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I thought this article was relevant to our discussion in class, where we discussed tax as a social justice issue. The inflation tax disproportionately impacts fixed-income earners because they cannot renegotiate wages in real time, and unlike formal taxation, it operates without transparency or explicit legislative design. This article highlights importance of visibility and financial literacy for tax payers and how tax can reinforce existing social inequalities.

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Government spending is pushing up the inflation tax on everyone

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Budget cuts are needed not for its own sake but to lessen capacity constraints on private sector investment, innovation, and productivity.

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Hi guys, I thought this article was relevant to our discussion on Wednesday, by highlighting the difficulty behind designing a tax that is fair, efficient and simple.

It critically analyses Labor’s proposed changes to the Super Tax, which is set to take effect on June 30 2026, and highlights some potential problematic outcomes.

The Albanese Government’s stated rationale is that the current framework is overly generous to high-income earners, with the Government noting that 17 individuals hold superannuation balances exceeding $100 million and that the existing concessional tax rate of 15 per cent on earnings has been used as a tax evasion strategy.

The Government proposed a plan to effectively increase the tax on earnings of super balances above 3 million dollars from 15% to 30%. The policy was framed as affecting only the top 0.5 per cent of superannuation account holders. However, critics argued that the $3 million threshold was not indexed, meaning that over time it could capture a far broader cohort, including younger Australians who are projected to accumulate higher superannuation balances by retirement.

In response to this criticism, the Government proposed a new version of the tax that would index the $3 million threshold. The article nevertheless raises a number of additional concerns about the practical and policy implications of the reform.

Anyways have a read and see what you think.

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3 reasons to watch Labor’s new super tax (even if you don’t have $3m)

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A looming 2026 valuation deadline and quirk in how investment returns are calculated mean every trustee should be aware of the new tax.

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As mentioned in class last week, reforms of the capital gains tax is a hot topic, with an ongoing Greens-led Senate enquiry and public hearings being undertaken ahead of its report in March and the May budget. I found this explainer a helpful starting point for understanding the different stakeholders and mechanisms of the CGT. It provides background to the development of reforms, with helpful examples and a modelling tool to illustrate different scenarios and impacts on differing assets.

It illustrates the argument that the capital gains tax discount may be too generous, in favour of property investors over younger buyers, with the backdrop of the growing housing affordability crisis. Modelling suggests that shifting to an inflation-indexed system would increase tax for property investors but reduce it for share investors, highlighting how different assets are affected. Overall, the debate centres on balancing fairness, housing affordability, and government revenue, with any reform likely to create both winners and losers.

https://www.afr.com/policy/economy/shares-v-property-who-wins-if-jim-chalmers-dumps-the-cgt-discount-20260209-p5o0oe

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Why share investors could see a 35pc cut under capital gains reform

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This article on Tim Wilson’s opposition to superannuation tax reform helped me realise that taxation involves more than technical calculation and instead raises broader questions of social justice and value choices. In Class, we discussed equity as a key objective of tax design, and this article illustrates how fairness can be understood in different ways in practice. Tax policy often requires balancing competing conceptions of equity. By framing the protection of retirees’ interests as fair, Wilson advances a particular view of equity that may also preserve existing wealth structures. Overall, the article highlighted for me that tax policy frequently reflects value conflicts between different social groups, alongside considerations of economic efficiency.

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Tim Wilson, the Liberal MP who campaigned relentlessly to help kill Labor's superannuation tax on unrealised gains and franking credit crackdown, has emerged as a frontrunner to be the new shadow treasurer.

But Wilson's flirtation in his book about the intergenerational inequity of high personal income tax compared to the capital gains tax discount on investment properties could complicate matters, as Labor considers winding back the CGT break, said one Liberal source who requested anonymity.

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'Retiree tax' crusader is contender to be shadow treasurer

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Tim Wilson, the Liberal MP who campaigned relentlessly to help kill Labor's superannuation tax, has emerged as a frontrunner for the high-profile role.

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The former RBA governor, Bernie Fraser, has expressed support for abolishing the capital gains tax (“CGT”) discount. In my view, this is somewhat relevant to the discussion on the criteria of a ‘good’ tax that took place during the first week’s lecture.

The proposal to abolish the CGT discount (the “Proposal”), at least with respect to its aim of improving housing affordability as suggested by the attached news article, engages the criteria of economic efficiency and equity.

With respect to economic efficiency, the Proposal appears to have the effect of increasing the amount of CGT payable by real estate investors. With my limited understanding of economic theory, such an increase would lead to economic inefficiency if it were to be viewed independently. Further, the Proposal would not only impact real estate investors but also investors in general. With some vibrant capital markets such as Hong Kong and Singapore having no capital gains tax, there may be an adverse impact on the amount of foreign investments.

On the bright side, the proposal could improve equity in terms of housing affordability. The “Demographia International Housing Affordability 2025” report published by the Center for Demographics and Policy of Chapman University has identified the top 10 most unaffordable housing markets. In my observation, all these markets are within jurisdictions with no CGT (or similar tax) or with CGT discount (or other CGT benefits applicable for long-term investments). The Proposal may indeed lead to more affordable housing in Australia, noting however that housing affordability depends on a large number of factors. (Link to the abovementioned report: https://blogs.chapman.edu/demographics-and-policy/2026/02/16/latest-publications-and-reports/)

The discussion above only concerns the trade-off between economic efficiency and equity. There are also other considerations worth taking into account when assessing the feasibility of the Proposal. A relevant consideration could well be the history of CGT (see, for example, [6.1] of the textbook) as to maintain policy consistency.

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Former RBA governor calls for capital gains tax discount to be scrapped

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Bernie Fraser tells a Senate committee hearing on capital gains tax that, if it were up to him, he would abolish the discount, as he warns younger Australians are watching the unaffordable housing market in “dismay”.

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Contrary to popular belief, Australia is not always tax-free upon death. While we avoid the UK’s potential 40% death duties above the 325,000-pound threshold on worldwide assets if the deceased was considered domiciled. Australia's system is a fragmented or quasi-death tax model.

Australia has various potential death taxes:

1. Summons for Probate: This depends on the gross value of the estate, reaching $7,099 for estates of $5m+ in NSW. https://supremecourt.nsw.gov.au/documents/Forms-and-Fees/FEES/Fee-Schedules/Fees-1-July-2025.pdf

2. Superannuation: A lump sum superannuation death benefit paid to a non-dependent adult child is subject to a 17% or 32% tax (including the Medicare levy), depending on the super components involved. This drops to 15% or 30% if your Will directs it to be payable to the Estate or personal legal representative, which is why filling out a binding death benefit nomination form with your superfund is important.

https://legalconsolidated.com.au/super-death-tax/?srsltid=AfmBOoqZZnCihwlsZZB0Egq334vsoxI1Kr3MTzSV28ClYYgIP-mzEkrL

3. Stamp duty: For example, if one sibling buys out the others, stamp duty may be payable on the transfer, subject to concessions.

4. Capital Gains Tax: You must sell/dispose or move into the deceased’s primary residence within two years. Otherwise, the property's value at the date of death becomes the new cost base, and you will owe CGT on any subsequent gains.

https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/inherited-assets-and-capital-gains-tax/how-cgt-applies-to-inherited-assets

5. Income tax: If the deceased estate earns income (e.g. rent or dividends) before the assets are distributed, the estate or beneficiary may pay income tax on those earnings and file a final tax return.

Beyond these established costs, new regulatory shifts are threatening to add even more weight to the burden.

Draft Tax Determination TD 2026/D1 has just been released and is open for public comment until 27-02-2026.

https://www.ato.gov.au/law/view/document?docid=DXT/TD2026D1/NAT/ATO/00001

In summary, it outlines the ATO’s view on the meaning of the right to occupy the dwelling under the deceased’s will.

I found this article below particularly interesting. https://www.accountantsdaily.com.au/tax-compliance/22115-tax-office-imposes-death-tax-on-family-homes-by-stealth

Despite little publicity, the ATO’s characterisation of a testamentary trust as ‘separate and distinct’ from the deceased’s Will may have future consequences for this beneficial structure.

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I’m posting this now because our Week 1 'light touch' on GST highlighted that tax definitions are often blurred; this AFR article on Christmas lunch illustrates exactly how defining a 'production category' (like raw vs. processed meat) forces a difficult tradeoff between simplicity, efficiency, and equity.

It serves as a practical follow-up to our introductory discussion, showing that when tax law struggles with clear categorisation, it creates real-world distortions in consumer behaviour and market pricing.

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‘Tax Grinch’: The secret to saving 10pc on your Christmas lunch

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Glazed ham, pavlova and Christmas pudding are all festive staples at a traditional Australian Christmas lunch. But do you know which are taxed?

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Taxing unrealized capital gains? By Amazing GK

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Taxing unrealized capital gains? By Amazing GK

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It seems that The Netherlands finally did it. I trust this will be scaring away migrants from there, despite the beauty of the country (and their people he he he).

Australia has considered doing this a couple of times, but we haven't got there. Don't even know if you can objectively measure unrealized capital gains for all assets.

BTW - Did you see my last post here? It seems to have disappeared.

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Dutch Lawmakers Approve a 36% Tax on Unrealized Crypto, Stock, and Bond Gains - IMI Daily

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Starting January 2028, the Netherlands is set to require that residents pay tax on paper profits they have not yet cashed in, pending Senate approval.

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This article discusses Labor’s second attempt to pass changes to superannuation tax for people with super balances in excess of $3M. The revised proposal retains the idea of increasing the tax from 15% to 30%, however shows considerable revision in light of criticism. Specifically, it removes taxation of unrealised gains, indexes the thresholds, and adds a new $10m threshold with a higher rate of 40%. Further, it increases the low-income superannuation tax offset and expands eligibility. I thought it was interesting because it illustrates that tax law is not simply about rules on paper, but also about policy design, fairness, and political negotiation. It also shows how legislation evolves through criticism and consultation.

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Labor tries again on super taxes, but success will hinge on Greens support

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A second attempt to raise taxes on high super balances has been presented to parliament, but will require the support of the Greens to secure Senate passage.

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Off the back of our class discussion today, I thought it would be interesting to revisit recent (and somewhat controversial) Australian court decisions which inform our approach to various topics we touched on.

1. Regarding royalties, we spoke about how the ATO (and the courts) often take into account substance over form when characterising a transaction. In Federal Commissioner of Taxation v PepsiCo Inc & Anor [2025] HCA 30 ('PepsiCo'), we saw the ATO attempt to characterise payments for beverage concentrate as a royalty. Summarising the facts on a high level, the case concerned an agreement whereby money was exchanged for beverage concentrate. The ATO's primary argument was that the true nature of the agreement was that money was being exchanged for both the beverage concentrate and the rights to use the Pepsi recipe (their intellectual property) which would allow them to turn that concentrate into the bottled product. This is because concentrate on its own is considerably less valuable if the buyer has no way to transform it to a readily sellable product (using the recipe). The HCA found that the transaction was not a royalty, and further rejected the ATO's argument that the companies had deliberately excluded the word 'royalty' from their contract to avoid tax (thus thwarting the ATO's attempt to impose diverted profits tax). This finding clarifies the legal boundaries around the ATO's substance-over-form approach, thus constraining the Commissioner's attempt to broaden the definition of 'royalty' to expand its revenue base.

2. Separately, our discussion of the allocation of income to a related entity (Myer case) brings up issues which were brought to the High Court in Bendel. The High Court is expected to deliver its judgement on this in the coming months. https://www.accountantsdaily.com.au/tax-compliance/21837-high-court-hears-bendel-appeal . Less relevant case but interesting to see the outcome.

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Yesterday, the High Court of Australia heard the Commissioner of Taxation’s appeal in the ongoing Bendel saga. The judgment is expected to be handed down early next year.

