Australia's Labor government moves to fix widow tax on investment properties

The Australian Labor government released draft legislation to correct an unintended consequence of its 2024 budget that would have stripped negative‑gearing tax benefits from investment properties transferred through inheritance, death, divorce or relationship breakdown after July 2027. The proposed fix would allow the original negative‑gearing status to continue for the new owner, preventing a loss of deductions for widows, divorcees and other property holders. The draft is open for public comment until 21 August, and Treasurer Jim Chalmers said the amendment will be presented to parliament next week.

Opposition parties and independents have criticised the government for rushing the reforms. Nationals Senate Leader Bridget McKenzie called the change a “backflip” and accused Labor of economic incompetence, while Community Strong Australia MP Allegra Spender said the episode highlighted the risks of hasty tax legislation. Senator David Pocock, who first raised the issue, praised the fix as a step to protect women and families affected by the original rules.