After the Budget: What Investors Should Do Next with Julie Bullen | Ask An Adviser

**Ren** (0:00)
Everything you're about to hear is for education and entertainment purposes only. Whilst we are licensed when not aware of your personal financial circumstances, any advice is general advice. Equity Mates operates under Australian financial services license 540697

**Julie Bullen** (0:15)
It's not the time for people to panic.

**Bryce** (0:17)
Negative gearing is not a strategy.

**Julie Bullen** (0:19)
The only people paying capital gains are those people who made money.

**Bryce** (0:22)
Equity Mates! Welcome to another episode of Equity Mates, the show where we explore what's possible in the world of investing. My name is Bryce.

**Ren** (0:29)
And I'm Ren. And today we are unpacking some of your big questions from the budget and more generally about how we build wealth.

**Bryce** (0:36)
Joining us in the studio, we have Julie Bullen, who is a financial advisor at Fox & Hare. Julie, welcome.

**Julie Bullen** (0:42)
Thank you. Thanks for having me.

**Ren** (0:43)
Now, Julie, we love these Ask An Advisor episodes because for so many of the Equity Mates community, they might be early in their investing journey or they might not be able to access an advisor. And this is their chance to put their questions to a professional financial advisor. And god, we got a lot of questions today.
Budget is obviously front of mind for people. And so we've got a bunch of budget questions where we'll start. But I think it's probably also triggered a lot of thoughts around more generally, how do we manage cash flow? How do we manage wealth building? The decisions between property and shares. So I hope you're ready. Oh, and super as well. So I hope you're ready because we're going to start peppering you.

**Julie Bullen** (1:20)
Awesome. Let's do it.

**Ren** (1:21)
So let's start general. We got this question from Shane in our Facebook discussion group. He asked, now that you've had time to sit with it, what's your read a couple of weeks post budget?

**Julie Bullen** (1:31)
Yeah, there was a lot of hype going into it. There was a lot of talk and honestly, I feel like it's a little bit of a non-event. I think there's been a lot of media discussions about how big these changes are going to be. If we were to quote Jimmy, it's the most controversial budget of the decade.
The reality is that for most people in the everyday person, it's not going to change materially the way that we should be investing. Negative gearing is not gone. If these legislations come through, it's just diverted to a different time period. Capital gains, there is a change there, but for anyone earning over $45,000, you're paying 30 percent tax anyway. Let's remember if you are paying capital gains, it's because you've made money. That's the point of investing.
Trust, which without going too far into it, the mandatory minimum tax rate of 30 percent that's going to be applied, it is going to impact some people, but it shouldn't materially impact the reason that you have a trust, which is ultimately succession planning, asset protection, generational wealth, separation of business assets and family money. Tax, whilst it's a benefit of all of these things, it's not materially going to change the reason why people are investing.

**Ren** (2:53)
The interesting one, just to hold on negative gearing, because we had a mortgage broker on a couple of weeks ago or a couple of episodes ago, and he said, effectively, rent vesting is dead because of the changes. But you just said something there, negative gearing has effectively just been diverted to a different time period. Can you just explain what you mean?

**Julie Bullen** (3:14)
So for anyone who doesn't know what negative gearing is, it's where the cost that you're paying for the property is more than what you're getting in rental income.
So the way it is currently, the extra that you're paying, you'd be able to claim as a tax deduction against other income, so commonly wages income.
Fast forward, post budget, if everything goes through, you're not going to be able to claim those losses against your wages income. But they're not lost. They're going to be carried forward from year to year. Ultimately, the idea of owning any asset is that at some point, it makes you money. So if you hold it for two or three years, rent prices increase, you pay down your debt a little bit, it's going to go from a negatively geared property to a positively geared property. You're not going to pay tax on that income that you're earning that's positive because it's going to be offset by the losses that have carried forward. Now let's say that you don't own it for long enough. You decide to sell it after five years and it had never got to fully positively geared. Then when you sell the property, any losses that you had is going to offset the gain when you sell it anyway. So you're not losing anything. Nothing has changed in that sense. It has just been diverted to a later time period. So the main adjustment people need to make is that you need to be able to fund it from a cashflow perspective in the short term.