Australia introduces Bill to overhaul property tax breaks, capital gains rule
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Under the proposals, the centre-left Labor government would cancel a 50 per cent discount on capital gains for assets held over a year.
PHOTO: REUTERS
SYDNEY - Australia’s government introduced a Bill in Parliament on May 28 to make the biggest overhaul of tax rules in decades, including scrapping a capital gains discount and curbing tax breaks for property investors in order to boost housing affordability.
The reforms, unveiled in the federal budget in May, have proven unpopular with voters according to polls, and the opposition has accused Prime Minister Anthony Albanese of breaking election promises.
Mr Albanese has defended the changes as a way to make housing affordability fairer for young people and ease investor competition for first-home buyers, despite pledging in the 2025 election campaign not to change housing taxes.
Under the proposals, the centre-left Labor government would cancel a 50 per cent discount on capital gains for assets held over a year, instead taxing inflation-adjusted gains.
A 30 per cent minimum tax on net capital gains would be introduced from July 2027.
The government also plans to limit negative gearing to newly built homes to steer capital to new housing supply, narrowing a rule that lets investors offset property losses against taxable income.
Some industry groups and businesses have urged the government to exempt them from the capital gains overhaul and confine changes to real estate.
Treasurer Jim Chalmers said the government was consulting stakeholders on technical aspects, including capital gains tax treatment for small businesses and startups.
“Where appropriate, these details will be legislated following consultation,” Mr Chalmers said in a statement.
“These changes build on our existing housing reforms to help level the playing field for first-home buyers, help preserve the gains investors have made and incentivise productive investment in areas like new housing supply.”
Tax breaks have lured many to buy investment properties over the last couple of decades.
Official data shows one in five Australian households owns a property other than their primary residence.
This has coincided with a surge in home prices amid supply shortages, making the housing market one of the world’s most unaffordable.
The Bill is introduced in the Lower House and must pass the Senate, where the government lacks a majority and needs crossbench support. REUTERS
