Australia scraps widow tax loophole in NDIS reform deal

The Australian federal government has agreed to scrap a tax loophole, colloquially known as the ‘widow tax,’ following a deal with the Coalition. The loophole within the government’s budget reforms would have caused widows and divorcees to lose negative gearing entitlements on investment properties.

In exchange for removing this provision, the Opposition has agreed to support Labor’s legislation to reduce spending on the National Disability Insurance Scheme (NDIS). The NDIS reforms had previously been stalled in the Senate, causing potential budget savings to erode.

Opposition Leader Angus Taylor offered the deal as an ultimatum, requiring the government to fast-track the widow tax amendment alongside fixes to capital gains and discretionary trust taxes. Pressure on the government increased after independent Senator David Pocock reported that a domestic violence victim had been denied property financing due to the loophole.