Source : Perth Now news
The Albanese government will consider whether new homes should be protected from a potential scaling back of the controversial capital gains tax.
Anthony Albanese is widely believed to be mulling changes in the May budget to the levy, which is applied after selling items like shares or property, and is part of a person’s annual income tax.
A discount of 50 per cent is given if someone has held the asset for more than a year and a person’s main residential property is exempt.
In a submission to the Senate Select Committee on the Operation of the Capital Gains Tax, the Business Council of Australia urged the government to consider exempting new homes from any scaling back of the capital gains tax.
“Any policy changes that result in a reduction to the CGT discount should therefore be structured in such a way as to not dis-incentivise investments in new dwellings,” chief executive Bran Black said.
Mr Black pushed back against any retrospectivity in regard to changes to the CGT, and said any alterations are “best done in the context of a broader tax reform effort”.
Speaking to Nine papers this week, the Prime Minister confirmed the government was mulling policy changes beyond housing supply.
It comes as Labor faces down a resurgent One Nation, which has sought to capitalise on anger over rising inequality.
“The system needs to work for people,” he said.
“You don’t change that by rhetoric and by dividing people, which is, what is some of the populist rhetoric.
“You do that by giving people a stake in the economy.”
Last week, Treasurer Jim Chalmers said he would be “pretty happy” if the headline out of the 2026-27 budget was that it was a “tax reform budget”.
That budget, however, will be finalised later than usual amid fallout from the war in the Middle East.
Labor twice proposed changes to negative gearing before the 2016 and 2019 elections.
At the time, those changes were not proposed to apply retrospectively or to all new housing, so as not to weaken investment.
The government has faced pressure from the Coalition and the crossbench ahead of the May budget over any changes to tax arrangements.
Greens Senator Nick McKim said Labor had a “historic opportunity to pass genuinely ambitious and progressive tax reform in this parliament”.
“If the government is serious about reducing inequality and fixing the housing crisis, now is the time” to change the GCT, he said last month.
The Coalition, meanwhile, has voiced concern about any changes that would increase the financial burden from taxes.
Financial journalist and author Alan Kohler told the Senate committee earlier this year the tax system sent “a clear signal that capital income is preferred over labour income”.
“I think that is one of the foundations of inequality in Australia,” he said.
Currently, capital gains tax is “over adjusted for inflation”, while income tax is not, he said.
Mr Kohler told the committee the 50 per cent capital gains discount is “more than it needs to be to adjust for inflation” and had encouraged investing.
