud believes the remaining Budget changes, including the negative gearing reforms, could ultimately benefit the industry by driving out less committed operators.
"I believe this will actually help our industry, because a lot of the people that were just in this to make a quick buck – I believe they won't stick around for as long,” he said. "This is a massive win for us.”
A good start, but more work needed
Jon Gawley (pictured, below), managing director of Kanebridge Finance, said it was a good start in rectifying an “ill-thought-out policy” that had significant implications for businesses and individuals. “I think business has been reeling on how it was announced in the first place,” said Gawley.
He also criticised the May Budget as a “broken promise which has impacted businesses’ ability to plan, but most of all trust who is leading the country.”
Labor promised not to tinker with CGT and negative gearing settings prior to the 2025 Federal Election, leading to mass criticism from his political opponents.
Taylor accused Labor of bypassing democratic scrutiny, saying in May: "Frankly, Labor should have taken this to the people, and their refusal to do so says they are cowards, they are liars, and they are sending Australian small businesses down the stream.” Pauline Hanson’s One Nation Party, meanwhile, has launched a ‘Fire the Liar’ campaign across social media, television and radio.
Today’s reversal “is a start, but this ill-thought-out policy needs a lot more work than a backflip and policy on the run,” said Gawley.
Mhairi Macleod (pictured, top of page, centre) Astute Ability Finance Group also welcomed today’s announcement, although she warned that business sentiment has already taken a battering.
“It is a positive and I’m hoping that it breathes more confidence into the market, but unfortunately I think the damage is already done,” said Macleod. “Small businesses are a little gun shy, which has slowed down capital investment and has many small businesses placing a pause on spending plans, which flows through many sectors.”
While Tanya Sale (pictured, top of page, right), chief executive of outsource Finance, is pleased to see the government amend its position, she worries that the blowback from the the Budget is not going to go away.
"The truth of the matter is the CGT changes should never have captured businesses at all," said Sale. "There has been strong lobbying from all sectors including ours and one must question the impact of the current shifting political dynamics at play that has contributed to the backflip!"
Great news for succession planning
Money Lounge mortgage broker Maddie Walton said she was “stoked” at today’s announcement. “From a broker's perspective, this is a really positive outcome for small business owners and their advisers,” she said.
The past month has brought considerable anxiety for business owners who have spent years building equity in their enterprises – many of whom view that business as their primary retirement vehicle.
But for Walton, "the government's decision to expand the concessions and provide greater clarity around business succession gives many owners more confidence to plan ahead. That's important not only for business owners themselves, but also for brokers, accountants and advisers who are helping clients make long-term decisions around lending, investment and wealth creation”.
At Money Lounge, small business owners represent a meaningful portion of the client base. When confidence around exit planning improves, so too does appetite for investment and borrowing.
"When they feel more confident about the future value of their business and their exit options, they're generally more willing to invest, grow, acquire property and borrow to support that growth," Walton said.
For the broking industry more broadly, the announcement clears a layer of uncertainty that had been weighing on succession planning conversations.
“A big part of broking is exit planning, like with any small business owner! So it's great news for us and one I was hoping for as it makes sense for our economy,” added Walton.
