Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026

Dr MULINO (Fraser—Assistant Treasurer and Minister for Financial Services) (21:03): The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, along with the Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026, represents a once-in-a-generation reform that will ease cost pressures on ordinary Australians by making our tax system fairer for everyone. At its core, this bill is about delivering three outcomes: delivering a tax cut for over 13 million workers, helping more Australians realise the dream of homeownership and better aligning the tax system towards rewarding work.

The bill contains four schedules which are designed to achieve these outcomes. Schedule 1 amends the income tax law to replace the 50 per cent discount and return CGT to its original purpose by taxing real gains. Schedule 2 amends the Income Tax Assessment Act 1997 to limit negative gearing for residential property investments to new builds and key government housing priorities.

The working Australian tax offset is detailed in schedule 3, with the $1,000 instant tax deduction set out in schedule 4. We know that the cost of living is a challenge for many Australians. That is why we are introducing a new $250 working Australians tax offset for more than 13 million workers.

This $250 annual offset will only apply to earned income and will not apply to other forms of income such as investment income. It puts more money back into the pockets of 13 million working Australians and builds on the three tax cuts the government has already delivered. We are also delivering a $1,000 instant tax deduction.

This will simplify tax time and put more money back into people's pockets. Importantly, people can still claim additional deductions beyond that amount, including for donations, super contributions and professional fees. Around 6.2 million people are expected to benefit, with the average worker receiving about $205 extra at tax time.

Together with tax cuts already delivered and more already legislated, this means that the average worker could receive up to $2,816 in total benefits by 2028. This is a government committed to cutting income taxes responsibly and consistently, but this bill is not just about tax relief. It is also about fixing barriers to homeownership.

We are taking action to fix a system which is not working for young Australians. For too long too many Australians, especially young Australians, looking to buy their first home would turn up at an auction and would be bidding against an investor who had the whole tax system behind them. That's why we are acting.

Under this bill, negative gearing will be limited to new housing from 2027. This ensures tax incentives support construction and increasing supply where it is needed most. At the same time, we will return capital gains tax to its original intent.

By reintroducing indexation to inflation, investors will only pay tax on gains above inflation, on real profit, not on paper gains, and a minimum tax rate will apply to better align how capital gains are taxed compared to wages. These reforms are prospective and they are measured. Existing investments are grandfathered.

Importantly, these changes do not remove incentives to invest in new housing. Investors in new builds will still be able to negatively gear and will retain the option of the 50 per cent capital gains discount. The result will be a more neutral, more productive system where investment decisions are driven by economic value, not tax advantages.

Importantly, this package is expected to help deliver around 75,000 additional homebuyers over the next decade, helping reverse the long decline in homeownership. That will mean 75,000 individuals and families over the long run who are owning their own homes and not renting. Opposing this bill means maintaining a status quo that is increasingly shutting Australians, particularly younger generations, out of homeownership.

We know the current settings are not delivering fair outcomes and continuing along the same path would only deepen the challenges that younger Australians have. On this side of the House, we have had the courage to acknowledge that the system isn't working and we are taking considered, responsible action to set things on a better, fairer course. The choice before this House is clear: vote to fix a system that isn't working or side with a broken status quo.

I commend the bill to the House.