Investment Comparison New Regime

Rates and links verified as at 2026-05-16. Tax rules change; verify with official sources before acting on any output.

Tax-rule assumptions

• 30% minimum CGT on individual gains from 1 July 2027 — Budget 2026–27 tax reform; detailed mechanics in the Treasury fact sheet (PDF)
• Indexation discount replaces the 50% CGT discount on most assets (same Treasury fact sheet); cost base indexed at CPI; only the real gain above inflation is taxed
• Loss quarantine: applies to established residential property only. Not extended to other passive investments. Existing residential properties (purchased pre-Budget) grandfathered indefinitely (Treasury fact sheet above).
• Division 152 small business CGT concessions preserved and carved out from the 30% floor + new indexation regime — legacy nominal-gain basis continues. ATO — Div 152 eligibility overview; AusTax analysis; SmartCompany coverage. See Div 152 section below.
• ESS acquisition-side rules unchanged in this reform (deferred taxing point, s83A-35 startup concession, $1,000 small grant exemption all preserved). However, post-vest CGT on ESS shares enters the new indexation + 30% floor regime once the deferred taxing point passes — exactly as the ESOP scenarios in this calculator model. ATO — ESS start-up concession (s83A-35).
• New builds can choose between the 50% discount or the new indexation regime (Treasury fact sheet). Not modelled here — established residential only.
• Pensioner carve-out from the 30% floor exists for income-support recipients. Out of scope for this audience.
• Effective date 1 July 2027 for CGT reforms; grandfathering for pre-Budget-night purchases. Government has signalled startup-sector consultation: SmartCompany — Labor considers startup CGT changes.

Division 152 small business CGT concessions — eligibility

• Basic conditions (must satisfy ALL):
  • Active asset test: the business is an active asset used in carrying on a business (this calculator assumes yes for owner-operator scenarios)
  • One of: aggregated annual turnover < $2M (small business entity test), OR net value of CGT assets owned by you + connected entities + affiliates ≤ $6M just before sale (maximum net asset value test)
• 15-year exemption (CGT $0): held the asset for ≥15 years AND owner aged 55+ at sale AND sale in connection with retirement (or permanently incapacitated). This calculator checks the 15-year hold period only — age and retirement intent are assumed satisfied when the user has Div 152 enabled with a 15+ year hold.
• 50% active asset reduction: just needs basic conditions; halves the gain before tax. No additional requirements.
• $500K retirement exemption: lifetime cap per individual; under-55s must contribute to super. Calculator's toggle assumes the full $500K cap is available.
• Rollover: defer the gain by acquiring a replacement asset within 2 years. Not modelled.
• Under the new regime: Div 152 concessions are explicitly carved out from the 30% minimum CGT rate and the new indexation regime. Legacy nominal-gain basis continues — this is the central tax-treatment advantage for genuine small businesses.

What this calculator does NOT check for Div 152

• Whether your business actually meets the active asset test (modelled as always yes)
• Aggregated turnover across connected entities and affiliates
• Net asset value across all your CGT assets (only the modelled sale value is checked, with a warning at $6M)
• Age + retirement timing for the 15-year exemption
• Lifetime use of the $500K retirement exemption cap
• Confirm with a registered tax adviser before relying on a Div 152 outcome.

ESOP startup option valuation convention

• Grant value = preference-share price. When an employee says their grant is "worth $X," that figure is typically priced at the last preference round share price — the headline value on the cap table — NOT the FMV used for tax purposes.
• FMV at grant ≈ $0.01/share for early-stage companies. Strike is typically set to this FMV under s83A-35.
• The math handles the divergence correctly: indexation applies to the strike paid (the CGT cost base), not the headline grant value. This is why zero/near-zero strike scenarios produce the harshest CGT outcomes — there's effectively nothing for indexation to shield.
• If you have a non-zero strike (e.g., later-stage employees, or grants made before a major valuation step-up), enter the actual total strike paid at exercise in the Strike field.

