UPDATE: The Albanese government is considering significant changes to the 50% capital gains tax discount that has favored older Australians, sparking immediate concern among property investors. This potential overhaul comes as Prime Minister Anthony Albanese prepares for a major reform budget set for May 2026.
Officials confirm that discussions are underway to revise the long-standing tax break, which allows investors to pay tax on only half the profit from selling investment properties held for over a year. Introduced in 1999 under then-Prime Minister John Howard, this discount has drawn criticism for disproportionately benefiting wealthy Australians, particularly those over 50.
The Australian Council of Trade Unions (ACTU) has publicly endorsed changes, advocating for a reduction of the discount to 25%. ACTU President Michele O’Neil emphasized that reform is crucial to address Australia’s escalating housing crisis, suggesting that any changes should only apply to new investments while allowing current arrangements to remain intact for a transition period.
In a recent interview, Treasurer Jim Chalmers hinted at the necessity for tax reforms aimed at promoting intergenerational fairness. He stated, “We know that people would like us to do more,” signaling a shift in the government’s approach to tax policy.
The urgency of this matter is amplified by rising housing costs, with recent research revealing that Australians now need to earn approximately $200,000 annually to avoid mortgage stress on typical homes in major cities. As parliamentary pressure mounts, a Greens-led Senate inquiry is scheduled to evaluate the capital gains tax discount over the coming month. Senator Nick McKim described the discount as “Australia’s most unfair tax break,” arguing it entrenches wealth among property owners while sidelining first-time buyers.
Critics argue that the current system encourages speculation over home ownership, with data showing that a staggering 54% of the benefits from the CGT discount flow to the top 1% of income earners. Senator McKim highlighted that, in the past year alone, $12.7 billion was allocated to those at the top, exacerbating inequality and making it harder for younger Australians to enter the housing market.
As discussions intensify ahead of the May budget, the potential rollback of this tax break could significantly reshape the Australian property landscape. Investors and homeowners alike are urged to stay informed as developments unfold.
Watch for further updates as the government’s plans become clearer in the coming weeks.
