Australia's tax reform targets capital gains, negative gearing and short‑term rentals

The Australian government, led by Prime Minister Anthony Albanese and Treasurer Jim Chalmers, is overhauling the tax system. Proposed changes would replace the existing 50 percent capital‑gains‑tax discount with an inflation‑indexed rate and limit negative‑gearing deductions to new‑build properties. The Treasury is also considering a carve‑out that would let start‑ups retain the current discount.

The reforms aim to ease the tight rental market, which has seen vacancy rates fall below 1 percent and rents rise over 22 percent since mid‑2023. About 175,000 short‑term rentals – roughly 1‑2 percent of the market – could be affected, potentially shifting some units back to long‑term use. Government modelling suggests house prices may be 2 percent lower than they would have been without the reforms, while rent increases are projected to be less than $2 a week.

Business groups have warned that the changes could reduce investment attractiveness and hurt productivity, while housing advocates argue the measures are needed to improve affordability for young Australians.