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Late last week, the US Supreme Court ruled (6-3) that the Liberation Day tariffs enforced by President Trump were unlawful.

In response to the ruling, democrats and corporations have begun pushing for refunds of the tariffs paid prior. FedEx announced yesterday that they were bringing legal action to demand a refund of their share of the total estimated $175 billion in levies paid as a result of this illegally enforced tariff regime.

This then begs the question of whether corporations will pass down any of the reimbursements to the consumers, which the Democrats are encouraging them to do.

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Democrats are pushing for refunds after Supreme Court blocks Trump tariffs

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A majority of President Donald Trump’s tariffs were struck down by the Supreme Court on Friday, leading him to seek other legal mechanisms for the duties.

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This AFR article (published last Friday) highlights the increasing economic pressure on Treasurer Jim Chalmers as weaker real wages, productivity concerns and ongoing inflation complicate fiscal management. A key implication is the central role of tax policy, particularly income tax, in responding to cost of living pressures while maintaining government revenue. This article is relevant as it demonstrates how income tax operates not only as a legal framework but also as a macroeconomic policy tool. Issues discsused today such as bracket creep and delayed tax relief demonstrate how the timing of tax changes can affect taxpayers’ real burden even without formal rate increases. Overall, this article illustrates how economic conditions can shape the practical impact of tax rules.

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Under pressure Chalmers suddenly has a challenge on his hands

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The economic scoreboard isn’t going the treasurer’s way, and his spin is wearing thin as the opposition prepares to take the fight to Labor. Can the government change course?

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Great news for schooner lovers! In August 2025, the Labour government delivered on their election promise by freezing the excise indexation on draught beer until August 2027. Previously, draught beer faced twice-yearly inflation adjustments on excise tax. This move was introduced to support approx. 300,000 hospitality jobs, exemplifying the practical impact of federal tax policies on the lives of many people. Treasurer Chalmers has attributed this decision to wanting to take pressure off "beer drinkers, brewers and bars", nodding to Australia's cost-of-living crisis and struggling hospitality industry.

Interestingly however, this protection did not extend to spirits. As of THIS MONTH, the cost of spirits increased to $108/L. This contradicts other government efforts to foster 24 hour cities, including the lifting of lock-out laws, raising interesting questions about the intersection between tax, policy and broader social/cultural debates.

So here we are seeing a discrepancy in how different types of alcohol are being treated from a policy perspective. This compounds our already complex tax system for alcohol - spirits are taxed based on their alcohol content at a much higher rate than beer and wines. This decision has been criticised by the spirits industry for creating a "two-speed" system that favours brewers over distillers and pubs over bars.

In Week 1, we were asked about the relationship between tax and social justice, and I think this policy invites interesting reflection.

The protection of beer prices reflects a deliberate endorsement of the pub as a cultural institution in the Australian social imaginary. Supporting pubs during our cost-of-living crisis therefore aligns tax policy with our cultural values and with employment in a sector that functions as both an economic and social hub. At the same time, broader efforts to foster 24h cities suggests a recognition that vibrant nightlife, including bars and clubs, contributes to urban vitality, tourism and small business growth. Supporting beer/pubs may indirectly stimulate other alcohol segments by encouraging people back into nightlife precincts.

However, the arguably discriminatory nature of this relief raises short-term concerns of competitive fairness. There is also the social consideration that tax concessions which make alcohol cheaper misaligns with public health objectives, including responsible service of alcohol, harm minimisation and reducing alcohol-related violence. If tax policy that signals affordability is prioritised over harm reduction, it may gradually erode the normative force of alcohol safety frameworks.

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The Albanese Labor Government will provide tax relief for Australia's distillers, brewers and wine producers.

Currently brewers and distillers get a full refund of any excise paid up to $350,000 each year. The Government will increase the excise remission cap to $400,000 for all eligible alcohol manufacturers. The Government will also increase the Wine Equalisation Tax (WET) producer rebate to $400,000.

Adjusting the taxation arrangements will back an important local industry as well as supporting regional tourism, investment and job creation. Currently around 1,500 brewers and distillers and 3,000 wine producers access these tax incentives.

The proposal will apply from 1 July 2026.

In addition to the tax relief, the Australian Trade and Investment Commission (Austrade) will be providing Australian distillers, brewers and wine producers with additional support to help them grow their exports in high priority overseas markets.

This support includes the opportunity to join in trade missions, expert advice and connections to help our small and medium size exporters tap into fast growing markets, including in Southeast Asia and beyond.

The tax relief is estimated to decrease tax receipts by $70 million over five years from 2024-25.

Quotes attributable to the Prime Minister Anthony Albanese:

"To build Australia's future, we need strong small and medium sized businesses generating jobs and economic opportunity for Australians.

"This common sense measure will back thriving local industries and open the way for growth."

Quotes attributable to the Treasurer Jim Chalmers:

"We're pleased to have found room in a tight budget to provide some tax relief for a really important industry creating jobs and opportunities around Australia.

"Brewers, distillers and winemakers play a large role in many local economies and this support will help them invest and grow."

Quotes attributable to the Minister for Trade and Tourism Don Farrell:

"Supporting small distillery, brewing and wine businesses is not just about producing exceptional products - it's about creating jobs, fostering local economies, and building a better Australia.

"By boosting our export support for these businesses, we are helping fast-track their success in international markets which will create even more jobs at home."

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Albanese Government provides tax relief to support investment and jobs

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The Albanese Labor Government will provide tax relief for Australia's distillers, brewers and wine producers.Currently brewers and distillers get a full refund of any excise paid up to $350,000 each year. The Government will increase the excise remission cap to $400,000 for all eligible alcohol manufacturers.

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Hi guys. I found this article, fresh off the press after our class during the day and thought that it was very relevant to the discussion that we had!

Interestingly, Phillip Coorey (Editor for the Article) starts with a quip about how a CGT discount of 33% (as is being considered by Treasury), would only serve the intention of Treasury, to raise sufficient revenue, if it was applied retrospectively. Insiders say however, that if the CGT discount was to decrease to 33% and it was to retrospectively apply, the $5 billion would be an effective wealth redistribution to allow for the $5 a week top-up tax cut legislated to begin on July 1, and then topping this up to $10 a week. This is looking at the equity of the CGT discount so that any increased revenue can be used to increase the equity of ordinary income tax relief.

Following from our discussions today as well, I think in light of the article, and Treasury's considerations, it is telling that we mainly considered CGT in the context of a sale of property. This is since Coorey reports that insiders state that the Albanese government is only thinking of changing the CGT discount's application for housing investors.

More discursively, Coorey voices Ken Henry's understanding of the Greens-led Senate inquiry into the Howard-era tax break. He reminisced on the suggestion for a 40% discount and that the rate applies to all capital income (rent, interest, trust dividends, etc.). Henry considered that the top marginal tax rate should decrease and that retrospective application should occur to avoid grandfathering.

Coorey also reported on what we discussed today in class, namely the inflation model. He reflected on Michael Brennan's (from e61 Institute) comments on the inflation model, noting that it would provide more revenue to use that model and that in any other case, the effect is minimal, so it might as well just stay at 50%, since it is close to their ideal benchmark. This raises questions on what should prevail in this form of tax design - should it be simplicity, should it be equity, or should it be both. Brennan contends that modern technology should allow for the complexities to be somewhat eliminated, therefore meaning that the more equitable approach would be helpful.

The alternative position of Jacob Caine from the Real Estate Institute of Australia was considered. Caine held strongly that tax policy should be neutral and predictable, and that the reforms in question could dampen investment, limit rental availability and place further pressure on rents, ultimately worsening the landscape for young people.

Senator Gallagher's comments effectively sum up the mentality on CGT changes: The Government is trying to make sure that younger people can buy their own home and to do so, all levers must be pulled. The Government is still looking at all options, so watch this space!

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Reducing the capital gains tax deduction from 50 per cent to 33 per cent is the preferred option being worked up by Treasury for the budget, but unless the change is applied retrospectively, it may not raise sufficient revenue to fund even a small tax reform.

As the Albanese government confirmed it was considering the tax change as part of a reform budget on May 12, sources familiar with deliberations said the intention was to only reduce the discount for housing investors, while keeping it at 50 per cent for shares and other investments.

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Treasury examines 33 per cent CGT deduction

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A reduction in the capital gains tax deduction from 50 per cent to 33 per cent is being worked up by Treasury. But will it raise enough revenue?

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This is the first taxpayer alert of 2026 (TA 2026/1), issued on 14 January 2026, addressing a concern of the ATO that long-term construction contracts are being used by property developers to delay paying tax. The structure of concern features three companies, a landowner company, developer company and a builder company – where the landowner company and developer company are controlled by the same people.

During construction, the developer pays costs, including payments to the builder, while claiming tax deductions for construction costs each year. However, pursuant to the contract, the developer does not invoice the landowner progressively (even though it could), but instead income is recognised only at the end of the project.

This results in ‘artificial tax losses’ that are then potentially used to offset other income in the group or reduce tax payable elsewhere. Essentially, the landowner and developer can deliberately coordinate the timing of income across the broader economic group or other development projects, resulting in minimal to no tax being paid.

The ATO stresses that in these arrangements, there is really only one single business activity, and the companies are being artificially separated to create tax advantages. The ATO has declared that this may trigger Part IVA of the ITAA36 which is Australia’s general anti-avoidance rule, and has warned that serious penalties may apply to participants or promoters of this type of arrangement.

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About Taxpayer Alerts

Alerts provide a summary of our concerns about new or emerging higher risk tax or superannuation arrangements or issues that we have under risk assessment.

While an Alert describes a type of arrangement, it is not possible to cover every potential variation of the arrangement. The absence of an Alert on an arrangement or a variation of an arrangement does not mean that we accept or endorse the arrangement or variation, or the underlying tax consequences.

Refer to Law Administration Practice Statement PS LA 2008/15 Taxpayer Alerts for more information about Alerts. See Alerts issued to date.

1. We are currently reviewing certain property development arrangements between related parties involving long-term construction contracts that appear to be designed to create an artificial mismatch between the recognition of income from the property development activity and deductions claimed for the costs of development, such that tax on the profits may be indefinitely deferred. The losses generated are utilised within the group to obtain a tax advantage.

2. In these arrangements, a special purpose developer entity (developer) is interposed between an entity that owns the land being developed (landowner) and another entity undertaking building and construction works on the land (builder). The interposition of the developer artificially separates the landownership and development activities which are, in substance, a single economic activity of property development.

3. This Alert outlines the features of concern, and the steps taxpayers should consider if they are involved in similar arrangements.

4. The property development arrangements under review typically involve the following characteristics:

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A separation of landownership and development activities is created through the interposition of an existing or newly established special purpose developer entity between the landowner and builder.

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The landowner and the developer are under common ownership or control.

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The landowner and the developer enter a Property Development Agreement (PDA) using a long-term construction contract that spans more than one income year.

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The terms of the contract deliberately provide that the developer does not derive any income for managing and delivering the development until the project is completed.

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While under the terms of the contract the developer purportedly provides development services to the landowner, in practice there is minimal or no evidence that the developer does, or has the capacity to, undertake the development. That is, the developer exists in form only, and it appears that the services provided to the landowner are all outsourced to the builder and funded by another party.

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The losses (arising from the deductions claimed progressively for construction costs while the recognition of income is deferred) are then offset against other income earned by the developer or used to offset other income of the economic group.

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This arrangement may be repeated in a deliberate manner to coordinate with the timing of income from the broader economic group or other development projects, resulting in minimal to no tax being paid across the economic group.

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While minimal to no tax is paid, there can be significant growth in the wealth of the economic group, and in some cases this wealth is subsequently extracted by individual controllers of the group for their personal benefit.

