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Australia’s House of Representatives has passed a landmark tax reform bill that proposes significant changes to property investment taxation and capital gains treatment, while also introducing new tax relief measures for workers. The legislation is aimed at improving housing affordability by limiting tax concessions for property investors and encouraging investment in new housing supply. The reforms, which form a key part of the federal government's recent budget agenda, will now move to the Senate for approval. The package also includes additional tax offsets and deductions for individual taxpayers alongside previously announced tax cuts.
Australia’s House of Representatives has approved a major tax reform bill that could bring some of the most significant changes to the country’s tax system in decades. The legislation seeks to reduce tax advantages available to property investors, encourage investment in new housing developments and improve housing affordability.
The bill was passed by a vote of 94-48 after attempts by the opposition and several independent lawmakers to amend the proposal were unsuccessful. During the parliamentary debate, some business groups had called on the government to limit the proposed capital gains tax changes to real estate assets and provide exemptions for businesses. However, the legislation was passed without those changes.
Prime Minister Anthony Albanese said on social media that the bill’s passage would deliver tax cuts for workers while providing greater opportunities for first-home buyers.
The legislation will now be considered by the Senate, where the government does not hold a majority and will need support from crossbench senators for the measures to become law.
The reforms were first announced as part of the federal budget presented in recent weeks. Under the proposal, the current 50% capital gains tax discount available on assets held for more than one year would be replaced with a tax system based on inflation-adjusted gains. In addition, a minimum 30% tax on net capital gains is scheduled to take effect from July 2027.
A key housing-related provision involves changes to negative gearing rules. The government plans to restrict negative gearing benefits to newly built homes, directing investor capital towards increasing housing supply. The move would narrow existing provisions that allow investors to offset property investment losses against their taxable income.
The reforms come at a time when housing affordability remains a major policy issue across Australia. Policymakers have increasingly focused on boosting housing supply while addressing concerns that existing tax settings have encouraged investment in established homes rather than new residential developments.
Alongside the property and capital gains changes, the bill introduces further tax relief for workers. Eligible taxpayers would receive a tax offset of AUD 250 and an instant tax deduction of AUD 1,000. These measures would be added to previously legislated tax cuts that are expected to provide annual savings of up to AUD 536 for individual taxpayers.
Source Reuters
5th Jun, 2025
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