Housing Minister Clare O'Neil has acknowledged that consultations on small business carve-outs related to the government's capital gains tax (CGT) reforms should be completed "speedily," amid ongoing backlash from various sectors. Speaking on ABC's Insiders program on Sunday, O'Neil defended the reforms, arguing that the criticism has been "completely out of proportion" with the actual impact of the changes.
The proposed CGT overhaul would replace the existing 50 per cent discount—introduced in 1999 under the Howard-Costello government—with an inflation indexation model applicable to all asset classes, including investment properties, shares, and businesses. Additionally, a 30 per cent minimum tax rate would be introduced.
O'Neil described the current discount regime as a "huge mistake" that inadvertently made residential property the most attractive low-risk investment in Australia, driving investors away from shares and into housing. She emphasized that the reforms aim to create a neutral investment platform, allowing investors to make decisions that benefit both themselves and the national economy.
Despite the government's stance, O'Neil faced tough questions about the timeline for finalizing potential carve-outs for small businesses. While she insisted the government would not be "driven by the politics of the moment," she conceded that resolving the matter speedily is in the nation's best interest.
Treasurer Jim Chalmers introduced the tax package, including CGT and negative gearing reforms, as an omnibus bill to the House of Representatives on Thursday. He noted ongoing consultations with start-ups, particularly regarding indexation applied to low or zero cost bases, and indicated that any subsequent carve-outs would be addressed in additional legislation, describing this as a standard approach.
The government maintains that the changes will level the playing field in the housing market and encourage more productive investment. However, critics argue that the reforms could harm small businesses and reduce investment incentives. The consultation process is expected to continue in the coming weeks.