Example

5. The following example illustrates the common features of these arrangements.

Diagram 1: Typical long-term construction contract arrangement – exploiting developer's losses

12. We are concerned that related parties undertaking these arrangements are, in substance, undertaking a single economic activity of property development, yet have artificially separated landownership and development activities to gain a tax advantage.

13. We are concerned that the arrangements are contrived and designed to artificially separate the landownership and development activities to:

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inappropriately manipulate application of the trading stock provisions under Division 70 of the Income Tax Assessment Act 1997 by the landowner entity

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inappropriately defer the recognition of income by the developer entity

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generate artificial losses in the developer entity that are used to offset other income within the economic group, leading to reduced tax or no tax being paid

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with repeated use of the arrangement in a deliberate manner, ensure reduced tax or no tax being paid, sometimes indefinitely and enable wealth extraction.

15. We are actively reviewing arrangements involving long-term construction contracts that exhibit features similar to those described in this Alert. To address the concerns identified, we will:

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engage with taxpayers involved in these arrangements involving related parties that raise compliance risks

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shortly publish a draft practical compliance guideline for comment to accompany this Alert. The draft Guideline will outline our proposed compliance approach, including indicators of higher-risk arrangements and illustrative examples likely to attract scrutiny, including when we are likely to undertake further compliance activity through reviews and audits.

16. Our aim is to ensure the consistent application of tax law and to deter the use of contrived structures that compromise the integrity of the tax system and disadvantage compliant taxpayers.

17. If you are currently involved in, or considering entering into, an arrangement of this nature, you should:

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Seek independent professional advice.

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Ask us for our view through a private ruling.

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Make a voluntary disclosure to reduce potential penalties.

18. Penalties may apply to participants in, and promoters of, this type of arrangement. This includes serious penalties for promoters under Division 290 of Schedule 1 to the Taxation Administration Act 1953. Registered tax agents involved in the promotion of this type of arrangement may be referred to the Tax Practitioners Board to consider whether there has been a breach of the Tax Agent Services Act 2009.

19. To provide information about this type of arrangement, or a promoter of this or another arrangement:

Commissioner of Taxation
14 January 2026

© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

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Patrick W                                                                                      Can tax law reform fix Australia's housing crisis?

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Patrick W                                                                                      Can tax law reform fix Australia's housing crisis?

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The news indicates the close relationship between taxation law and economic and social objectives. The tax rules decide the directions of social aspects, such as housing, the most significant issue in Australia.

From a legal perspective, the capital gain tax discount and negative gearing are discussed. As I remember, around 1985, the government paused negative gearing for one or two years. At that moment, the house owners transfer their loss from negative gearing to the tenants, which puts significant pressure on rents. With high rents, the housing crisis worsened.

The discussion demonstrates that the tax reform requires legislative drafting to amend tax provisions. Even minor wording changes may alter taxpayers' rights and liabilities.

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Insiders: Can tax reform fix Australia’s housing crisis?

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The Treasurer has confirmed his department is looking at changes to both the capital gains tax discount and negative gearing rules ahead of the May budget.

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The article highlights the growing concentration of wealth among Australian billionaires, in stark contrast with growing statistics of poverty and food insecurity in Australia. A report by Oxfam Australia found that 48 billionaires held more wealth than the bottom 40% (11 million) Australians, with a collective growth of $10.5 billion, while over 3.7 million people live in poverty in Australia. The growth of wealth is interpreted as the symptom of a failing tax symptom, relating to our discussions of distributive justice theories and the “equity” criteria for a “good” tax system.

The article raises the policy question of whether concessional treatment of capital gains aligns with principles of fairness, especially when wealth accumulation significantly outpaces income growth for ordinary taxpayers. This illustrates our discussion on how technical tax rules, like the CGT discount, are inseparable from broader social justice and redistribution debates.

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Australian billionaires’ wealth rose by $600k per day in 2025: new report

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A new report has found the average Australian billionaire saw their wealth rise by almost $600,000 per day…

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This debate reveals what appears to be a deeper structural concern within Australia’s tax framework. The combined operation of negative gearing and the capital gains tax (CGT) discount confers significant advantages on higher-income taxpayers, particularly those with the financial capacity to acquire multiple investment properties. Viewed through the lens of vertical equity, it is difficult to justify the continuation of generous tax concessions that disproportionately benefit wealthier investors in circumstances where younger Australians face substantial barriers to home ownership.

Nevertheless, a cautious approach to reform is warranted. If amendments to these concessions were to materially reduce housing supply, there is a risk that affordability pressures could be exacerbated rather than alleviated.

However, Treasury evidence indicating that proposed reforms would largely result in a reallocation of housing stock from investors to owner-occupiers calls into question the characterisation of negative gearing as a supply-enhancing mechanism. If its primary effect is instead to stimulate demand, the normative basis for its retention as a housing policy tool becomes less persuasive.

Reflection based on a broader tax policy perspective implies that the principle of neutrality is engaged. The current settings appear to favour leveraged investment in residential property over alternative, potentially more productive forms of capital deployment. This raises a legitimate concern as to whether the tax system is distorting capital allocation in a manner that undermines overall economic efficiency.

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Labor not ruling out negative gearing changes

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A government source said it would make sense to consider changes to negative gearing and capital gains tax together, but that no decision was close to being made.

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Tax experts argue that Australia’s 47% top marginal tax rate strengthens incentives to use negative gearing and the CGT discount, making property investment particularly attractive to high-income earners.

Some suggest that lowering the top rate, rather than targeting property concessions alone, could reduce these distortions.

However, others warn that scaling back tax incentives may affect rental supply and housing affordability.

The article highlights how income tax settings interact with property tax concessions, suggesting that reforming marginal tax rates may be as important as adjusting negative gearing or CGT rules.

It raises broader questions about whether Australia’s tax mix unintentionally favours asset accumulation over wage income.

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The number of Australians paying the top income tax rate has tripled over the past two decades, enticing more people to invest in property to exploit negative gearing and the capital gains tax discount to reduce their tax bill.

As the Albanese government considers changes to the 50 per cent CGT discount and negative gearing limits before the May 12 federal budget, tax experts say Treasurer Jim Chalmers should also consider cutting the maximum 47 per cent income tax rate.

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Cut 47 per cent tax rate to reduce property perks

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The sharp rise in Australians caught in the top income taxation bracket is fuelling the exploitation of negative gearing and the capital gains tax discount.

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Walking through Sydney's CBD on my way to work, I saw a distinctive and unusually long line outside the ABC Bullion store. Perhaps driven by a wartime scare, Australians were turning away from fragile stock-market investments, and towards a rather old-fashioned instrument; gold and silver.

As I stared, puzzled, at the line of soon-to-be-gold-owners, I recalled an offhand comment made in a Week 2 discussion about Capital Gains Tax; a joke made about how you can always just hide gold under your bed. Seeing a throng of eager antiquarians returning to the purchase of shiny metals, I began to wonder whether that was indeed the case. After all, is buying gold not like buying any other jewellery? Or, for that matter, any random item? What is the difference between gold and say, the metals used in your refrigerator?

After some digging, Mark Chapman gave me a clear, unsurprising, but perhaps disappointing answer: Capital Gains Tax applies in Australia to the sale, gifting, or transfer of gold and silver (at least, at a glance). Similarly, the GST discount applies to those precious assets; individuals and trusts being eligible for 50% off said CG if they deign to hold the gold for at least 12 months. (See Part3-1 of the ITAA97)

As if to answer my classmates earlier comment, Chapman goes further to clarify that it is, in fact, a bad idea to hide gold under your bed. Chapman declares that "The ATO can also know more than many investors expect"" possessing the power to conduct a 'lifestyle audit'. Namely, where the ATO suspects that a persons standard of living is so different to their reported income that there is a potential tax evasion, The ATO may look at their insured items, social media, business expenses, amongst other things. In a practical sense, what this means is that by hiding the gold bar under your bed and skimping out on CGT, you can face significant fines, criminal convictions, and even imprisonment for up to 10 years if the ATO finds you guilty of tax crime.

Before wrapping up, I wanted to address one last important concern of Chapman's, to comfort any anxious readers. There is a 'personal use asset exemption' for precious metals, meaning that the silver bracelet you got for Christmas is likely considered by the ATO to be outside the scope of CGT. However, the burden of proof remains with the taxpayer; so if you stole Empress Marie-Louise' necklace from the Louvre, you'll need to start wearing it soon, or the government may suspect it to be an investment piece, rather than an exempt personal use asset.

A few key takeaways,

1. Gold and Silver ARE subject to Capital Gains Tax.

2. You incur a serious risk by hiding gains on bullion, noting substantial ATO audit powers.

3. Personal use assets likely fall outside the scope of CGT; even if they are comprised of precious metals.

This is not tax advice.

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Capital Gains Tax on Gold and Silver | H&R Block

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Understand how capital gains tax applies to gold and silver investments in Australia, including bullion, ETFs, CGT discounts, SMSFs and ATO reporting rules.

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The attached news article highlights the demand from tax practitioners to reform the Division 7A regime. Much attention of the reform is attributable to the decision of Commissioner of Taxation v Bendel [2025] FCAFC 15, which the Full Federal Court held that “UPEs owed by a trustee to a corporate beneficiary are not loans for the purpose of Division 7A” (https://www.minterellison.com/articles/bendel-appeal-dismissed-upes-are-not-loans).

The case could be relevant to the content covered in week 2’s lecture as the decision practically engages the topic of assessable income, which is best addressed in an insight from KWM: “The Court’s decision in Bendel also gives rise for the opportunity to consider amending prior returns if a taxpayer applied the Commissioner’s views and included a deemed dividend in their assessable income by reference to a UPE. This also provides more flexible capital funding opportunities going forward for private groups”(https://www.kwm.com/au/en/insights/latest-thinking/commissioner-of-taxation-v-bendel-2025-fcafc-15-upes-are-not-loans-for-division-7a-purposes.html).

It is noted, however, that the High Court’s judgment is yet to be delivered.

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Government urged to prioritise Div 7A reform this year

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The government must undertake further consultation on Division 7A to resolve long-standing issues and reduce uncertainty, industry bodies have warned.

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This news highlights that the Australian government is re-examining investor tax concessions such as negative gearing and the capital gains tax discount, with the aim of both raising revenue and addressing the housing crisis. In my view, tax settings that increasingly position housing as a vehicle for wealth accumulation risk undermining its social function as a basic necessity.

From a tax equity perspective, the current negative gearing and capital gains tax discount arrangements tend to allocate benefits towards taxpayers with greater investment capacity, particularly high-income earners and those holding multiple properties. By contrast, younger Australians, first-home buyers and lower-income groups are less able to directly benefit from these tax concessions, while facing higher housing prices and rental costs in the market.

I also consider that framing housing affordability primarily as a tax concession issue may understate the importance of structural supply constraints. If reform efforts focus solely on winding back tax incentives without simultaneously addressing land-use planning, construction capacity and infrastructure provision, their impact on housing affordability is likely to remain limited.

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Negative gearing changes on the table before May budget, Jim Chalmers confirms

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Treasurer says ‘not unusual’ for his department to examine options but stresses that no decision has been made

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This article reports that the Western Australian government is fighting to maintain the current distribution arrangement for GST instead of changing in the upcoming review. Under the 2018 GST reforms, WA receives a higher share of the GST pool relative to its population than it would under a purely equal distribution system. This means the state gets more GST revenue back than it contributes. As such, WA argues that changing the GST formula could discourage investment and harm its economy. The state is proposing a 25 % carve-out of mining revenue from the GST distribution to preserve incentives for mining growth.

This article is relevant to our studies of understanding mechanisms of tax distribution. In particular, it demonstrates different methods of tax revenue being shared within a state. It also explores the legal and policy complexity behind distributing a broad-based tax like GST as well as issues of constitutionality and the power of State governments.

