The Albanese government has secured a deal with the Greens to overhaul capital gains tax (CGT) and superannuation concessions, in a move expected to raise $50 billion over the next decade. The changes, which will be included in the upcoming federal budget, target high-income earners and self-managed super funds (SMSFs).
Key Changes to Capital Gains Tax
Under the agreement, the 50% CGT discount for assets held longer than 12 months will be reduced to 25% for individuals earning more than $180,000 annually. The discount will also be capped at $50,000 per year. The changes are estimated to affect around 150,000 taxpayers, primarily wealthy investors and property speculators.
Greens treasury spokesperson Nick McKim said the deal was a "significant step" towards tax fairness. "For too long, the wealthy have exploited loopholes to avoid paying their fair share. These reforms will help fund essential services like health and education," McKim said.
Superannuation Concessions Targeted
The government will also reduce the concessional contributions cap for superannuation from $27,500 to $20,000 per year, and lower the non-concessional cap from $110,000 to $80,000. The changes will apply to accounts with balances exceeding $3 million, affecting approximately 80,000 SMSF members.
Treasurer Jim Chalmers said the reforms were designed to make the tax system more equitable. "These are sensible changes that ensure those with the broadest shoulders contribute more. The revenue raised will be directed towards cost-of-living relief and climate action," Chalmers said.
Impact on Housing and Economy
The Greens have secured a commitment from Labor to invest $5 billion in social and affordable housing over five years, funded by the tax changes. The party also pushed for a ban on negative gearing for new investment properties, but this was not included in the final deal.
Economists have mixed views on the package. Some warn that reducing the CGT discount could dampen investment in housing and shares, while others argue it will help cool the overheated property market. The government estimates the changes will reduce house prices by 2-3% over the medium term.
Political Reaction and Next Steps
The Coalition has criticised the deal, accusing Labor of breaking election promises. Shadow Treasurer Angus Taylor said the changes would "punish hard-working Australians who have saved for retirement." The government insists the changes only affect the top 5% of earners.
The legislation is expected to be introduced in parliament next month, with the changes taking effect from 1 July 2027. The Greens have agreed to support the bill in exchange for the housing investment and a commitment to review the tax treatment of cryptocurrencies.