Talent flight comparison — caveats & sources

• Each foreign regime modelled to its headline treatment for a typical ESOP-style grant held >12 months. Real-world eligibility (UK EMI qualification rules, US QSBS 5-year hold + original-issue requirement, etc.) is simplified out.
• UK: Business Asset Disposal Relief (BADR) + Enterprise Management Incentives (EMI). BADR rates: 18% on first £1M lifetime from 6 April 2026 (was 10% pre-April 2025, 14% transitional April 2025–April 2026). Above the £1M lifetime cap, UK CGT is 24% (raised from 20% from 30 October 2024). Assumes the grant qualifies under EMI rules.
• US (employee LTCG, headline): 20% federal long-term capital gains + 3.8% Net Investment Income Tax = 23.8% federal. This is the typical case for an employee who receives RSUs (not eligible for QSBS) or exercises options at exit and sells same-day. State-level taxes are additional and vary widely (CA up to ~13%, NY ~10%, TX/FL/WA 0%).
• US (founder, QSBS §1202): 0% federal on first US$15M of gain on Qualified Small Business Stock (post-OBBBA, for stock acquired after 4 July 2025; was US$10M before). Strict eligibility: original-issue stock (not options exercised at exit), held ≥5 years, company a C-corp with ≤US$75M gross assets when stock was issued (was $50M pre-OBBBA), active business. 26 U.S. Code § 1202 (Cornell LII). Applies to founders and very early employees who exercised early and held — not to typical late-stage employees with RSUs or unexercised options.
• Singapore: no general capital gains tax. IRAS — gains from sale of property, shares and financial instruments. Gains may be re-characterised as income if the taxpayer is deemed a "trader" by IRAS under its "Badges of Trade" test, but treatment for ESOP held as an investment is generally tax-free.
• New Zealand: no general capital gains tax. Specific exceptions exist (bright-line test for residential property held <2 years, trader status). Labour party has announced plans to introduce a broader CGT if it wins the next election — current treatment may not be permanent. NZ IRD — The New Zealand case on CGT.
• FX fixed at approximate rates (GBP $1.95, USD $1.50). No live FX. The panel's purpose is showing order-of-magnitude differences, not jurisdiction-precise tax outcomes.
• The panel exists to expose the comparative tax pressure a globally mobile founder or engineer sees when evaluating offers — not to provide tax advice for any specific jurisdiction.

Modelling simplifications

• Individual taxpayer — not company or trust structures (most small businesses use a structure with different tax mechanics; flagged but not modelled)
• Business profit drawn as personal income (not company-tax-then-franked-dividends)
• ESOP startup options assumed to qualify for s83A-35 (employer turnover <$50M, unlisted, etc.)
• Startup option exercise modelled at year 0 (CGT 12-month clock starts at exercise)
• Foregone salary grows with CPI when toggle is on
• Stamp duty & land tax use real state bracket data, sourced from the eight state/territory revenue offices: NSW, VIC, QLD, WA, SA, TAS, ACT, NT.
• Constant vacancy % — no shock events
• Constant capital growth — no rate or price shocks
• Property scenario locked to established residential; new builds excluded

Tax bracket source

• ATO — Tax rates Australian residents 2024–25. Top bracket modelled at 47% = 45% income tax + 2% Medicare Levy, assuming the user holds complying private hospital cover (no Medicare Levy Surcharge). Users without hospital cover and singles income > $151k pay MLS Tier 3 (+1.5%) → 48.5% — add 1.5% mentally. MLS applies to "income for surcharge purposes" which includes grossed-up franked dividends and net capital gain at sale.

