New income tax rules governing the taxing of capital gains in Australia were included in the September 1999 Budget. An extract from Nick Renton's
Income Tax and Investment dealing with this subject is set out below:

Despite official claims by the Federal Treasurer and others to the effect that the 1999 changes were a marvellous reform they can often leave investors badly out of pocket.

Worse still, investors can now be taxed even when they are making losses in real terms, that is, after allowing for inflation.

Consider the situation of a person who bought an investment property for $500,000 and sold it a few years later at a profit of between 20 per cent and 180 per cent. If the consumer price index had doubled by then the position would be as follows:

Profit  Proceeds    Real    Nominal         Taxable Gain
                    Gain     Gain
                                     "Old" Basis    "New" Basis

                                      Indexation      Discount
                                        Method         Method

 %          $         $        $          $              $

 20      600,000  -400,000  100,000          0         50,000
 40      700,000  -300,000  200,000          0        100,000
 60      800,000  -200,000  300,000          0        150,000
 80      900,000  -100,000  400,000          0        200,000
100    1,000,000         0  500,000          0        250,000
120    1,100,000   100,000  600,000    100,000        300,000
140    1,200,000   200,000  700,000    200,000        350,000
160    1,300,000   300,000  800,000    300,000        400,000
180    1,400,000   400,000  900,000    400,000        450,000

A comparison of the figures in the last two columns shows that a gigantic hoax has effectively been imposed on an unsuspecting Australian public.