Australia's Parliament Passes Major Tax Reform Overhauling Negative Gearing and Capital Gains Rules

Australia’s federal parliament approved a sweeping tax reform package after a deal with the Greens. The legislation limits negative‑gearing deductions to new‑build residential properties, grandfathering existing arrangements, and replaces the 50 % capital‑gains‑tax (CGT) discount with a cost‑base indexation system and a 30 % minimum rate. The changes extend to all assets, including businesses, with a carve‑out for the startup sector, and close the so‑called “widow’s tax” loophole.

Prime Minister Anthony Albanese defended the reforms, saying they correct a “broken” system and will ease housing pressure for younger Australians. Treasurer Jim Chalmers echoed the view, describing the measures as “the most important part of the most ambitious tax reforms in more than a quarter of a century”. Former Reserve Bank governor Philip Lowe criticised the changes, warning they will not boost housing supply and shift policy from growth to redistribution. The opposition, led by Angus Taylor, promised to repeal the reforms if elected.

The package will take effect from July 2027 for CGT changes and next year for the negative‑gearing restrictions, with additional tax cuts, six months of paid parental leave and permanent urgent‑care clinics slated to commence within weeks.