Australian tax assumptions & simplifications

• Medicare Levy modelled at top bracket only; MLS assumed off. The top bracket uses 47% (= 45% + 2% Medicare Levy), assuming the user holds complying private hospital cover so the Medicare Levy Surcharge does not apply. Below the top bracket the calculator ignores the 2% Medicare Levy — a deliberate simplification because the calculator's audience (top-decile professionals considering investment property + ESOP) sits at or above the top bracket. Users who lower the income slider into the $130–190k range will see understated dividend / rental / CGT during the hold by ~2pp. Users without hospital cover and singles income > $151k should add 1.5% to the headline effective rate (MLS Tier 3). ATO — MLS thresholds
• Transitional rules for assets held across 1 July 2027. This calculator models assets acquired after 1 July 2027 under the full new regime. For assets held on 1 July 2027 and sold later, gains will be apportioned: pre-2027 portion gets the legacy 50% discount, post-2027 portion gets indexation + 30% floor. Apportionment is via either market value at 1 July 2027 (quoted price for listed shares) or a Treasury "specified apportionment formula" based on holding-period growth. Treasury exposure draft not yet released.
• Direct shares only. The Listed Shares scenario models direct ASX share ownership. Most retail diversified ASX exposure is via ETFs (VAS, A200, IVV), which are Attribution Managed Investment Trusts (AMITs) with cost-base adjustments from tax-deferred distribution components (CGT event E10). Small effect for vanilla equity ETFs; material for property/infrastructure-heavy ETFs (VAP, MVA). ATO — AMIT cost-base adjustments
• Income support exemption from 30% floor. Treasury has confirmed recipients of pensions, JobSeeker, and other income support payments are exempt from the 30% minimum and remain on marginal rate. Not a typical user of this calculator but worth noting.
• 45-day holding rule (franking). To claim franking credits, shares must be held "at risk" (no hedging via options or contracts for difference) for at least 45 days. Buy-and-hold investors easily satisfy this; the Small Shareholder Exemption ($5,000 franking credits or less) covers early years for the default $280k portfolio. ATO — Franking credit trading
• Brokerage and transaction costs ignored. For a single-parcel buy + sale at retail brokerage rates ($5–$30 per trade), total brokerage is <0.03% of proceeds — well within model noise. Cost base would technically include buy-side brokerage (second-element incidental cost, s110-25(3)); sale proceeds would be reduced by sell-side brokerage. s110-25 ITAA 1997
• Australian tax resident assumed. Non-residents are generally exempt from CGT on Australian listed shares under Division 855 (not "Taxable Australian Property" unless the principal asset test is met). The calculator assumes resident treatment — full CGT, full franking credit refundability. s855-15 ITAA 1997
• Investor, not share-trader. A 10-year buy-and-hold portfolio is on capital account per the ATO's standard investor-vs-trader factors. CGT applies, indexation available under the new regime. Day-traders are on revenue account — ordinary income tax, no CGT discount or indexation. Not relevant for this calculator's audience.

CPI assumption

• Default CPI 2.9% p.a. — the rolling 10-year average of Australian headline CPI. Drives both the indexation discount on cost bases under the new regime and the year-on-year inflation of foregone salary opportunity cost.
• Sources: RBA — Measures of Consumer Price Inflation; ABS — Consumer Price Index, Australia; rateinflation.com — Australia historical inflation rates.
• The user can override the CPI input at the top of the page to stress-test against higher or lower inflation regimes.

Drafting and legislative uncertainty

• Legislation not yet passed. The post-2027 regime was announced in the May 2026 Federal Budget. Draft legislation, ATO guidance, and parliamentary amendments will determine final mechanics. This calculator models the rules as announced in the Treasury fact sheet; specifics may shift.
• Indexation methodology modelled as cost base × (1+CPI)^N. The legislation may specify a different price index (e.g., RBA underlying inflation), quarterly step-ups, or partial-year indexation rules.
• Loss pool offset ordering modelled as: pool offsets positive net rental income first (during hold), then offsets real capital gain at sale. The statutory order isn't yet legislated.
• 30% minimum CGT rate applied here as a floor on the effective rate over total real gain. Drafting could apply it per-marginal-dollar of gain or as an aggregate minimum.
• Treasury consultation on startup carve-outs is ongoing. This calculator models the regime as announced, not as it may end up after consultation.

