Controversial ‘ambition tax’ reforms face a bumpy ride through Senate
Prime Minister Anthony Albanese (pictured) has confirmed that legislation enacting Labor's capital gains tax (CGT) and negative gearing changes will be introduced to parliament this Thursday, 28 May, as he pushes ahead with one of the most contested property tax overhauls in a generation.
The centrepiece of the reforms is a cap on negative gearing, limited to new residential builds from July 2027. The existing 50% CGT discount will be replaced by inflation-adjusted indexation, though new builds retain the option to use the discount to preserve investor appetite for new construction.
A second tranche of legislation covering implementation details – including potential carve-outs for technology start-ups – will follow a period of Treasury consultation with the Council of Small Business Organisations Australia (COSBOA), the Australian Chamber of Commerce and Industry, and the Tech Council.
The decision to hold industry consultation after the budget rather than before drew questioning from reporters. Albanese defended the sequencing on grounds that pre-announcement disclosure would create an unfair advantage for those privy to the details.
"What you cannot do is go out there and sit down with people and say, OK, from Budget night this change is definitely going to occur in detail, because there are implications of that, that's called insider knowledge," he said.
"Because changes are dated from – in capital gains and negative gearing – from Budget night, that is why you can't have the level of consultation … you want to see people coming forward in a common-sense way."
The same bill will also advance the $250 Working Australian Tax Offset and a standard $1,000 individual tax deduction.
MPs piling into Canberra for sitting week are being met with a stark reminder that not all are onboard with Labor’s controversial tax reforms.
Joseph Daoud, founder of It's Simple Finance, has taken out more than $17,000 worth of billboard advertising inside and around Canberra Airport in a vain attempt to halt what he dubs "ambition taxes”.
Last week, Property Council chief executive Mike Zorbas warned the reforms amount to a "big roll of the dice", arguing they create uncertainty at a time of rising labour costs, materials costs, and borrowing costs. "I genuinely hope that this series of measures does support the creation of new houses, but our modelling conducted over many years suggests it won't," he said.
Even without the industry push back, the bill faces a rocky path through the Senate, with the Greens using their Senate sway to push for far more ambitious reforms than the government has proposed.
Preliminary negotiations between the Albanese government and the Greens are under way, but the minor party has not guaranteed its Senate support, nor agreed to Labor's preference of bypassing a Senate inquiry.
Greens treasury spokesman Senator Nick McKim warned that Labor has been "handed a historic opportunity to pass genuinely ambitious and progressive tax reform," cautioning that "tinkering around the edges is not going to cut it”.
