Prime Minister Anthony Albanese has come under fire after the biggest shake-up to capital gains tax discounts in more than two decades. Housing has taken centre stage in the government's landmark Budget, as Labor swings the axe at negative gearing and property tax incentives in a mammoth effort to fix generational inequality and provide cost-of-living relief.
Budget Announcements
Treasurer Jim Chalmers delivered a litany of broken election promises when he tabled his fifth Federal Budget on Tuesday night, announcing negative gearing will be wound back to include only new builds. Capital gains tax discounts have also been reduced. Under the previous rules, investors only had to pay tax on half their profits on sale. Now, the tax will be indexed to inflation and apply to the sale of any asset – including stocks and property.
Young Australians will be locked out of the tax break on which the Prime Minister built his property portfolio, including a $4.3 million clifftop property on the NSW Central Coast.
Biggest Losers from the Shake-Up
Millions of young Australians have been locked out of tax breaks that previous generations have enjoyed. The Albanese government has abolished the 50 per cent tax discount on all asset classes, including the stock market and existing property investments, in the Federal Budget handed down on Tuesday night. Under the old scheme, individuals and trusts that held assets for more than 12 months were able to claim a 50 per cent tax discount on profits earned from selling. Capital gains taxes have now reverted to the pre-1999 system, where discounts were indexed to inflation.
There are also changes to negative gearing, which allows investors to offset a loss-making property against other income. Investors who purchase existing homes after Budget night will only be able to use negative gearing until July 1, 2027.
Political Reactions
Prime Minister Anthony Albanese has been accused of hypocrisy by scrapping the tax benefits that he built his extensive property portfolio on. Shadow Assistant Minister to the Opposition Leader, Simon Kennedy, told Sky News: 'The majority of people who negatively gear are under 40. We are taking away opportunities for these people to grow their wealth that I have, that the Prime Minister is probably actively using now. We’re taking away lower tax treatment from them. What we’re doing is increasing taxes on young people. They will now pay the top marginal tax rate when they sell their investment property. They will no longer have negative gearing. We’re going to tax this generation even more. Now the hide of somehow dressing this up as solving intergenerational inequity when they will pay more tax tomorrow than they did today… that’s the fact of this budget.'
Kennedy added: 'There are loads of things we can do to lower the tax burden on young people, but what the Labor government is going to do is increase the tax burden on young people, rig the system further against them. I’ve benefited from CGT discount. I’ve invested well, no young person will ever have those tax benefits that I had or that the prime minister is probably actively using now.'
The Budget changes have sparked debate about intergenerational equity and the future of property investment in Australia.