"Successful founder" preset basis

The Successful Founder preset is calibrated to a top-quartile Australian VC-backed founder exit: ~$2.5M gross capital gain per founder at sale. The ESOP column models this as founder common stock with $0 strike — a $1M-equivalent equity stake compounding at 9.6% p.a. over the 10-year hold reaches a ~$2.50M sale value, taxed under the new regime at the top marginal rate (no s83A-35 since founder common shares aren't ESS interests; full sale value taxed at indexed-cost-base of $0 → 47% CGT including the Medicare Levy, assuming complying private hospital cover so MLS doesn't apply). After CGT (~$1.18M) and the foregone-salary opportunity cost over the build years (~$587k after-tax): ~$735k net pocket per founder. Note this is materially lower than founder-exit narratives that assume the old-regime 50% CGT discount — under the post-2027 regime with zero-strike founder common shares, the effective CGT consumes nearly half the gross. The middle Listed Shares column shows the same person's passive alternative — what they'd net by putting their property deposit into ASX shares instead — and is smaller again because shares have no leverage. The 10-year hold is slightly above median AU time-to-exit (~8 years), aligned with the other presets for cross-preset comparison. Evidence backing the $2.5M gross figure: top-quartile AU trade-sale enterprise value sits around A$80M (per Cut Through Venture's State of AU Startup Funding 2024 and Grant Thornton Dealtracker 2025), reached at Series B–C after 3–4 priced rounds plus bridges. Carta's Founder Ownership 2026 data shows founder TEAM equity at Series C median is ~16% — AU-specific ESOP stacking and bridge-round prevalence (AirTree ESOP guidance) pulls that closer to ~13%. With 2–3 co-founders and a typical AVCAL 1× non-participating liquidation preference stack consuming ~$30M off the top of the deal, each founder receives roughly $2.5M gross ($1.5–3.5M range). After 47% top-bracket CGT under the post-2027 regime (no Div 152 — VC-backed companies are above the $6M aggregated turnover and net asset thresholds; no s83A-35 — founder common shares aren't ESS interests): ~$1.3M net. Cross-check: Hipages IPO disclosure shows founders Vitek + Sharon-Zipser at 6.10% / 5.79% each on a $318M cap. For a small-business owner-operator eligible for Div 152, the same exit value could yield more after-tax thanks to the 50% active asset reduction or 15-year exemption — that contrast is the central tax-treatment advantage for genuine small businesses, NOT VC-backed startups.

Framing note

This calculator presents one side of an active policy debate. The new regime is intended to improve housing affordability and intergenerational equity by removing tax advantages that have flowed disproportionately to leveraged property investors. The numbers here demonstrate that — under individual scenario comparisons — the reform does not eliminate property's structural advantages relative to other investment paths. Both the policy goal (macro) and the structural-advantage observation (individual) can be true simultaneously. See the Treasury policy rationale for the government's framing.

What this calculator doesn't capture

• Expected-value for ESOP outcomes — roughly 70-80% of seed-stage Australian startups return $0 to early employees. The "Successful founder" and "Unicorn employee" presets model the conditional outcome given the startup performs. EV across the population is much lower. Headline numbers should be read as scenario projections, not probability-weighted expectations.
• Behavioural response — people may not actually do what the math suggests
• Liquidity differences — property is more illiquid than ESOP
• Franking credit implications for company-structured businesses (would reduce effective business tax)
• SMSF treatment — exempted from the new regime but modelled out of scope
• Multi-property portfolios — the loss pool would aggregate across properties under the new regime; we model a single property only
• Retained earnings in business are modelled as compounding at the business growth rate (treated as productively reinvested). True cash sitting on the balance sheet earns 0%; productive deployment may earn more. Reality sits between.