Finance Update with Jovan Cvetkoski – The Upcoming Federal Budget Announcement

By Jovan Cvetkoski, Financial Adviser and Director, Knight Group

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About this episode

On budget day, Jovan Cvetkoski, Financial Adviser and Director of Knight Group, previews what to expect from the federal budget being handed down that evening – a budget framed around “intergenerational equity” but which he reads as containing a number of new taxes.

Jovan outlines flagged changes to capital gains tax (a shift from the 50% discount towards inflation indexation), negative gearing, and the potential taxing of family trusts at a flat 30%. On the relief side, he covers a small income tax offset, a $1,000 instant work-related deduction claimable without receipts, and a permanent $20,000 asset write-off threshold.

He also discusses nearly a trillion dollars of government debt, WA infrastructure spending of around $550 million for Westport and Anketell Road, and proposed NDIS reforms. Jovan calls it one of the most consequential budgets in decades.

In this episode

What extra tax hits are heading your way in this budget?

Jovan flagged several. On capital gains tax, he said the current 50% discount looked likely to be replaced with the old inflation-indexation model, giving a smaller discount. He also pointed to expected changes to negative gearing and the potential taxing of family trust distributions at a flat 30% rather than at beneficiaries’ marginal rates.

Is the government actually offering any real tax relief this time?

Jovan mentioned a small income tax offset of around $200–$300 for wage earners, which he described as modest. More notable, in his view, was a proposed $1,000 instant tax deduction letting workers – including office workers – claim $1,000 in work-related expenses without receipts. He also noted the $20,000 instant asset write-off for businesses turning over less than $10 million was expected to be made permanent.

Just how broke is a country with nearly a trillion dollars in debt?

Jovan said the government owes nearly a trillion dollars. He contrasted the media’s focus on net debt – bringing in around $750 billion against roughly $780 billion of spending, for a deficit of about $30 billion – with a simpler household view. A household that owes a trillion dollars is, in his words, a very broke household.

Which WA infrastructure projects are getting a slice of the pie?

Jovan pointed to WA-specific infrastructure, with around $550 million expected for upgrades to Anketell Road and funding towards Westport, including planning and land acquisition. The aim, he explained, is to shift some container capacity from Fremantle port to Kwinana – which he saw as positive for surrounding suburbs.

Is the NDIS budget officially growing faster than Medicare?

Jovan described NDIS reform as the major spending item. He noted it was reportedly costing around four times its original budget. By one account he had read, this is more than Medicare. The scheme has more than 760,000 participants. Current modelling aims for 600,000 by the end of the decade under new rules. He also mentioned public service cuts, which serve as code for reducing public-sector spending, and questioned the large amount spent on external consultants.

Key Takeaways

Jovan expected capital gains tax to shift from the 50% discount towards inflation indexation.
Negative gearing changes and a possible flat 30% tax on family trust distributions were flagged.
Relief measures included a modest income tax offset and a proposed $1,000 receipt-free work deduction.
Around $550 million was expected for WA infrastructure (Westport and Anketell Road).
NDIS reform was the major spending item, with participant numbers targeted to fall by the end of the decade.

Full episode transcript

Host: Jovan Cvetkoski joins us – director and financial adviser for Knight Group. There’s a lot to talk about with the budget tonight. Is the government confident it’s a vote-winner?

Jovan: I don’t know. They’re trying to win the younger vote by wrapping this budget up as a measure of intergenerational equity, but personally I just see a bunch of new taxes.

Host: What are we going to get?

Jovan: In the tax-increase column: capital gains tax changes – currently you get a 50% discount on a gain, and it looks like that’s going to be replaced with the old inflation-indexation model, so a smaller discount. There are also changes to negative gearing and the potential taxing of family trusts. On debt, we’re near a trillion dollars. The media talks about net debt – bringing in about $750 billion and spending $780 billion, so a $30 billion deficit. I look at it like a household: a household that owes a trillion dollars is a very broke household.

Host: What about tax relief?

Jovan: There’s a small income tax offset of about $200 or $300 for wage earners – a bag of lollies, really. There’s a better one I don’t mind: a $1,000 instant tax deduction for workers, so you can claim $1,000 in work-related expenses without needing receipts – even office workers, evidence-free. And the $20,000 instant asset write-off for businesses turning over under $10 million – that already happens, but they’re saying it’ll be made permanent. A lot of small businesses run through family trusts, though, and one change would tax trust distributions at a flat 30% instead of your marginal rate – that would hit small business.

Host: New spending?

Jovan: There’s some WA-specific infrastructure – likely money for Westport and related roads at Kwinana. The Commonwealth has flagged maybe $550 million for upgrades to Anketell Road and money into Westport, plus planning and land acquisition. It’s trying to take container capacity off Fremantle and shift it to Kwinana, which is good for surrounding suburbs. The major spending item is NDIS reform – it’s probably costing four times what was originally budgeted; I read somewhere it costs more than Medicare. The scheme has more than 760,000 participants, and modelling aims for 600,000 by the end of the decade under new rules, so it looks like a cut. There are also public service cuts – code for reducing public-sector spending. Government spends a lot on external consultants, which I always find odd.

Host: They reckon it could take a couple of years to bring things back to normal.

Jovan: Let’s hope so. It’s a big, potentially game-changing budget – whether you think it’s good or bad, probably one of the most consequential in the last 10 to 20 years.

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