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The WA government has stepped up its fight to keep the GST deal it struck with then prime minister Scott Morrison in 2018, arguing that changes would discourage investment.

The Productivity Commission is reviewing the nation's GST arrangement and was due to make recommendations to the federal government next year.

Under a 2018 deal, Western Australia was guaranteed a greater share of the Goods and Services Tax pool than it would otherwise get.

The GST deal has been described as the worst public policy decision this century, but none of the major parties will touch it for fear of upsetting Western Australia.

The state was forecast to receive $7.8 billion in GST payments this financial year, or about 8 per cent of the total pool, but without the 2018 changes, it would have got just $1.7 billion.

To compensate for WA's increased payments, the Commonwealth has topped up other states to ensure they were no worse off, which has caused a more than $44 billion cost blowout over 10 years.

Western Australia established a GST "fairness fighter" team to mount its case during the inquiry, and spent $1 million on advertising its argument across the country.

WA contributes $32 billion

In its submission to the inquiry, WA has argued Australia should move from full horizontal fiscal equalisation (HFE) - which aims to create a level playing field across all states by compensating for areas with less earning capacity or higher costs - to partial HFE.

How does GST work?

Goods and services tax (GST) is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia.

The Australian Government helps put state governments in a position to provide their residents with comparable services by distributing revenue from the goods and services tax pool according to need.

It is the job of the Commonwealth Grants Commission to advise the Australian Government on how the GST pool should be distributed.

Source: Australian Taxation Office and Commonwealth Grants Commission.
That would allow "states like Western Australia to continue investing in their economies, by allowing them to retain more of the benefits of policy decisions and investments", the submission said.

It said other countries had adopted a partial HFE.

But economist Saul Eslake said that did not make it a good idea.

"We are a better country than the other federations in part because we do HFE more comprehensively," Mr Eslake said, pointing to smaller gaps in living standards between Australian states.

WA's submission estimated since 1942-43, WA had made a net contribution of $32 billion to the federation.

It argued the previous GST system had "many perverse" outcomes, including that "New South Wales, Victoria and Queensland effectively received more of our iron ore, lithium and nickel royalties than we did".

"In contrast, New South Wales effectively retained the vast majority of its coal royalties," the submission reads.

Cost blowouts from the no worse off guarantee were because of higher-than-expected iron ore prices which had benefited the bottom line of the federal budget, according to the submission.

"Indeed, we estimate that the benefit to the Commonwealth budget through increased company tax revenue alone is three to four times greater than the increased cost of the [guarantee]," it reads.

For those reasons - and many more argued across a 124-page submission - WA Treasurer Rita Saffioti said the current deal should, at the very least, be maintained.

Partial mining exemption sought

WA wants a 25 per cent reduction on the value of mining revenue which factors into the GST distribution if changes are to be made, to "improve states' incentives to grow their mining industries".

That would halve the cost of the no worse off guarantee in the coming financial year and potentially eliminate the need for it by the end of the decade, it says.

When it comes to Western Australia's slice of the GST pie, the state government is making no apologies for ruffling the feathers of other jurisdictions.

Asked why Western Australia was arguing it should provide less support to less prosperous states, Ms Saffioti said partial equalisation allowed for greater "fairness" in the tax system.

"We deliver about 17 per cent of national economic growth," Ms Saffioti said.

"We deliver 50 per cent of national exports.

"You undermine the WA economy, you undermine the national economy."

Victorian premier weighs in

Across the Nullarbor, Victorian Premier Jacinta Allan seemed unconvinced by WA's case, saying she would "always advocate for Victoria to get its fair share".

"We still collect less revenue per head of person than Western Australia," Ms Allan said.

"We are a bigger state, a growing state, a state that is building the infrastructure for the future and delivering the services that working people and family need for our public health and public education systems.

"So that's why I will continue to push for Victoria to get its fair share."

Promotion

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WA government fights to keep GST deal, seeks 25 per cent mining carve-out

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WA is desperate to retain the GST deal it struck with Scott Morrison as the Productivity Commission looks to rein in cost blowouts, and says exempting 25 per cent of mining revenues could help.

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This article explores the use of intergenerational equity in debates about CGT reform in Australia. Intergenerational equity is framed as a concern about how economic policies distribute costs and benefits across age groups, particularly between younger and older Australians.

The piece suggests that some arguments for reform view existing CGT concessions, such as discounted taxation on investment assets, as contributing to wealth disparities.

In this view, younger people may face disadvantages due to rising housing prices and lower asset ownership rates, while older generations may have benefited from earlier periods of property price growth and favourable tax settings.

However, the article also notes that intergenerational equity is complex and does not necessarily imply that policy gains for one generation must come at the expense of another. It cautions against framing the issue as purely zero-sum, and instead highlights broader structural factors affecting affordability, such as housing supply, market conditions, and economic growth.

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CGT smash and grab on investment is not going to help the young

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Framing debates about tax concessions in terms of intergenerational equity reflects a redistributionist, zero-sum mindset that ignores growth.

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This article links the reforms to the capital gain tax to the crisis of housing affordability in Australia. It also underlies the complex political context in which the issues of tax should be considered. Given that the government is facing intense political pressure from the Greens and the worsening housing crisis, the Australian government’s stance on housing tax reform appears to be shifting as the Treasury recently refused to rule out changes to negative gearing and capital gains tax.

However, if the changes are implemented, a reduction in the CGT discount could significantly affect property investors and long-term investment strategies. This demonstrates the tension in Australian tax law between encouraging investment and promoting equity.

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Minister won’t rule out tax change as Greens up demands

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Falling building approvals have put the government further behind its housing supply targets, as Labor weighs up tax changes to ease affordability.

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In the absence of clear contemporaneous evidence of what was agreed, the ATO can successfully challenge the validity of such deductions. Commissioner of Taxation v S.N.A Group Pty Ltd [2026] FCAFC 10

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In the absence of clear contemporaneous evidence of what was agreed, the ATO can successfully challenge the validity of such deductions. Commissioner of Taxation v S.N.A Group Pty Ltd [2026] FCAFC 10

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Related party transactions: Full Court reaffirms that substantiation can win or lose a tax case - Pitcher Partners

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In the recent Full Federal Court’s decision in Commissioner of Taxation v S.N.A Group Pty Ltd [2026] FCAFC 10, the ATO was successful in challenging the deductibility of intragroup service fees.

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I was recently doing some research into the oil and fuel economy, and came across this interesting article about fuel tax credits in Australia.

Australians pay a flat fuel excise every time they purchase fuel, an amount which is adjusted twice a year in line with the CPI. This amount currently sits at 51.6 cents per litre. Fuel tax credits provide businesses who have purchased fuel for their business with a tax credit for the amount of tax that was included in the price of the fuel. Fuel used in business activities includes fuel for heavy vehicles, machinery and equipment. The excise primarily benefits those in the mining, transportation and agriculture sectors whilst costing our taxpayers - in fact, the scheme is one of the 20 biggest expenses in the budget.

The fuel tax credits essentially mean that large companies operating in these sectors pay significantly less to burn "dirty fuels" including diesel and petrol than households would. There are many social and environmental reasons why this is controversial. One key reason is that it undermines the Australian Safeguard Mechanism, a climate policy that regulates greenhouse gas emissions for Australia's largest industrial facilities, requiring them to reduce their emissions in line with Australia’s emission reduction targets of 43% below 2005 levels by 2030 and net zero by 2050. Yet, this scheme makes it more economically efficient for these companies not to reduce their emissions.

There have been further criticisms from the government's Climate Change Authority (CCA) and the OECD, essentially condemning the policy for supporting fossil fuels. At the Australian Financial Review summit last October, Matt Kean, the chair of the CCA stated it was "insane" miners were receiving such a rebate when the money could go to helping consumers shift away from fossil fuels to renewable energy and electric vehicles. The OECD has further requested that the Australian goverment to "reduce or eliminate" exemptions for off-road vehicles and on-road heavy vehicles.

This is a debate that has been occurring for a while, but has recently gained attention as the Labor Environment Action Network launched a campaign to push the Treasurer, Jim Chalmers, to cap the rebates for major companies. Other stakeholders are pushing for the scheme to be scrapped; however, it is likely a compromise may be necessary. It will be interesting to see the parties' positions come the next federal election.

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Australia’s most costly anti-climate policy hits taxpayers for $30m a day as calls mount to wind back fuel tax credits | Adam Morton

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The government will hand over $10.8bn this financial year under the scheme that makes it cheaper for miners and other industries to use diesel and petrol

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The Australian Government has announced plans to introduce a standard $1,000 tax deduction for work-related expenses, aimed at simplifying how smaller deductions are claimed.

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The Australian Government has announced plans to introduce a standard $1,000 tax deduction for work-related expenses, aimed at simplifying how smaller deductions are claimed.

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$1,000 Standard Tax Deduction 2026–27 | H&R Block

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The $1,000 standard tax deduction is proposed to apply to the 2026–27 tax year, with returns lodged from July 2027. Find out how it works and what to expect.

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This article discusses whether changing Australia’s capital gains tax (CGT) rules for property investors could improve housing affordability. CGT applies when a person sells an asset, such as an investment property or shares, for a profit. In Australia, many assets receive a 50% CGT discount, which means only half of the capital gain is taxed.

The article argues that this discount, together with negative gearing, makes property investment more attractive and mainly benefits wealthier taxpayers. Because of this, some people believe CGT reform could make the tax system fairer and reduce excessive investor demand in the housing market.

However, the article also explains that the actual effect on house prices would likely be modest. Most modelling suggests that even significant CGT changes would only reduce prices slightly, and the impact would depend heavily on how the reform is designed. Overall, the article shows that CGT is not only a tax issue, but also an important policy debate about fairness, investment incentives, and housing affordability.

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Would changes to the capital gains tax discount lower house prices?

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Labor has not ruled out changes to the capital gains tax discount but wants any tax changes to improve housing affordability.

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I found this article which examines the current policy debate surrounding Australia’s CGT discount. In the 2022/23 income year, approximately $45.2 billion in CGT discounts were claimed across around 577,000 entities, highlighting how significant the concession has become within Australia’s tax system.

This article summarises competing perspectives presented to a parliamentary committee reviewing the discount. Some commentators argue that the concession should be reduced or reformed because the current tax mix places a greater burden on labour income compared with capital income, raising concerns about fairness and intergenerational equity. Others argue that removing or reducing the discount could discourage investment, particularly in housing, potentially reducing rental supply and increasing rents. Therefore, the debate reflects a broader tension between tax equity and economic incentives.

This discussion directly connects with the Asprey Report from this week's readings, which originally recommended introducing a capital gains tax in Australia. The Asprey Committee argued that failing to tax capital gains undermined the equity of the tax system, because individuals receiving income through wages were taxed while those deriving gains from capital appreciation could escape taxation. The Committee also highlighted issues of horizontal equity (taxpayers with similar economic capacity paying different tax depending on the form of income) and vertical equity (wealthier individuals benefiting disproportionately from untaxed capital gains).

In many ways, the contemporary debate about the CGT discount reflects the same policy concerns identified by the Asprey Committee in 1975. Advocates of reform argue that concessional treatment of capital gains continues to privilege capital over labour income, potentially exacerbating inequality and distorting investment decisions, particularly in housing. Conversely, critics emphasise efficiency concerns similar to those acknowledged by Asprey, arguing that changes to CGT could affect investment incentives and market behaviour.

In sum, this article demonstrates how CGT remains a contested element of Australia’s tax system, balancing competing objectives of equity, efficiency and revenue. The persistence of this debate also illustrates the lasting influence of the Asprey Report, which framed the fundamental policy rationale for taxing capital gains but recognised that implementing such a tax would inevitably involve complex trade offs for all.

