Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026
Ms BERRY (Whitlam) (18:04): I rise today to speak in support of these two important bills, which mark the first stage of the most significant transformation of the tax system in over a quarter of a century. These bills deliver on three key objectives: cutting taxes for every Australian worker, making it easier for people to buy their first home and better aligning the tax treatment of income associated with labour and income associated with assets.
The first bill, the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, amends taxation legislation to replace the 50 per cent capital gains tax discount for individuals, trusts and partnerships with cost based indexation and a 30 per cent minimum tax rate on capital gains accruing from 1 July 2027; limit negative gearing for residential property investments to new builds from 1 July 2027; introduce the working Australians tax offset, a non-refundable tax offset for Australian residents who earn labour income; and introduce a $1,000 standard deduction for work related expenses for Australian taxpayers.
The second bill, the Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026, amends the Income Tax Rates Act 1986 to impose a minimum 30 per cent tax on capital gains that are realised on or after 1 July 2027. The reforms contained in these two bills will build a better, fairer, simpler tax system by reducing the tax burden for over 13 million workers, supporting 75,000 more homeowners into the housing market and delivering $3.5 billion in new measures that lower taxes for businesses and startups.
It's important to remind the House that the Albanese government has already delivered tax cuts for every Australian taxpayer by bringing rates down and pushing thresholds up from 1 July 2024. Another tax cut will come into effect from 1 July this year, which is only four weeks away, and a third tax cut will be introduced from 1 July next year. This bill introduces two more tax-relief initiatives: the $250 working Australians tax offset and the $1,000 instant tax deduction for workers.
Together, the Albanese government's five tax cuts mean the average Australian worker will receive a combined benefit of almost $3,000 in 2028. The coalition voted against our tax cuts last year, which perplexed millions of Australian taxpayers across the country. We urge them not to make the same mistake again, because what we are proposing is responsible tax relief targeted to working people.
It will benefit teachers, nurses, tradies and other Australians who earn salaries and wages. The $250 working Australians tax offset will be available for every working Australian taxpayer for income years starting on or after 1 July 2027. It will provide a benefit for over 13 million Australian workers, including over six million women.
Importantly, this is not a temporary measure. It is a permanent structural improvement to the tax system that will help Australian workers keep more of what they earn, delivering targeted cost-of-living relief. Our instant tax deduction, which delivers on a commitment we made before last year's election, will make life simpler for millions of time-poor workers and put cash into their pockets as well.
Eligible individuals will be able to claim an instant tax deduction of up to $1,000 instead of claiming individual work-related expenses, saving time and money. The Australian Tax Office estimates this measure will save Australians $380 million in compliance costs each year. Over six million people will benefit—more than half of them women—with the average worker receiving an extra $205 at tax time.
It's important to note that taxpayers will still be able to claim more than $1,000 in work related deductions if they are entitled to, and they will still be able to claim non-work-related deductions on top of the instant $1,000 deduction. This includes charitable donations, superannuation contributions, union and professional association membership fees, and income protection, sickness and accident insurance premiums.
The second key objective of this legislation is to make it easier for people to buy their own home, because, for too long, too many Australians have been locked out of the housing market. I note that the previous speaker referred to 'the politics of envy' in relation to these measures and, can I say, the desire to own your own home has nothing to do with the politics of envy.
To suggest that it does, I think, is an offensive statement. The Albanese government's $47 billion investment in housing includes expanding the five per cent deposit scheme to all first homebuyers and introducing it earlier than originally scheduled. I'm delighted to say that more than 1,800 people in my electorate of Whitlam have been able to buy their first home thanks to Labor's expansion of this scheme in October last year.
We launched the Help to Buy scheme for low- and middle-income earners, with 10,000 places available each year for the next four years. We're delivering 55,000 new social and affordable homes by mid 2029 through the $10 billion Housing Australia Future Fund, our HAAF program, and the Social Housing Accelerator Program. We're extending the ban on foreign investors—investors buying existing homes—until mid 2029, helping more Australians into homes.
And we're delivering the biggest back-to-back increase in Commonwealth Rent Assistance in more than 30 years, which benefits more than 9,000 people in my electorate who currently receive Commonwealth Rent Assistance. Labor's primary focus, as we work hard to tackle the challenges associated with housing, continues to be on supply. That is why we are investing a further $2 billion in housing-enabling infrastructure to address one of the key barriers holding back more housing supply.
This funding will establish a new local infrastructure fund as part of the Housing Support Program to unlock the enabling infrastructure needed to finish housing projects that otherwise wouldn't go ahead due to a lack of enabling infrastructure that includes roads, water, power and sewerage. This funding will be provided to local governments and state utility providers, with $500 million reserved for regional Australia.
