House Approves Major Tax Overhaul Targeting Investors and Capital Gains

Australia's House of Representatives approved legislation to narrow tax concessions for property investors and replace the current capital gains discount with an inflation-adjusted gains tax and a minimum tax. The bill, which also provides modest tax relief for workers, now moves to the Senate where the government will need crossbench support to secure passage.

Key Points

The House of Representatives approved the government's tax reform bill by 94-48, tightening tax breaks for property investors and ending the 50% capital gains discount for assets held over a year.
The reforms will tax inflation-adjusted capital gains and introduce a 30% minimum tax on net capital gains from July 2027, while limiting negative gearing to newly built homes to encourage investment in new supply.
Workers receive targeted relief via a A$250 tax offset and a new A$1,000 instant tax deduction, on top of previously legislated tax cuts worth up to A$536 annually.

SYDNEY, June 4 - The lower chamber of Australia's parliament voted on Thursday to pass legislation representing the country's most substantial tax reform in decades, curbing tax advantages for property investors and eliminating the current capital gains discount.

The bill cleared the House of Representatives by a margin of 94-48 after opposition and some independents pressed unsuccessful amendment attempts. The government had faced appeals from parts of the business community urging that the capital gains changes be limited to real estate and that businesses be spared from the broader overhaul.

The package, first outlined in last month's federal budget, replaces the existing 50% capital gains discount for assets held longer than a year with a regime that taxes inflation-adjusted gains. It also establishes a 30% minimum tax on net capital gains, scheduled to take effect from July 2027.

In addition to tightening tax settings for property investors, the legislation restricts negative gearing to newly built dwellings. The change narrows the current rule that allows investors to offset property losses against other taxable income, with the stated objective of redirecting capital into new housing supply.

The bill includes measures aimed at providing immediate relief to workers. These provisions comprise a tax offset of A$250 and a new instant tax deduction of A$1,000. These items are to be added to earlier legislated tax cuts that deliver up to A$536 a year in savings for individual taxpayers.

"Passed the House: tax cuts for every worker and a fair go for first home buyers," Prime Minister Anthony Albanese said on X.

With no government majority in the Senate, the measure will require support from crossbench senators to become law. That procedural reality introduces an element of uncertainty about the final shape and timing of the reforms.

Currency detail provided with the bill's release notes that $1 = 1.4035 Australian dollars.

Impacted sectors: property and real estate investors, construction and homebuilding, and broader financial services tied to investment income and taxation.

Risks

Passage in the Senate is uncertain because the government does not hold a majority and will need crossbench support - this could alter timing or scope of the reforms (affects legislative and financial sectors).
Some businesses have lobbied for exemptions to the capital gains changes, signaling potential opposition that could lead to amendments or legal and compliance uncertainty (affects corporate taxpayers and advisors).

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House Approves Major Tax Overhaul Targeting Investors and Capital Gains

Key Points

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