Labor's contentious property tax reforms are set to pass the Senate after a deal was reached with the Greens, clearing the path for the Albanese government to enact its budget centrepiece before the winter parliamentary break.
Key Changes to Tax Breaks
The capital gains tax discount of 50% on profit from sold assets will be replaced by a cost-based indexation model from July 2027. Negative gearing concessions will no longer apply to investment properties purchased after 7.30pm on 12 May 2026, with exemptions for new builds and certain government housing programs.
The government agreed to remove a loophole allowing investors with self-managed super funds to continue benefiting from the tax breaks, and also limited ministerial powers that could reverse the reforms in the future.
NDIS Reforms Delayed
As part of the deal, legislation to contain the growth of the $50-billion-a-year National Disability Insurance Scheme (NDIS) will be delayed until at least mid-August. This gives the Greens and disability advocates a two-month window to pressure the government to abandon the reform.
The Greens secured an eight-week extension to a Senate inquiry into the NDIS changes and negotiated amendments to limit the minister's power to make blanket cuts to categories of participant supports. The minor party will still vote against the NDIS legislation, which it considers “cruel” and harmful to the more than 240,000 people expected to be forced off the scheme under the cost-saving plan.
Political Reactions
Prime Minister Anthony Albanese defended the tax reforms, stating, “Most Australians have nothing to sell but their time, nothing to give but their hard work, and that’s how they earn an income. That’s how they put food on the table, and we want those people, those hard-working Australians, to have the opportunity to own their own home.”
Greens leader Larissa Waters acknowledged the reforms “could have been so much better” but called them a “small step in the right direction.” She vowed to “push in every possible way for this bill to never pass” regarding the NDIS changes.
Opposition leader Angus Taylor labeled the deal “dangerous,” saying it would hurt business investment and housing supply. He reaffirmed the Coalition's commitment to repeal the tax changes if it wins the next election.
Next Steps
The government will need to draft a second piece of legislation addressing trusts and a special capital gains tax concession for startups, requiring fresh negotiations with the Greens. The Coalition has offered to work with the Greens to extend the NDIS inquiry for six months in exchange for more scrutiny of the tax bills.
Health Minister Mark Butler remained confident in Labor's NDIS plan, stating, “It’s hard reform, but I’m not going to sugar-coat the fact that big change needs to happen to the NDIS. We’ve designed that change very carefully.”
