Australia’s peak accounting group has warned Labor’s rushed changes to capital gains tax concessions could leave investment property owners and shareholders with a huge bill they hadn’t planned for — even if they didn’t sell.
CPA Australia, representing Certified Practising Accountants, noted in a Treasury Bill submission that replacing the 50 per cent capital gains tax discount with a 30 per cent tax on inflation-adjusted gains from July 1 next year would put an enormous financial burden on landlords and investors, with valuers typically charging hundreds of dollars per assessment.
That’s because Labor’s legislation would require all investors to seek a property valuation by June 30, 2027, so capital gains on either side of that date could be properly calculated.
Sign up to The Nightly’s newsletters.
Get the first look at the digital newspaper, curated daily stories and breaking headlines delivered to your inbox.
By continuing you agree to our Terms and Privacy Policy.
This would also apply to a range of other assets including shares, affecting millions of taxpayers at the end of the next financial year.
A simpler calculation for the Australian Taxation Office is yet to be devised in Labor’s legislation, whereby a 50 per cent CGT discount would apply for gains accrued from September 1999 to June 2027 before a new 30 per cent tax was applied to gains made after July 1, 2027.
“Without this, taxpayers and advisers cannot plan, and the transitional valuation cost, which Treasury has not disclosed, falls in full on Australian taxpayers,” CPA Australia said in its submission to the Senate economics committee.
Jenny Wong, CPA Australia’s tax lead, has called for the Federal Government to defer putting the legislation before the Senate, where Labor needs the support of the Greens to turn the Budget into law.
She made the call as welfare and social housing advocacy groups called for Labor’s changes to capital gains tax concessions and negative gearing to pass the Senate without delay.
“This is not a case of resistance to reform — it is a case of reform that could be done better,” Ms Wong said.
“This is the most compressed consultation cycle CPA Australia has encountered for legislation of this scale and complexity, and is, from a policy perspective, avoidable.”
Interest groups had just 11 days to make submissions to the Senate economics committee, having closed on Tuesday.
This committee is delivering a report on June 22, when the Senate sits again, after just 24 days of sifting through submissions and only two days of public hearings.
Australia’s peak accountancy group also warned against giving Treasurer Jim Chalmers the power to decide which assets the capital gains tax would be levied, even after the Budget measures became law.
“This is of genuine concern to the integrity of the parliamentary process and adds uncertainty,” CPA Australia said.
While Labor has grandfathered negative gearing for existing properties exchanged before Budget night the Greens, who have the balance of power in the Senate, in March indicated they wanted the laws to be retrospective, with Labor setting a July 2027 start date.
The Australian Council of Social Service is also arguing for grandfathering to be removed from Labor’s negative gearing changes to tax breaks for investors making a rental loss.
“The ‘grandfathering’ of existing negatively geared properties is problematic since it delays the impact of the reforms on public revenues and housing markets and preserves the unfair tax,” ACOSS said in its submission to the Senate economics committee.
But the peak body for welfare groups wants CGT changes to pass the Senate without delay.
“To provide certainty for those affected, we urge the Parliament to pass these elements of the Bill promptly,” it said.
Everybody’s Home, a social housing group, made the same call on Labor’s Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, that is likely to go the Senate later this month.
“We support the proposed reforms to negative gearing and the capital gains tax discount and urge the Parliament to pass the legislation without delay,” it said.
Treasury estimated restricting negative gearing to brand new properties from July 2027 and replacing the CGT concessions would cost $88.4 million in regulatory compliance costs.
That’s based on negative gearing and the CGT concessions being grandfathered for homes bought before Budget night on May 12.
But CPA Australia calculated the compliance costs would be $295m to $542m a year, continually, and at least $675m to $825m more as a one-off transitional cost.
“This is three to six times Treasury’s own estimate of $88.4 million,” it said.
“CPA Australia urges the committee to recommend that the Bill not proceed until Treasury publishes a revised and disaggregated compliance cost estimate, and the Government commits to targeted amendments to reduce structural compliance burdens.”
The Federal Government is reportedly examining an exemption for start-ups so they don’t incur a 30 per cent tax on capital gains.
The existing legislation gives an exemption for businesses with a turnover under $2m but CPA Australia argues the existing 50 per cent capital gains tax concession should be retained for businesses with an annual turnover of up to $20m.
Wilson Asset Management argued Labor’s capital gains tax changes were deter investors.
“Our central concern is that the Bills will make Australia a less attractive place to invest, build businesses and a better financial future,” it said in its submission.
“The legislation as drafted weakens the principle that Australians who work hard, save consistently and take productive risks should be able to improve their financial position over time.”