The Albanese government is drafting three new tax changes ahead of the May 12 federal budget. Restrictions on negative gearing, a rollback of capital gains tax, and the elimination of family trust tax breaks are all on the table, Sky News reported.
Negative Gearing Changes
Negative gearing changes could be confined to newly built properties, with existing landlords shielded from any immediate impact. Future investors could lose the ability to deduct rental losses from their taxable income.
Capital Gains Tax Overhaul
Treasury is also weighing up major changes to capital gains tax, potentially scrapping the 50 per cent discount and replacing it with an indexation model that taxes only real gains after inflation. Whether the change would apply solely to future investments, or involve a partial reset of existing assets, remains unclear.
Family Trusts Under Review
Family trusts are also under review, amid concerns they are being used to minimise tax rather than support legitimate family businesses and small enterprises. A minimum tax on trusts of 30 per cent, exempting farmers but affecting thousands of small businesses and families, is an option Treasurer Jim Chalmers is close to locking in to raise billions of dollars and improve the budget bottom line.
Any move to wind back negative gearing or capital gains concessions would represent a clear break from Labor's 2025 election commitments. During the campaign, Prime Minister Anthony Albanese repeatedly and unequivocally ruled out changes to both policies. On April 9, 2025, speaking to reporters in Sydney, Albanese shut down speculation about reform. 'Labor is not changing negative gearing. That is not our policy,' he said. Albanese made the comments while rejecting pressure from the Greens to scrap the concession, accusing then-party leader Adam Bandt of trying to 'make himself relevant' during the campaign.
As the budget approaches, the Prime Minister has shifted his language, increasingly framing Labor's economic agenda around fairness, resilience, and global uncertainty. In a video released on Sunday to mark one year since Labor's election victory, Albanese highlighted the government's cost-of-living measures, hinting towards major reform in the upcoming budget. 'One year ago, Australians put their trust in Labor to keep building Australia's future,' he said. 'Every day since, we've been focused on delivering lower taxes, more free visits to the GP, wiping 20 per cent of student debt and helping first‑home buyers with five per cent deposits.'
He warned that international instability was now being felt at home, with recent 'Conflict far from home is putting pressure on people here, from the servo to the supermarket,' Albanese said. 'No matter what's happening overseas, we'll keep doing things the Australian way, looking after people, making sure no one is left behind and no one is held back.' Both Albanese and Chalmers have repeatedly invoked intergenerational fairness in recent weeks, signalling it will sit at the heart of the upcoming federal budget.