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This article focuses on former RBA governor Bernie Fraser’s view that Australia should remove the capital gains tax (CGT) discount. He argues that this tax concession makes property investment too attractive and contributes to housing unaffordability and inequality. Under the current system, people usually only pay tax on half of their capital gain if they sell an asset after holding it for more than 12 months.

The article shows that CGT is not just a technical tax rule. It also affects investment behaviour, wealth distribution, and the housing market. Supporters of reform believe that removing the discount could reduce unfair tax advantages for investors and make the system more equitable.

However, the article also notes that Treasury believes the direct effect on housing prices and supply would probably be small. Overall, the article suggests that CGT reform may help address inequality, but it is only one part of the broader housing policy debate.

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Former RBA governor calls for capital gains tax discount to be scrapped

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Bernie Fraser tells a Senate committee hearing on capital gains tax that, if it were up to him, he would abolish the discount, as he warns younger Australians are watching the unaffordable housing market in “dismay”.

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The government is in discussions of reducing or withdrawing the FBT restriction for EVs, aiming to increase government savings ahead of the May federal budget. From 2022-2027 it was projected that this scheme would cost the government roughly $5.1 billion, however with the significant increase in EV popularity, the costs have been much higher than projected. Treasury is forecasting the cost between 2028-9 to be almost $3 billion alone. Additionally, the government is also looking at amending the zero tariff policy on imported EVs.

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WhichCar | New Car Reviews, Prices and Buying Advice

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Government weighs curbing EV tax breaks as cost of scheme surges

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Budget review could restrict fringe benefits exemption to cheaper electric vehicles.

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I found this to be particularly interesting because the overarching sentiment and justification seems to be one someone can easily get behind - boosting productive output and grow the nation's collective wealth. To impelment significant, overarching tax changes to make Australia a more desirable place for people to invest and consider the long term gains of same. Their answer to this is to cut funding NDIS (don't redistribute the pie, grow it), an infamously already underfunded scheme that aids society's most vulnerable. Their language targets workers who feel they are being neglected by the current system by identifying a different demographic to blame, rather than those that stand to disproportionately benefit from the impact of their proposed changes.

In line with week 3's content, Bill Kelty warns that the reduction of capital gains tax for investors in tandem with income tax with the awareness it will impact younger generations the most.

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Fix tax and cut NDIS, CEOs tell Chalmers

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Business leaders call on the government to implement ambitious tax reform and pro-growth policies while cutting spending to set up the nation’s prosperity.

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Yuqi Wang -- Potential CGT discharge changes

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Yuqi Wang -- Potential CGT discharge changes

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one of the reason I choose this course cuz this one is really related to our lives. The housing price will reflect the economic in this country and also it will influence people's thoughts to invest. Home buyers and renters face a slew of new rules across the country in 2026, ranging from tighter home lending to the end of sought-after grants and tax concessions.

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The passage discusses concerns raised by The Tax Institute regarding the Australian Taxation Office’s draft determination TD 2026/D1. The draft ruling stipulates that if a person's right to occupy does not arise directly under the will, the main residence CGT exemption would not apply.

The Tax Institute argues that the ATO’s interpretation is too restrictive, because it focuses heavily on the technical wording of the will rather than the substantive rights created by it, particularly where those rights arise through testamentary trusts.

In my view, while taxes on inheritances can serve a broader social purpose of promoting wealth redistribution, narrowing the scope of the main residence exemption introduces uncertainty for taxpayers. The change is also unlikely to generate significant revenue for the government, given that the exemption may still be obtained through more careful drafting of a will.

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The ATO's proposed interpretation of the main residence exemption in deceased estate cases is "unduly restrictive" and may disrupt established estate planning arrangements, The Tax Institute has said.
The Tax Institute has urged the ATO to reconsider its draft Tax determination TD 2026/D1 due to concerns with the ATO's proposed interpretation.

TD 2026/D1, which the Tax Office released in late January, concerns individual beneficiaries and trustees of a deceased estate who have an ownership interest in a dwelling acquired from a deceased estate.

The draft tax determination clarifies when an individual has a 'right to occupy a dwelling under the deceased's will', which is relevant in determining whether the beneficiary or trustee of the deceased estate is entitled to the capital gains tax (CGT) main residence exemption when a CGT event happens to their ownership interest in the dwelling.

In its submission on TD2026/D1, The Tax Institute said it was concerned the draft determination adopts an unduly restrictive view of what constitutes a "right to occupy a dwelling under the deceased's will" for the purposes of section 18-195 of the Income Tax Assessment Act 1997.

The submission said the draft determination places disproportionate emphasis on technical drafting form, rather than the substantive rights created by a will, particularly where those rights are affected through testamentary trust mechanisms.

Head of tax and legal at The Tax Institute, Julie Abdalla, said the draft interpretation risks elevating form over substance.

"Where a will clearly provides for a person to live in the family home, the tax outcome should not depend on whether that right is expressed directly or arises through a testamentary trust structure," she said.

"A distinction of that kind is not supported by a coherent reading of the legislative framework."

Abdalla noted that advisers and trustees have long administered deceased estates on a settled understanding of section 118-195.

"A significant narrowing of that understanding, particularly without appropriate transitional safeguards, risks unsettling existing arrangements and exposing families to unexpected capital gains tax consequences," she said.

The Institute's submission also warned that the proposed approach may produce inconsistent outcomes between estates with substantively identical facts, depending solely on drafting differences.

Certainty and coherence were essential to tax administration, Abdalla said.

"The main residence exemption in deceased estate contexts exists to provide continuity and ensure sensible outcomes at a vulnerable time for families."

"An interpretation that elevates drafting nuance above evident intent risks undermining confidence in the integrity and stability of the tax system."

The Tax Institute said it has urged the ATO to adopt a principled, substance-based interpretation that appropriately recognises occupancy rights created under a will, including those arising through testamentary trust structures, and to ensure that final guidance is administrable, equitable and aligned with legislative intent.

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ATO urged to reconsider draft tax determination on deceased states

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The ATO's proposed interpretation of the main residence exemption in deceased estate cases is "unduly restrictive" and may disrupt established estate planning arrangements, The Tax Institute has said.

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There’s been a lot of discussion recently about potential changes to Australia’s CGT discount, and one perspective that stands out is the debate over grandfathering versus retrospective reform.

Grandfathering means new rules would only apply to future investments, leaving existing assets under the current 50 per cent discount. While this is politically easier, it effectively benefits older investors and leaves younger or new entrants facing a higher tax burden, reinforcing intergenerational inequality.

Retrospective changes, though always politically unpopular, would apply new rules to gains realised after the reform, regardless of when the asset was purchased. This approach aligns more closely with principles of fairness, as the CGT event occurs at the point of sale. Without retrospective application, the tax system risks entrenching advantages for long‑standing holders and failing to meaningfully address inequities between generations. Or perhaps Gen Z’ers should just have been born 30 years earlier.

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Only retrospective CGT change is fair for the young, says tax expert

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A member of the Henry tax review warns that the mooted reforms are not worth doing unless intergenerational equity can be achieved.

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The attached news article highlights CPA Australia’s support for broader reform of capital gains tax (“CGT”) and negative gearing, but not for fragmented tax changes to address housing unaffordability.

There are many factors contributing to housing unaffordability, and I am of the view that the abolition of the CGT discount would have only a limited effect on housing affordability. Instead, I think the Federal Government should consider alternative measures.

As addressed in week 3’s lecture, the CGT discount is governed by Division 115 of the ITAA 1997. Personally, I think the Federal Government should consider:

1. amendments to Division 115 of the ITAA 1997;

2. taxes imposed at the State level (stamp duty, land tax and any surcharges); and

3. non-tax measures

to improve housing affordability.

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CPA calls for multi-pronged approach to housing affordability

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The body supports broader reform for CGT and negative gearing and has emphasised that fragmented tax changes are not a solution to housing affordability.

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I found this article and thought it might be relevant to our upcoming class on deductions. The article discusses the case of Commissioner of Taxation v S.N.A Group Pty Ltd [2026]. In short, a real estate group restructured in 2005 to separate operating entities from asset-holding trusts. The group had formal service agreements initially, however they expired in 2015. The group continued business as usual, paying "service fees" totalling millions of dollars without those updated contracts. The Federal Court ruled in favour of the ATO, denying those deductions for a variety of reasons, including: (1) lack of legal obligation, (2) inconsistent evidence, (3) poor accounting practices, and (4) administrative failures. I thought this article would be relevant to our class on deductions since it touches on the requirement of deductions being "incurred", as well as the required nexus between outgoings and income. More broadly, it shows the interconnectedness of contract law and tax law.

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Qld real estate group misses out on millions in ‘service fee’ deductions

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A family real estate group has missed out on millions of dollars in tax deductions after the Federal Court ruled that its informal arrangements did not constitute legally binding contracts.

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This article highlights the ongoing debate about the relationship between negative gearing and the CGT discount in housing market. The argument that reducing the CGT discount could weaken the incentive for investors to negatively gear their properties is logically convincing, as the current tax system allows investors to deduct losses at a higher marginal tax rate while paying a relatively lower tax on capital gains.

From a young person’s perspective, particularly for those trying to enter the housing market for the first time, the current tax system can feel unfair. Many young buyers struggle with rising house prices while investors benefit from tax deductions and capital gains concessions. In this sense, reducing the CGT discount could potentially make the tax system more balanced and reduce speculative investment in housing.

However, from an investor’s perspective, the issue is more complex. Property investors take financial risks and often accept short-term losses, hoping that long-term capital gains will compensate for those losses. If tax incentives such as the CGT discount are significantly reduced, it may discourage investment in the rental market.

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CGT reform may fix Australia’s negative gearing problem: economists

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As Labor mulls big budget changes, experts say increasing the tax on capital gains should cool investor demand for property before any cut to negative gearing.

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Comment on Alicia X's Post: I agree with your point about how the interaction between negative gearing and the CGT discount creates strong incentives for property investment. From a tax policy perspective, it also raises questions about the integrity of the tax system because investors can deduct losses from rental properties against other income under s 8-1 ITAA 1997, while the eventual gain may be taxed concessionally under the CGT discount. This asymmetry may encourage tax-motivated investment rather than economically productive activity, which can distort investment decisions and undermine horizontal equity between taxpayers who cannot access similar deductions. It highlights how deduction rules can influence behaviour and why policymakers sometimes consider limiting deductions or aligning the taxation of losses and gains.

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Superannuation Tax Changes to Pass - Michael B

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Superannuation Tax Changes to Pass - Michael B

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This article summarises the superannuation taxation changes which look to pass the Senate this week. The primary differences from the previous proposal is the introduction of indexation to the thresholds, the removal of a means of taxing unrealised capital gains, and a more aggressive marginal rate for balances >$10M of 40%. It's interesting to see criticism of legislating non-indexed thresholds come to bear. One can hope that we might one day see indexed income tax brackets, though I suspect the revenue derived from bracket creep may be too appealing for a few (dozen) more years.

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Labor to pass super tax changes with support of Greens

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The legislation comes as speculation builds that the federal government will pursue more ambitious tax changes in the May budget.

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This article highlights the large number of Australians claiming work related deductions and the ATO’s scrutiny of claims that lack a genuine connection to income earning activities. It relates directly to s 8-1 ITAA 1997, which allows deductions only for expenses incurred in gaining or producing assessable income and excludes private or domestic expenditure. The rejected claims mentioned in the article (such as gaming consoles or swimwear) illustrate how courts and the ATO apply a nexus requirement to prevent taxpayers from claiming expenses that merely make work more comfortable rather than actually producing income. From a policy perspective, the article also raises issues of tax system integrity and equity where generous deduction rules may encourage taxpayers to push the boundaries of what qualifies as work related. This has the potential of reducing government revenue and creating horizontal inequities between taxpayers who can claim deductions and those who cannot. The ATO’s monitoring and data matching therefore reflects an attempt to maintain the integrity of the deduction system and ensure deductions operate consistently with their intended purpose.

