Deal clears path for legislation
Changes to negative gearing and capital gains tax will get a parliamentary green light after Labor made a handful of concessions.
A tax increase on investments is expected to become law after Labor and the Greens reached a deal to close a loophole for self-managed super funds and delay planned changes to the National Disability Insurance Scheme.
The agreement, reached on Tuesday morning, means the federal government’s plans is likely to pass parliament by Thursday.
It allows the government to avoid a potentially lengthy delay when politicians leave Canberra for the five-week winter break.
Changes to super and tax settings
Prime Minister Anthony Albanese agreed to prevent people from avoiding the capital gains tax increase by purchasing property using money borrowed through a self-managed super fund.
The change is expected to raise about $50 million over four years, Treasurer Jim Chalmers said, while delaying changes to the NDIS will cost several hundred million dollars.
Super funds are protected from the tax changes, which will remove the 50 per cent capital gains tax discount for established properties and replace it with indexation of the cost base and a 30 per cent minimum tax.
Self-managed super funds will be banned from using limited recourse borrowing arrangements, which allow trustees to borrow for property while protecting other fund assets.
Broader policy changes
The bill also includes abolishing negative gearing for established properties, a $250 annual tax offset for workers and a standard $1000 deduction for work expenses.
Changes will apply to all assets, including businesses, although the government has announced a carve-out for innovative firms.
Those carve-outs will not be included in this week’s legislation, but are expected in a future bill before the changes take effect in 2027.
NDIS reforms delayed
As part of the agreement, the government will extend an inquiry into changes to the National Disability Insurance Scheme.
An interim report is expected to be tabled, with the final report now due by August 14.
The government has also agreed to amendments to limit ministerial powers over budgets, improve transparency in decision-making and prevent restrictive practices for participants.