As I mentioned, the Local Infrastructure Fund will support up to 65,000 additional homes over 10 years. However, supply cannot be our only focus, because our distorted tax system has resulted in property prices far outstripping wages growth, and the dream of homeownership has become increasingly out of reach, particularly for young people. One of the issues raised most often with me by people in my electorate since I became the member for Whitlam just over a year ago is the affordability of housing.
This issue is not raised just by young people but also by parents and grandparents who are concerned for the future of their grandchildren and their children. There is widespread acceptance that Australia's housing market is not working. Young people on lower incomes are half as likely to own their own home than they were in the year I was born.
Many young Australians are putting off having children because of housing insecurity. We cannot accept this unfair status quo. That is why we are taking action to fix it.
Our reforms to capital gains tax and negative gearing will help 75,000 more homeowners to enter the housing market over the next decade. From 1 July 2027, the 50 per cent capital gains discount will be replaced by cost based indexation for assets held for more than 12 months, with a 30 per cent minimum tax on net capital gains. These changes will apply to all CGT assets, including pre-1995 CGT assets held by individuals, trusts and partnerships.
The changes will apply prospectively, with the 50 per cent discount applying to gains accruing up until 1 July 2027 and the indexation and the minimum tax used to calculate the CGT on gains accruing from 1 July 2027. Under the changes that take effect from 1 July in 2027, investors will index the cost base of their assets in line with inflation, so they pay tax only on their real gains above inflation.
The effective tax rate on capital gains will vary depending on an individual's marginal rate, their nominal returns and the inflation rate over the period the asset has been held. This means that not everyone will pay more tax under these changes. Some will pay less.
It will depend on their circumstances. A key change is that the introduction of the minimum tax reduces the benefit for taxpayers who defer capital gains realisation to years in which their marginal tax rates are low. It ensures their gains are subject to a tax rate closer to the rate that applied to them during their working life.
Importantly, recipients of certain government payments, including the aged pension and JobSeeker, will be exempted from the minimum tax if they receive any of these payments in the financial year in which they realise the capital gain. In line with our goal of supporting new housing supply, investors who buy new builds will be able to choose either the 50 per cent CGT discount or indexation and the minimum tax when they sell their property.
The existing CGT discount of up to 60 per cent that applies to qualifying affordable housing will also be fully retained to preserve incentives to invest in those assets. I want to stress that the four existing small business CGT concessions will remain in place, allowing eligible small businesses to reduce or remove tax on any gains when they sell. These reforms limit negative gearing for residential property investments to new builds and key government housing priorities.
From 1 July 2027, losses related to existing residential investment properties purchased after 7:30 pm on 12 May 2026 will only be deductible against other income from residential properties, including capital gains. Excess losses can be carried forward to offset residential property income in future years so investors can continue to claim a deduction in the future for costs such as maintenance.
Residential properties held on the date we announced these changes will be allowed to be negatively geared in future years until they are sold. This ensures that arrangements for taxpayers who have already made investment decisions based on the existing rules for negative gearing will not change. It's important to state that new builds can continue to be negatively geared after 1 July 2027, ensuring the benefits of negative gearing are directed to investments that support growth in Australia's housing stock.
Negative gearing will continue to support residential properties which genuinely add to supply, such as dwellings constructed on vacant land or where existing properties are demolished and replaced with a greater number of dwellings. I note these changes to negative gearing will only apply to residential property. Commercial property and other asset classes, including shares, will remain subject to existing arrangements.
Further exemptions to the negative gearing changes will also be available for private investors who support government housing programs, for example through the provision of affordable housing. I note that, while these two bills put in place the main provisions of our tax reforms, the government will consult on the most complex policy issues, including the application of capital gains tax changes to small and start-up businesses.
These bills will reduce the tax burden for over 13 million workers, help 75,000 Australians realise the dream of homeownership, deliver $3.5 billion in new measures that lower taxes for businesses and start-ups, and reduce compliance costs by $540 million a year. These reforms will make our tax system better, fairer and simpler and make our economy and our tax system work in the interests of more Australians.
They build on the tax reforms already delivered by the Albanese Labor government, consolidating our record of responsible economic management. Our tax reforms are pro aspiration, pro worker and pro investment. They are the right reforms even though they involve difficult decisions.
They take our intergenerational responsibilities seriously and don't leave those problems for the next generation to fix. For all of these reasons, I commend these bills to the House.