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One of the more interesting questions coming out of the proposed capital gains tax changes is not just what they mean for existing investors.

It is what they mean for younger Australians trying to become investors in the first place.

We often talk to the children of clients who are doing the right things. They are saving, investing, working hard, living at home longer than they might like, and trying to build enough capital to eventually buy a home. 

For many of them, investing in shares has been one logical pathway.

The thinking is simple enough: if the property deposit feels too far away, invest savings into a diversified portfolio, accept some market risk, and hopefully grow the deposit faster than cash alone.

That has never been a risk-free strategy. Share markets can fall at exactly the wrong time. A home deposit generally has a shorter and more emotional timeframe than a retirement portfolio.

But the proposed CGT changes add another layer to the decision.

From 1 July 2027, the Government proposes to replace the 50% CGT discount with CPI-based indexation and introduce a 30% minimum tax on real capital gains. The reforms are proposed to apply only to gains arising after that date. Existing investors therefore receive a form of transitional treatment, while younger investors starting from scratch may face a less generous long-term CGT environment.

That creates an uncomfortable generational issue.

Older investors often built wealth under a system that rewarded long-term capital growth with a 50% CGT discount. Younger investors may now be told they need to invest more, take more responsibility, save larger deposits, and manage higher property prices — while receiving less favourable tax treatment on the very growth assets they may need to get there.

That does not mean young people should stop investing.

But it does mean the decision becomes more nuanced.

If a young person is investing for a home deposit, the key question is no longer simply, “Can the market outperform cash?”

It becomes, “Can the market outperform cash after tax, after volatility, and within the timeframe I actually need the money?”

For a 25-year-old investing for retirement, the answer may still be yes. Long-term compounding remains powerful.

For a 28-year-old hoping to buy a home in ten years, the answer is much less obvious.

That is the conundrum.

The tax system may be trying to make housing more accessible by reducing some investor advantages, particularly around property. But if the same CGT changes also make sharemarket investing less attractive for younger savers trying to build a deposit, the policy effect becomes more complicated.

In trying to level one playing field, we may be tilting another.

For younger Australians, the practical lesson is not to give up on investing. It is to be more deliberate.

A future home deposit may need a different strategy to a long-term wealth portfolio. Cash, term deposits, high-interest savings accounts, first home super saver strategies, diversified portfolios and family assistance may all play different roles depending on timeframe, risk tolerance and tax position.

The bigger message is that structure and timeframe matter earlier than people think.

For our clients, this is increasingly becoming a family conversation, not just an investment conversation. Parents and grandparents are often asking how to help the next generation without simply handing over money, creating dependency, or getting the strategy wrong.

And for younger investors, the message is equally important: building wealth still matters, but the rules around how that wealth is taxed may be changing.

— Glynn