Opposition cries 'shame' as Labor's Budget bill approved by senate following SMSF lending deal with greens
Australia's landmark reforms to negative gearing and capital gains tax have passed into law after a charged parliamentary session, with Labor MPs cheering and Coalition members shouting "shame" as Prime Minister Anthony Albanese and Treasurer Jim Chalmers walked triumphantly from the chamber.
The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 was ratified by the House of Representatives on Thursday by 98 votes to 39, after late Senate amendments – secured with the support of the Greens – were returned to the lower house for final approval.
The passage ends months of intense political and industry debate, and delivers a sweeping overhaul of Australia's investor tax settings that will reshape how mortgage brokers guide property investor clients from 1 July 2027.
Treasury reveals revenue split
In the aftermath of the vote, Treasury confirmed that approximately 85% of the estimated $3.6 billion in additional tax revenue over the forward estimates will come from restrictions on negative gearing, with the remaining 15% attributable to changes to the capital gains tax (CGT) discount. The figures were provided in response to a Senate question on notice from Coalition finance spokeswoman Senator Claire Chandler.
Treasury noted that the two measures interact – carry-forward negative gearing deductions can, for instance, be applied against future capital gains – which is why the government chose not to separate the revenue figures in the original budget papers.
Over a decade, both the trust measure and the combined CGT and negative gearing changes are each projected to raise more than $40 billion. A separate measure introducing a minimum 30% tax on discretionary trust distributions is forecast to raise at least $4.4 billion annually from the 2029–30 financial year.
‘Economic reform is never easy’
Addressing reporters in Parliament House ahead of the final vote, Prime Minister Albanese said passage of the legislation would provide workers, businesses, and investors with certainty ahead of the 1 July 2027 commencement date.
The bill's passage was secured after the Greens agreed to back the package in return for further amendments – including a prohibition on self-managed super funds (SMSF) borrowing to fund residential property investments – and an extended inquiry into the government's proposed NDIS overhaul.
The Coalition remained fiercely opposed throughout. Opposition senators had used a Senate inquiry earlier this month to press experts on the rigour of the government's economic modelling.
Business groups also registered alarm. Council of Small Business Organisations Australia (COSBOA) chair Matthew Addison warned during the inquiry: "Tax reform should encourage ambition, investment, and growth. Our concern is that, as currently drafted, these measures risk doing the opposite."