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Work-related tax deductions: ATO data shows average claim of $2,739

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More than 10.3 million Australians recently claimed a work-related tax deduction, racking up $28.3 billion in claims.

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This article outlines Australia's new public country by country reporting regime which aims to increase tax transaprency obligations for large multinational companies. The deadlines depending on the type of entity range between June-December 2026.

Why is this important?

It seems that there has been a lack of public disclosre by large companies with PWC's 2025 Tax Transaparency study showing only 3.5% of large companies studied globally had published country by country data prior to the introduction of mandatory public country by country regimes.

Penalties are quite high, going up to $825k AUD for failing to comply with the deadline or correct material errors on a timely basis.

What needs to be reported?

Entity's approach to tax and whether it is in line with Global Reporting Initiative's Sustainability Reporting Standards GRI 207-1.

Main business activites

Number of employees

Revenue from unrelated parties, related parties not resident in the jurisdiction, profit/loss

etc

In PWC's key takeaways I found it interesting that they had a section called "prepare for public scrutiny" and suggest clients to engage internal stakeholders, including the board, early, and consider self-publishing additional context alongside the report.

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Australian public country-by-country reporting – are you prepared?

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Australia’s new public country‑by‑country reporting regime introduces far‑reaching tax transparency obligations for large multinationals. Affected groups will need to closely consider and carefully plan for upcoming disclosures.

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The bill to implement the $3 million threshold tax for superannuation has now cleared the House of Representatives.

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The bill to implement the $3 million threshold tax for superannuation has now cleared the House of Representatives.

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The bill to implement the $3 million threshold tax for superannuation has now cleared the House of Representatives.

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This article looks at how the Treasury is looking at capping negative gearing so landlords can only use it for up to two loss making investment properties at a time. Under the current system, investors can offset losses from as many properties as they own.

According to the latest tax data, out of about 2.26 million people who own an investment property in Australia, a bit over 1.1 million were negatively gearing in 2022-23. But only roughly 117,000 of them had three or more properties. That means only a small proportion of overall investors would feel the hit if the cap was introduced despite there being around 452,700 properties that may be affected.

I believe this is a change to negative gearing that is meant to be incremental as the total removal of it has been proposed in the past but has been rather unpopular despite it potentially benefitting the majority of Australians. The changes are therefore not meant to impact ordinary Australians who are viewed as having worked hard to buy an additional property and rather be perceived as going after the ultra-wealthy in society. I do think that this change is only going to be temporary with the complete removal of negative gearing being the ultimate goal and this is just the first step to get over some of the friction present in negative gearing reform discussions.

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Half a million Aussie landlords in the firing line in huge proposed change

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The revenue raising measure could limit a common tax avoidance strategy in Australia.

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I wanted to share this article as I found the discussion on fairness and equity to be highly relevant to our weekly discussions, in particular the tax design criteria which we discussed in the first week.

This article argues that Australia's tax system is set up for 'wealth creation', providing increased financial support for retirees and pensioners whilst effectively blocking younger residents from entering the property market and accumulating wealth. As a result, financial stress tends to be highest among younger and middle-aged Australians.

Despite the growing wealth of older Australians, the tax system has not been adjusted to reflect this. A working paper from ANU's Tax and Transfer Policy Institute last year found that "current settings increasingly favour older Australians at the expense of younger Australians".

The article goes on to discuss the increasing gap between older and young Australians, and suggests that the tax system can be reformed to level the playing field. Suggestions include lowering tax concessions, including on capital gains and superannuation, for older Australians.

Another consideration to keep in mind in future is Australia's aging population and growing aged care and pension costs. Reducing concessions on super has been suggested as a potential response, rather than increasing income tax. Overall I found this article insightful in how it grappled with themes of equity and fairness in the current Australian tax environment.

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The 33-year-old bought the property for $780,000 during the COVID-19 pandemic. It's now worth between $1.2-$1.4 million.

"I don't think we could afford to buy our house currently," he tells SBS News, noting the mortgage would likely be unaffordable, especially given his wife is now on maternity leave.

Barley says he was astonished to find out how much his property has increased in value since 2021, and he believes change is necessary:

I think we've reached what is very clearly a breaking point and a level of inequity that is no longer feasible.

He says all of his friends feel extremely pessimistic about the housing market and what their future ultimately looks like.

"The numbers just don't work," Barley says.

"Those who didn't get on the housing market are now just looking at it as a ship that has sailed."

With housing increasingly out of reach for young people, experts are now raising concerns that Australia's taxation system could be fuelling inequality - and unfairly benefiting older Australians.

Australia's tax system is set up for 'wealth creation'

For decades, Australia has provided financial support to older residents as they retire and their incomes drop.

But spending per person on the age pension, aged care and health care has increased significantly in the last 30 years, while expenditure targeting younger households has remained relatively constant.

Generous tax arrangements have also allowed older Australians to accumulate significant wealth and income linked to their real estate and superannuation assets.

Despite this growing wealth, the tax system has not adjusted, instead providing increased support for older generations, a working paper from the Australian National University's (ANU) Tax and Transfer Policy Institute last year found.

The impact of tax concessions can be seen in the post-tax income of older Australians.

The report noted that, in the decade between 2013/14 and 2022/23, post-tax income for the over-60s was almost equal to that of younger cohorts.

That's despite many over-60s being retired or nearing retirement, and their before-tax income being substantially less than that of younger Australians.

The before-tax income of older Australians was 65 per cent of that earned by younger people, but rose to 95 per cent after tax due to the generous concessions.

"Current settings increasingly favour older Australians at the expense of younger Australians," the report notes.

However, ANU economic and social researcher Ben Phillips notes that not every older Australian is wealthy and, despite concessions, some would be struggling.

A couple who owns their home still needs a combined $730,000 in super to enjoy a comfortable retirement, according to the Association of Superannuation Funds of Australia.

Around 92 per cent of Australians with super had a balance of less than $500,000 in 2022/23, according to data collected by the Australian Tax Office.

Phillips says tax concessions such as those for negative gearing, capital gains and superannuation have some legitimacy, but he believes Australia is too generous, especially when it comes to super.

He notes the largest benefits flow to those with the biggest super accounts and substantial property holdings.

We do see this increasing gap where it's older Australians getting richer.

Property prices in Australia have skyrocketed over the last 40 years, with a PropTrack study last year showing Sydney properties were four times higher than in 1980, adjusting for inflation.

This means a typical house cost $65,000 in 1980, which would be roughly $338,000 in today's money.

The staggering rise in property prices - with houses in Sydney typically selling for $1.47 million last year - is putting money into the pockets of those lucky enough to have bought earlier, while locking out younger generations.

"I think at the moment with the tax system in Australia, it's pretty well set up for wealth creation," Phillips says.

'Levelling the playing field'

Phillips believes Australia needs to change its tax system to rein in generous concessions that generally benefit older cohorts.

But he says this does not have to involve increasing taxes overall.

"It's probably about rebalancing how we tax in Australia," he says.

If you lower the tax concessions [such as negative gearing, capital gains and superannuation], it does allow you to start doing things like lowering personal income tax.

Economist Chris Richardson of Rich Insight believes Australia has made two big policy mistakes - both of which have hurt the young while benefiting older Australians.

They centre on two areas where most of the nation's wealth is held: housing and, to a lesser extent, the share markets.

Richardson notes Australia is more generous with retirement support for wealthier residents through super tax concessions, for example, than it is for those on low incomes.

He says changing these arrangements is not about being "unfair to older and richer Australians".

"What we are doing is spectacularly unfair and comes at a pretty massive cost. So a little touch of fairness would be a grand thing," he says.

"We're levelling a playing field which is dangerously tilted and absolutely worsens inequality."

Comfortable in old age, struggling in middle age

As Phillips points out, financial stress tends to be highest among younger and middle-aged Australians.

According to the latest Household, Income and Labour Dynamics in Australia survey released in December, people aged 65 and over consistently report the lowest levels of financial stress, with 6 per cent saying they were stressed in 2023.

This compares to 14 per cent of younger cohorts.

Phillips says just because someone has turned 60, it doesn't mean they suddenly have the right to pay no tax (apart from GST on things they buy).

There should be some [concessions but] at the moment you've got extremely wealthy households who are over the age of 60, who are paying not a cent of tax on their earnings.

"I think that's grossly unfair, and I think it puts a bit too much burden on younger families, who we do know are actually struggling."

Experts also warn that as Australia's population ages, a smaller proportion of young people will be expected to support older generations.

By 2050, there could be just 2.7 people of working age for each person aged 65 years or older, compared with five people in 2009, and 7.5 people in 1969, according to the Rudd government-commissioned Henry tax review published in 2010.

Phillips says Australia may have to increase taxes to support its ageing population due to higher aged care and pension costs.

If so, he believes it would be fairer to reduce tax concessions on superannuation rather than squeeze more money out of people who pay income tax.

Over the past 15 years, Australia has increased taxes through bracket creep - meaning workers pay more as inflation pushes them into higher tax brackets.

What taxes could be changed?

Phillips says superannuation concessions would be the most important area for change.

Once Australians retire, they can still have up to $2 million in a super account and pay no tax on the income it earns.

If it's invested in a balanced fund with returns of 5-6 per cent, they could be earning around $100,000 a year tax-free.

A couple would then have a combined amount of $4 million, allowing them to earn up to $300,000 a year tax-free (if invested in a fund with returns of 7-8 per cent).

"That's unnecessarily concessional," Phillips says.

"If you were a 40-year-old and you're earning $100,000 a year and looking after a couple of kids ... you'd be paying 32.5 cents in the dollar [for a tax bill of around $22,967]."

'Takes money from the poor and gives it to the rich'

High-income earners are also the biggest beneficiaries of how money transferred into super is taxed.

"It takes money from the poor and gives it to the rich," Richardson says of the current super arrangements.

"On average, that means taking money from the young and giving it to the older."

Super contributions are taxed at 15 per cent (up to an amount of $30,000) - which is 30 percentage points below the top income tax bracket of 45 cents in the dollar, but just 15 points lower than what many middle-income earners pay.

Richardson notes these generous super concessions don't save Australia much when it comes to funding the age pension.

"That's a myth," he says.

"So we have it wrong, pure and simple."

Richardson says one of the recommendations in the Henry tax review, which he supports, is changing the superannuation rules so everyone gets the same discount.

A tax discount of 15 percentage points, for example, would allow someone in the top tax bracket (of 45 cents in the dollar) to bring their rate down to 30 cents. Someone in the 32.5 per cent bracket would pay 17.5 cents per dollar.

This allows everyone to gain the same benefit.

Previously, super funds complained that implementing this would be administratively complicated, but Richardson says technology has improved since the 1990s.

Options being considered by government

Treasurer Jim Chalmers has acknowledged "intergenerational issues in the tax system and in housing".

A Senate inquiry was established last year into the operation of the capital gains tax (CGT) discount, with a report due on 17 March.

The CGT discount is applied when you sell assets that you have owned for at least a year - including stocks, jewellery and properties.

It allows you to claim a 50 per cent discount on tax paid on the profit.

Chalmers told ABC RN Breakfast on 26 February that the government hasn't changed its policy despite reporting from the Australian Financial Review suggesting Treasury is considering a reduction in the CGT deduction from 50 per cent to 33 per cent.

New rules to limit negative gearing to two investment properties are also being examined, according to reports in The Australian.

Chalmers says the government has tried to address affordability issues by building more homes and offering 5 per cent deposit guarantees for first-home buyers.

But he acknowledges there are other options being considered as part of the budget, which is due to be handed down in May.

Opposition leader Angus Taylor told 2GB last Friday it's "highly unlikely" he would support changes to negative gearing or the CGT because "we want to see more houses".

