Dear Friends,
Federal Budget 2026 – as widely leaked
As someone who watches the political theatre of the Federal Budget closely, the announcements on Tuesday were as expected. They were 'telegraphed' – or ’leaked’ if you prefer – well in advance.
So, what should you do if you have a negative gearing strategy in place?
Nothing at this stage. Talk with me at our next review. I will explain the details, and we can work our way forward together. Much is 'grandfathered', or there is a ‘sunset clause’ (i.e., a future date when the new rules are planned to come into effect), so you have time to weigh up the pros and cons and make an informed decision.
Some observations
If you have planned to implement a negative gearing (property) investment strategy, this has become much less attractive. I will counsel against it.
What we are likely to see is the 'heat' coming off in the established housing market, which would not be a bad thing for first home buyers. However, if you are planning to downsize you may not receive the price the real estate agent suggested 12 months ago.
The capital gains changes will not affect most Marinis Financial Group clients as superannuation and pensions were not affected in this budget. They remain the most tax friendly vehicle to hold your investments. As a ‘Super Nerd’ I stand by the long-held mantra of “Super as soon as you can, as much as you can for as long as you can”!
It appears that family trusts will now become less tax friendly, subject to an analysis of the final legislation. Again, don’t rush to close these investment entities down.
For more detail, I have included a link to the Budget review from my friend Dr Shane Oliver, one of Australia's most articulate economists here.
Some insights
Budgets (federal and state) are simply plans for the future; they are not written in stone and in fact are often varied in Parliament.
There is currently a disconnect between what I see in the real economy and that described in the budget papers and by the media. I see older parents helping their children deal with mortgages, school fees and inter-generational wealth transfer. Real people are not relying on government. I don't see Canberra as ever filling this void.
Are we heading for a recession?
As I write, the economic trade winds are against us, despite booming stock markets.
The wars in the Middle East, the Ukraine, and the impending AI induced ‘lemming-like’ redundancies, will see a lot of people suffering. I think it will take its toll for about three years, probably starting mid this year – ceteris paribus (if everything stays the same).
My advice from our last Grow issue (and every issue before that really) remains the same: don't panic.
If you are about to retire, you may feel worried. Speak to me for reassurance – we have strategies that work. Usually, when a client reaches 60 and is working, I recommend a conservative approach to help them avoid the worst if a downturn comes along. For those in income drawdown phase, your Marinis Buffer will protect you, as always. For those people who are still working, keep contributing and buy cheap assets.
If you have middle aged children with mortgages and perhaps other debt, I would recommend you counsel them about the likely rough period ahead – and that it will get better. They will already be hurting from the recent interest rate increases. If this is your family situation, talk with me about the possibility of helping them out without hurting your investment strategy too much, if necessary.
Last year's Federal Budget
I've spent considerable time with clients over the last 12 months helping them navigate the so called 'Div 296' issues created by new rules the Government put in place to cap the amount of super a person can have and receive the tax benefits. As my mentor John Thomson would have said “I can't change the direction of the wind, but I can adjust my sails”. These fortunate clients have had their affairs rearranged so they don't need to be concerned by last year’s tax-grab.
Keep cyber safe
I am accused – and plead guilty – to harping-on about cyber security. We need to become hyper vigilant about anything we receive digitally. Don't rush. Telephone people on a known number. Don't share details online. Do keep an eye on the Federal Government's scam watch website www.cyber.gov.au/protect-yourself.
As always, if I or any of our team can be of assistance, please don’t hesitate to get in touch by either calling (08) 8130 5130 or email admin@marinisgroup.com.au.
Don't forget we have moved to join our Caveo Partners friends (just east of the corner of King William and Halifax Steets).
Remember too that at Caveo we also have inhouse accountants, tax specialists, legal and mortgage brokers to assist with all your needs in the one place.
Yours sincerely
Theo Marinis CFP®, B.A., B.Ec., CPA., MCIFAA
Financial Strategist
Authorised Representative
