Treasurer Jim Chalmers has acknowledged that Labor's tax reforms in the forthcoming budget will centre on housing, with the government considering the abolition of negative gearing and a reduction in the capital gains tax discount.
Current Tax Provisions
Australia's capital gains tax discount permits individuals and certain trusts to pay tax on only 50 per cent of a capital gain when they dispose of eligible assets, such as shares or investment properties, that have been held for over 12 months. Negative gearing enables investment property owners to offset losses and running costs—including loan interest and council rates—against their taxable income. Critics argue this encourages investors to acquire additional properties, exacerbating housing affordability challenges.
Chalmers' Statement
During an appearance on Sunrise, Chalmers indicated that any tax reforms would be directed at housing, with announcements expected in the next Budget, scheduled for delivery on May 12. He stated, 'When we think about the intergenerational unfairness in the budget, in the economy and our society more broadly, a couple of the drivers of that are in housing, are in the tax system.'
Chalmers elaborated, 'We've been upfront with people and said that we think that there are issues in the housing market and in the tax system that we are working through. There are some issues of intergenerational fairness that we're very focused on. And one of those issues is around whether or not young people can get a toehold in the housing market.'
He added, 'I think a lot of us are very concerned about, over time, the way that there are fewer and fewer younger people who are able to buy their own home. So housing supply is the main game. We want to make sure that people can actually get a toehold in this market as well. And so that's driving some of these deliberations as we get closer and closer to finishing the budget.'