Last year, the government also introduced legislation to double the tax rate on earnings for superannuation funds of more than $3 million - to 30 per cent - but this has not yet been passed by the Senate.

It will also introduce a new 40 per cent tax for balances above $10 million.

Housing reform also needed

Experts acknowledge that reforming negative gearing and the CGT won't solve the housing affordability problem, but would likely slow price growth.

Richardson says CGT changes being debated might dampen property prices by 1.5-2 per cent, which would have a similar impact to the Reserve Bank lifting rates by 0.25 percentage points.

Regardless, Richardson does think the tax needs to be changed.

"Because we can have a better tax, not because it's a magic solution in housing," he explains.

Richardson believes other changes, such as reforms to planning regulations, will also be necessary to bring down house prices.

"For 40 years in Australia, our housing policy has been the word 'no'. It needs to change to the word 'yes'," he says.

He says housing affordability is a complex problem and it will be a "battle that will be fought for decades".

Victoria provides hope for aspiring homeowners

Barley remains hopeful change can happen and points to Victoria, which appears to have cooled its housing market.

Data supplied to SBS News from Domain shows property values in Melbourne are growing at the slowest rate of all capital cities.

In the five years from December 2020 to December 2025, house prices in Melbourne grew by 19.5 per cent - much lower than the growth in Perth (91.3 per cent), Adelaide (90.7 per cent), Brisbane (86. 2 per cent) and Sydney (46.3 per cent).

Unit prices rose by only 5.8 per cent in Melbourne, compared with 86.6 per cent in Adelaide.

Changes to tax policies in Victoria have made it less appealing to investors, including forcing more homeowners generating an income from their property (through Airbnb, for example) to pay land tax.

Kate Raynor, an urban planning expert with public policy think tank Per Capita, told SBS News earlier this year that Victoria also approves more new homes than other Australian states and territories.

"I would definitely be in support of changes similar to those [in Victoria]," Barley says.

He also supports changes to the capital gains discount but fears incendiary commentary over even the most modest changes.

"It doesn't seem like we can have a reasonable conversation about this because the extremes just get pushed so hard."

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'We've reached a breaking point': Is it time to tax older Australians more?

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Some Australians are richer than ever, while younger cohorts are struggling. Experts say it's time for change.

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I found this good article which relates to the Australian federal government’s superannuation reform is set to become law following a deal with the Greens. The changes, which take effect July 1, aim to increase fairness in the retirement system while boosting federal revenue by $1.6 billion annually.

Key Changes to how super is taxed at both ends of the income spectrum:

Support for Low Earners: The Low Income Superannuation Tax Offset threshold will rise from $37,000 to $45,000. This allows an additional 1.3 million workers to keep more of their super, potentially adding up to $50,000 to their final retirement balances.

Higher Taxes for the Wealthy: Approximately 90,000 Australians with high-balance accounts will face increased tax rates on earnings:

30% tax on earnings for balances between $3 million and $10 million.

40% tax on earnings for balances exceeding $10 million.

The most positive implication is for those earning between $37-45k per year. Currently these workers pay 15% tax on their super contributions—often a higher rate than the tax they pay on their take-home pay, and the new provisions removes this tax penalty. Since women make up roughly 60% of the low-income workforce, this is expected to help narrow the gender super gap. For the average Australian, your super earnings remain taxed at the flat 15% rate.

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$1.6 billion-a-year tax change confirmed for millions of super accounts

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The federal government’s proposed changes to the way superannuation is taxed will soon become law, after th…

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A recent tax issue that I found interesting concerns proposals to reduce Australia’s capital gains tax (CGT) discount for investors. Currently, individuals who hold an asset such as property or shares for more than 12 months receive a 50 per cent discount on the capital gain when it is taxed. Policymakers have been discussing reducing this discount to around 25 per cent for future investments. Economists have suggested that such a change could slow long term property price growth, with some modelling indicating that house prices could end up several percentage points lower than current projections if the policy were implemented.

What makes this debate interesting is how clearly it shows the behavioural impact of tax policy. The CGT discount was originally introduced to encourage investment and to compensate for inflation, but it has also been criticised for encouraging speculative investment in property, which may contribute to housing affordability pressures. Reducing the discount could change investment incentives across the economy and potentially shift capital away from property and towards other assets such as shares or productive business investment.

At the same time, the proposal highlights the trade offs involved in tax reform. While lower investor demand may ease house price growth, fewer investors entering the market could reduce rental supply and place upward pressure on rents. This makes the issue interesting because it shows how tax policy can have complex and sometimes unintended effects across housing markets, investment decisions and government revenue. As someone studying law and economics, I find it particularly interesting because it demonstrates how legal tax structures influence real economic outcomes and broader policy debates about efficiency and fairness.

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Capital gains tax changes to hit home prices: CBA

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The nation’s biggest home lender says the government’s planned CGT changes will be a drag on property prices.

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Article relevant to the recent events Iran - a good way to bring up the issue of insufficient tax on our most lucrative industries. Truly makes one's gears grind thinking of all the potential revenue the government could raise and resolve its budgetary deficit with if it just had more teeth to tax oil and gas companies with. The article has an interesting hypothetical of what would have happened had we implemented Sims' tax before the war on Ukraine, we'd have raised $26.7 billion in revenue. Goes towards the priorities of government and the poor implementation of the PRRT --> why not tax cashflow, or find means that would prevent oil and gas companies from being able to rely on the previous years' losses so much?

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Australia to miss out on multibillion-dollar oil and gas budget boost

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Treasurer Jim Chalmers is likely to pass over a major revenue lift from surging fuel prices because of the government’s ineffective tax on windfall profits.

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The Albanese government is reportedly considering changes to property investment taxes ahead of the May budget, including reducing the Capital Gains Tax (CGT) discount from 50% to 33% and capping negative gearing at two investment properties. According to the Property Council of Australia, these changes risk severely worsening Australia's existing housing shortage, which currently faces a deficit of 1.3 million homes since 2000, and driving up rental prices.

Property Council Chief Executive Mike Zorbas argues that tightening property tax settings will "hammer supply" by discouraging investment in new homes and pushing investors toward the stock market. Research indicates that around 60% of Australia's two million small-scale landlords would already be financially better off investing in superannuation rather than rental properties, especially since typical rental returns sit below 3% annually. Zorbas warns that penalizing property investors will ultimately hurt the nearly 30% of Australians who rely on the rental market, further entrenching the intergenerational inequity the government claims it wants to solve.

Zorbas points out that tax settings are not the only problem. Housing affordability is also being hindered by rapid population growth, shrinking household sizes, high borrowing and construction costs, and a growing burden of government taxes, which can make up to one-third of the cost of a new home. Instead of raising taxes, the Property Council recommends broader reforms like infrastructure incentives, better build-to-rent settings, and encouraging institutional investment.

It was also argued that taxing landlords more heavily will not improve affordability and suggested the government should instead focus on releasing more land to increase housing supply and lower capital gains naturally.

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Tax changes could worsen housing shortage, increase rents

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Proposed tax reforms risk exacerbating Australia’s housing crisis by hiking rents and deterring investment, per Property Council and ex-Treasury official warnings.

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Another article on my personal mission against the PRRT - Senator Pocock has been pointing out that the beer excise collects more tax than our gas exports, which sounds ridiculous based on who is being taxed. How can multinational, multi-billion dollar oil and gas companies pay less on tax than a beverage charged on an individual, consumer basis? Taxes on beer expected for 2025-26 were $2.7 billion, while taxes from PRRT were expected to be $1.5 billion. It goes against the notion of an equitable tax - where Australian physical resources are funnelled out of the country through oil and gas multinationals with little benefit in return for Australia. This should also bring up policy discussions around adopting not only a higher tax on oil and gas companies or preventing ways of circumventing tax payment, but also adopting a system akin to Norway's sovereign wealth fund and nationalisation of the oil and gas industry. With all our discussions around increased super tax, or reforming the CGT - why is this such a blind spot?

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Why Australia taxes beer more effectively than its gas exports

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Far from fixing the problem of low PRRT revenues, PRRT revenue is expected to fall further over coming years, while beer excise just keeps on rising.

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Building on Marianne A's article, this provides a very clear comparison on the amount of revenue Australia could raise if PRRT were raised in line with Qatar's model. For context, Qatar exports just as much LNG as Australia, but the Qatari taxation model raises $AUD 56 billion in

government revenue as opposed to Australia's $AUD $10.6 billion in government.

revenue from LNG exports

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The recent Middle East war has significantly increased oil and gas prices. This means that oil & gas company make a super profit.

However, at least in Australia, they pay the same taxes. In Europe for instance, they added special taxes to cover the super profits. Should we do the same? Maybe so.

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Push for gas tax as LNG exports reap huge profits after one week of war

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Gas prices tripled in 2022, which was the last time an international conflict hit energy markets. Experts say it may happen again due to the Iran war.

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In short from this news, Labor will pass legislation to increase the tax on those with super balances of more than $3 million, ending a years-long stalemate.

The tax bill will pass the Senate this week without amendment, after Labor secured the support of the Greens. The Greens say their support is a "down payment" of goodwill in the hope Labor will pursue more ambitious tax policies in the budget. Just one thought from this news, cuz there has a way to tax avoidance is to put more salary into the super account(I don't know whether I describe is correct or not haha) and also has another way to make the SMSF. Just wondering whether Greens decision will influence this way.

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Labor to pass super tax changes with support of Greens

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The legislation comes as speculation builds that the federal government will pursue more ambitious tax changes in the May budget.

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The Tax Ombudsman recently published their review on the ATO’s management of general interest charges (GIC) – the full report can be found here: https://taxombudsman.gov.au/reviews_reports/atos-management-of-remission-of-the-general-interest-charge/.

A GIC is the charge imposed when taxes are not paid on time, and is used to deter late payments. GICs can be remitted by the ATO (reduced or refunded) if certain criteria are deemed to be met.

The Tax Ombudsman identified issues with the remission process, with the main concern being a lack of transparency combined with inconsistent decisions and vagueness surrounding the process. Their findings revealed that the amount of remission requests had only slightly increased, while the amount of refusals doubled. The ATO’s approach to remissions has become much stricter since 2023 without clear communication about the tightening of this approach to taxpayer or practitioners.

Ten recommendations were made to the ATO, including making the administration of the GIC process better, potentially using partial remissions more frequently, increasing consistency in decision making, and improving communications regarding decision making. The ATO has agreed with all ten recommendations: https://www.ato.gov.au/media-centre/ato-response-to-tax-ombudsmans-review-of-atos-management-of-gic-remission.

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Tax Ombudsman hands down GIC remission review findings

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The Tax Ombudsman has handed down her review into the ATO’s GIC remission processes, revealing widespread taxpayer concerns surrounding consistency and transparency.

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In conjunction with the Greens, Labor will pass legislation this week to increase taxation on superannuation balances over 3 million by 15%, and on balanced over 10 million by an extra 25%. It's fascinating that the Greens supported this as a gesture of good will for greater support come the budget in May, so I do wonder how that will actualise later.

The reasoning was cited as that a balance of larger than 3 million is unnecessary for retirement, which seems as if it would hold true if you had earned enough to amass such an amount.

Concurrently, increasing the LISTO threshold for low-income earners to get more back at tax time, as well as stricter measures to prevent child sexual abusers from hiding asseets or superfund advertisment is an excellent move in the right direction.

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How new superannuation changes will impact you

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The government’s much-debated changes to superannuation have now passed the Senate, and are expected to become law by the end of the week.

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Ahead of the May Fed Budget where we will likely see reforms to the CGT Discount, negative gearing, and possibly personal income tax, MP Allegra Spender has proposed changes to these aforementioned policies with aims of restoring equity within our tax system.

