It is my habit to spend some time each quarter reflecting on the prevailing conditions and Natgen’s responses to the opportunities and challenges during the year.
Over recent months there has been significant speculation, commentary and anticipation surrounding possible changes to Australia’s taxation framework, particularly in relation to capital gains tax, negative gearing and trust structures.
Budget night in May provided an initial outline of the Government’s intentions, however many of the proposed measures remain subject to consultation, variation at the convenience of the government, legislative drafting and parliamentary approval before becoming law.
We have now seen ‘adjustments’ for small business and ‘innovative businesses’ together with a deal with the Greens to change the status quo on SMSF borrowing for property. No wonder there has been such passionate debate about policy which has been clearly rushed without a true understanding of many of the sectors of the economy impacted.
Notwithstanding the farce surrounding the introduction of these measures, it does represent one of the more significant shifts in Australia’s investment taxation landscape in decades. Beyond the domestic implications, these settings will inevitably influence how Australia is viewed from a global capital perspective, including perceptions around tax stability, sovereign risk, long term investment certainty and Australia’s competitiveness for attracting both domestic and offshore capital.
The proposed expansion of the capital gains tax regime is particularly noteworthy. Historically, assets acquired prior to September 1985 sat outside the CGT framework entirely. The concept that long held legacy assets may now be indirectly drawn into a revised regime represents a substantial philosophical shift in Australia’s taxation approach, and one which has understandably generated considerable discussion.
From a Natgen perspective, it is important to separate political commentary from structural reality.
Natgen’s investment structures are established as unit trusts and we will undertake appropriate legal and taxation review to ensure our structures continue to satisfy the relevant fixed trust and widely held trust requirements referenced within the proposed measures. This is particularly relevant given the proposed introduction of a 30% minimum tax on discretionary trusts, which are a different structure from fixed trusts and widely held trusts. Subject to the final legislation, this should support the continuation of the existing flow-through taxation treatment applicable to our structures, rather than taxation being imposed within the trust vehicle itself.
Importantly, Natgen’s commercial property investment philosophy has always focused on resilient income producing assets with positive gearing characteristics. Unlike many residential investment strategies reliant upon negative gearing outcomes, Natgen assets are generally designed to generate recurring monthly income distributions from the underlying property cashflow itself. In many respects, this has long been one of commercial property’s structural advantages relative to residential investment property.
As always, Natgen will continue to assess developments carefully, seek specialist legal and taxation advice where appropriate, and communicate material implications to investors as further detail becomes available. At present, many aspects of the proposed measures remain policy announcements and supposition rather than enacted law, and considerable detail is still to emerge through the legislative process.
Periods of structural change and policy uncertainty also create opportunity. Capital flows, investor preferences and asset pricing rarely remain static during periods such as these. We expect the coming period will present both challenges and opportunities across Australian property markets and investment structures.
Natgen will continue to assess opportunities through the lens of disciplined asset selection, resilient income characteristics and long-term value. It would not surprise us if the evolving environment creates opportunities that warrant investor attention in the near term, and no doubt investors will hear more from Natgen in due course.
As the breadth of the Natgen business increases, the Directors are intent on ensuring that our business remains sharply focused on serving the needs of our investors. This is our raison d’etre and we spend much time and effort ensuring that all at Natgen consider their role through this lens.
To further entrench this within our operations, we are undertaking a management and process restructuring as at 30 June 2026. Going forward, the Natgen business operations will be structured around the following five functional areas:
- Property – incorporating acquisition and disposals, property management, and development management.
- Investor Relations – incorporating capital raising, unitholder support, and investor care.
- Governance and Risk Management – incorporating compliance management, financial services management, unitholder registry services and capital review.
- Marketing and Communications – incorporating unitholder reporting, general marketing, branding and general communications.
- Finance and Business Services – incorporating corporate accounting, trust accounting, audit management, people and culture, IT and quantitative analysis
These functional business units are each led by a senior manager who reports directly to the chief executive and has direct access to the Board. The directors also maintain specific business functions within this context. We find that the above structure, whilst somewhat novel for a funds management business, provides us with the required focus and feedback to efficiently operate the entirety of our business.
Steven Goakes
Managing Director
Natgen provides clients with well-considered, carefully measured commercial investment opportunities, accompanied by professional advice from our experienced leaders.
If you’d like to be notified of future investment opportunities, request an Investor Information Pack or contact us directly at invest@natgen.com.au
