Australia: Update on proposed legislation to amend capital gains tax and introduce new tax reform measures
Government announced that it will make targeted amendments to the bills currently before Parliament.
Following the first round of post-budget consultation, the government announced further implementation details for its proposals to amend the capital gains tax (CGT) discount and introduce new tax reform measures, which are included in Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026. Read TaxNewsFlash
The government announced that it will make targeted amendments to the bills currently before Parliament, including:
- Extending the eligibility of the small business 50% active asset CGT reduction to more businesses by increasing the turnover threshold from AU$2 million to AU$10 million
- Providing deductible gift and donations reduce capital gains that are subject to the minimum tax, to maintain tax incentives in relation to charitable giving
- Providing the list of income support payments that qualify for an exemption from the minimum tax on capital gains
- Embedding the calculation method for the Working Australians Tax Offset in legislation
- Removing ministerial powers no longer needed to give effect to the government’s policy intent
The government also announced its intent (with legislation to be introduced later this year following consultation) to remove ministerial discretion in relation to the definition of (1) new builds that are eligible to choose a 50% discount on gains accrued from July 1, 2027, and eligible to access negative gearing for properties purchased after May 12, 2026, and (2) the types of housing investment exempt from the limits on negative gearing, including affordable housing.
The government also released a consultation paper on the design of a targeted 50% CGT discount for early-stage investors including founders and employee share scheme participants of innovative start-up businesses. The government says that it will consider expanding eligibility to 15 years for start-ups in sectors such as biotech and medtech that can take longer to commercialize. Consultation on the arrangements for innovative start-ups will close July 10, 2026.