Federal government’s CGT, negative gearing changes pass parliament
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The news: The federal government’s controversial move to replace the 50% capital gains tax discount on assets held for longer than 12 months with an inflation-indexation model has passed parliament in a legislative package with separate tax relief measures.
The bill also restricts negative gearing to investments to new builds but includes grandfathering provisions for existing investment properties.
The context: The reform package includes an increase of the eligible turnover threshold from $2 million to $10 million for an existing small business to access a carve out for a 50% active asset CGT concession, flagged on 18 June.
It also includes a Working Australians Tax Offset worth up to $250 per year, announced at the 2026-27 federal budget, and a $1,000 instant tax deduction for workers flagged ahead of the last federal election.
The government is currently consulting on further CGT concessions for innovative businesses.
Most of the changes will come into effect from 1 July 2027. The instant asset write off for workers will be effective from 1 July 2026.
What they said: “We will continue to implement the next steps and further tranches of legislation as we roll out our full tax reform package in the months ahead,” Treasurer Jim Chalmers said in a statement.
“The Liberals, Nationals and One Nation all voted against our plan to cut income taxes and make the housing market fairer, confirming that whenever they have an opportunity to make life easier for Australians, they choose not to take it,” he said.
“Today is a really important day for economic reform, for tax reform, for our economy and our country and it’s a very good day for workers and first home buyers in particular.”
The source: Jim Chalmers media release