These changes include lowering the CGT discount to 30% and reducing or withdrawing negative gearing with hopes of lowering the demand to real estate investments and consequently the bar to entry for first home owners.

This is paired with lowering personal income tax marginal rates to provide tax benefits to younger Australians who naturally earn less than older Australians.

I believe that although this sounds good in theory, there needs to be careful policy considerations and long-term planning to the consequences.

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Lower tax on wages, raise tax on investment, MP urges

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Australia’s tax system needs to be rebalanced towards effort and ingenuity, independent MP Allegra Spender said as she…

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Building off of the discussion of today’s article about second earners being disproportionately impacted by making childcare deductible, I found this opinion article about the impact of Australia’s tax system on mothers quite relevant.

The article argues that Australia’s tax and transfer system was designed around outdated assumptions of a single-income household with a male breadwinner and a secondary earner. It highlights how, in modern dual-income families, the second earner faces stacked financial penalties when returning to work through higher marginal tax, reduced family benefits, and childcare costs. As a result, the system effectively discourages workforce participation by mothers and contributes to persistent income and retirement savings gaps between men and women.

This issue also reminded me of our first class, when we touched on Sustainable Development Goal 5 (gender equality) and how legal and tax systems can influence economic participation. Although tax rules are often framed as neutral, the article suggests they can produce gendered outcomes when they interact with social structures like caregiving responsibilities. By shaping incentives around labour participation, the tax system plays an important role in either reinforcing or reducing gender inequalities.

It also relates to our discussion of equity as a key criterion of a “good” tax system, which requires that the burden of taxation be distributed fairly across taxpayers, and how to strive for “second best” in a way that may address broader social concerns.

If the current system disproportionately discourages mothers from working or disadvantages dual-income households, it raises questions about whether the system satisfies the equity objective and whether tax reform could be used as a tool to promote greater social justice.

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Our tax system punishes mothers for going back to work

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Australia’s tax and transfer system has been built on outdated assumptions about work and care.

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I came across a short video of Allegra Spender's speech yesterday, and then found this AFR article discussing her proposal to address intergenerational inequity. Spender's proposal is to (at a basic level) shift Australia’s tax mix away from labour income and toward assets. She argues that younger Australians carry a disproportionate tax burden because government revenue relies heavily on personal income tax, while older generations hold large amounts of relatively lightly taxed wealth, particularly in housing.

This concern reflects issues raised over a decade ago in the Henry Review, which emphasised the need for a tax system that is efficient, equitable and sustainable. The Review also noted that some taxes, particularly broad land taxes, create fewer economic distortions than taxes such as stamp duties. Accordingly, proposals to tax assets more heavily may improve both economic efficiency and fairness between generations by broadening the tax base beyond labour income. Another interesting point she raised was her proposal to charge a 27.5% rate on income from investments and remove the tax free threshold for non-labour income to reduce the artificial incentives to create family trusts - an aspect of tax law that has an immense impact on intergenerational equity.

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Spender’s $29b plan: Cut income tax by taxing assets more

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Independent MP Allegra Spender has called for a major intergenerational rebalancing of the system by cutting income tax, paid for by higher levies on capital gains and trusts.

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This article purports that increasing the capital gains tax will reduce the effectiveness of borrowing strategies adopted by Australian landlords. For the past 25 years, high earners have been claiming tax deductions for their mortgage interest and then paying capital gains when they eventually sell their property. Reforms should be thought about in relation to this relationship between capital gains and negative gearing.

In addition, our tax system gives investors a tax benefit on both sides of the situation - when they spend money to maintain an asset and when they sell it. Economists say that reducing the capital gains would bring the tax rules for investment properties closer to a neutral system. But, a better option would be to cut the discount to 40% and apply it to all returns from investments.

Ultimately, this article raises sound arguments on the effects of changing the capital gains discount with a focus on high income earners who own more than one property (often multiple properties). In doing so, it fails to consider the majority of Australians who do not fall within this category. This demonstrates that a tax system usually results in differentiating tax treatment depending on the income tax bracket of the individual.

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CGT reform may fix Australia’s negative gearing problem: economists

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As Labor mulls big budget changes, experts say increasing the tax on capital gains should cool investor demand for property before any cut to negative gearing.

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I have across this article which discusses the link the disparity of electorates in receiving the CGT discount.

Unsurprisingly, the electorate of Wentworth receives the most CGT discounts with each person receiving around $13,450. Wentworth alone amounts to 7.5% of the total national CGT discount.

Whilst the link between income and the CGT discount is clear, it begs the question on why the current CGT discount is so large and easy to obtain when it clearly favours high income earners who account for an extremely small subsection of the community.

I found two things in the article especially interesting. First, as a prelude to the foreshadowed CGT discount cuts, it is expected that the member for Wentworth - Allegra Spender, will vote in favour of reducing the CGT discount. Spender notes that this will involve ‘difficult conversations’ with her community however I have doubts on whether the majority of her electorate will support this move at their own detriment even if it amounts to significant step towards overall wealth equality.

Second, the article suggests that there are expert opinions to bring back the inflation indexation system to account for CGT. While I do agree that this would be more equitable, I’m curious whether this would be still appropriate considering the current state of the Australian property market. With investment properties increasing, I believe that going back to the indexation model may further deter asset liquidity and result in less economic activity.

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Capital gains tax discount ‘overwhelmingly’ benefits investors in Australia’s richest electorates, analysis shows

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Chief executive of Acoss, who commissioned the study says ‘it’s clear this tax break funnels billions into the wealthiest parts of our country’

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I recently came across this article about the Commonwealth Grants Commission having released its 2026/27 GST distribution. The total pool of GST being divided up among the States and Territories is approximately $103 billion.

NSW is proportionally receiving the least from the GST pool, receiving $1.7 billion less than Victoria despite having 1.5 million more people in its population. This mean that NSW is receiving 25.5% of the GST share despite its population making up 31% of the Australia. In real terms this means that NSW is receiving $2,990 per person compared to $19,122 per person in the North Territory.

The reason given for this was “above average growth in land values” which gave NSW more capacity to collect land taxes. This has led to key political figures like NSW Premier Chris Minns describing the GST distribution system as being “past its use-by date”.

For comparison Queensland saw the largest improvement in its allocations of any state with its share rising from 85 cents to 87 cents of the per dollar of GST collected. In total this is worth an extra $1.7 billion. The reason for Queensland’s increased allocations was listed as falling coal prices reducing its capacity to collect royalty revenues.

Western Australia's allocation continues to be controversial. Under 2018 legislation, WA's floor rose to be the equivalent proportion received by NSW. This means that WA receives just under 82 cents per dollar of GST contributed despite this additional money actually coming from Federal taxes not the GST. This means the federal top-up cost to ensure no state is worse off will rise from $6.1 billion to $6.6 billion in 2026/27.

The way GST is redistributed relates to our discussions regarding how for a tax system to function with the most efficiency it needs to distribute the tax burden onto those who can afford to pay it. In this sense we can see this principle demonstrated on a larger scale by examining how the states who can get revenue from other sources are deemed as being able to pay for the needs of other states and thus from an economic efficiency standpoint not in need of GST distributions to the same extent as other states.

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Biggest winners and losers in $103 billion GST carve-up

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Victoria’s GST allocation will be about $1.7 billion more than NSW’s, despite having a smaller population.

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Madeline (Maddie) Panos Post 2 - GST Distribution

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Madeline (Maddie) Panos Post 2 - GST Distribution

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Hi everyone, here to address the government's announcement of how they will distribute $103 billion in GST payments over FY26/7 and the 2018 funding agreement.

Current Announcement

The biggest beneficiary of this announcement is WA, which is set to receive $9.3 billion. This represents a 1.3bn increase from last year, and 6.6bn more than it would have received before the 2018 policy changes. This is controversial because WA has the strongest state budget in the country due to their mining royalties. The Commonwealth Grants Commission recently admitted that under current economic circumstances, WA receives more GST revenue than what is actually needed to provide average services, while most other states receive less than what is needed.

2018 Policy

You are probably wondering what the 2018 policy changes I referred to are. It is a distribution model that was introduced by Scomo while he was treasurer. He introduced a floor of receiving 75 cents for every dollar of GST it raises, applicable to all states and territories. This shifted the system from accounting for every jurisdiction's ability to raise revenue, to now ensuring a minimum return regardless of a state's independent wealth.

Other Jurisdictions

Queensland will see a 1.7bn increase (more than WA or any other jurisdiction) primarily because the falling coal prices have reduced the state government's own revenue

Tas and NT will see a slight increase in share because of changes in First Nations populations and the number of people in regional areas

NSW, SA and Vic are all having a fall in their percentage share as funds are redirected to WA and Qld.

My Opinion

What do I think? I honestly don't know.

When learning about the 2018 policy, I was thinking about FedCon and how Scomo's policy is a significant departure from horizontal fiscal equalisation, which I think was pretty central to our decision to federate. It seems more in line with federalism to ensure that every citizen, regardless of their state, has access to similar levels of public services. Perhaps the guaranteed floor of 75 cents per dollar is too high for wealthy states like WA, so a potential reform could be lowering the floor rather than abolishing it altogether.

Economic professors seem to be very critical of the 2018 deal, and I definitely see how there is a practical problem (as well as the political/federal implications) if WA is getting more than they need while other states do not receive enough share to provide average resources. That being said, the people in WA are doing the jobs that none of us want to be doing in order to raise such a strong state budget, and it doesn't seem fair to punish them by giving them less GST payments when they are breaking their backs out in the mines. For this reason, I don't like the argument that WA might face fiscal laziness, because they are clearly the least lazy of us all. It also makes sense for WA to have lots of funding because they can use that to generate even more money for Australia, while NSW and many other jurisdictions simply don't have the resources to achieve this regardless of how much money is thrown at us.

As I have hopefully shown, there are strong considerations for and against the 2018 policy.

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Bonus $6.6 billion handout given to Aussie state that needs it least

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Western Australia will be handed an extra $6.6 billion by the federal government next year thanks to a cont…

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Hi everyone!

In light of this week's topic on corporate taxation, I read this article released by the AFR discussing the way in which Aussie banks are ramping up their campaign against major technology companies such as Apple, Google and Meta. Unsurprisingly, banks are claiming that it is "unfair" that major tech giants pay little to no tax due to complex multinational corporate structures that allow profits to be shifted offshore and recognised in lower-tax jurisdictions. This discussion is not new in the tax world, however the AFR article shares that banks are now lobbying the federal government to “level the playing field” by reforming tax and regulatory frameworks for global technology firms operating in Australia.

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Australian banks pay more than $4 billion each year in charges on top of their company tax obligations, while international juggernauts like Apple, Google and Meta get an easy ride on tax and regulation, says Australian Banking Association chief executive Simon Birmingham.

The system is unfair and should be reformed to safeguard federal government revenue, says the head of the influential lobby group in an opinion article ahead of his appearance at The Australian Financial Review Banking Summit on Monday.

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Australian banks ramp up tax fight against Apple Pay, Google, Meta

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Banks argue foreign rivals benefit from lower taxes and less regulation. They're calling on the federal government to level the playing field.

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The article reports that independent MP Allegra Spender has proposed a major tax reform aimed at making Australia’s tax system fairer. Her plan would reduce taxes on wages and salaries while increasing taxes on asset-based income such as capital gains, investment income, and some superannuation benefits. The proposal also includes reducing the capital gains tax discount and limiting negative gearing so that investment losses can only offset investment income. Overall, the reform seeks to shift the tax burden away from labour and towards wealth and investment.

For many young people, this reform could be beneficial. Younger Australians generally rely more on wage income and own fewer assets, so reducing income tax would increase their disposable income. At the same time, higher taxes on investments and capital gains would mainly affect wealthier and older individuals who derive more income from assets. However, the policy could have mixed long-term effects if it discourages investment or affects property markets. Overall, in the short term it is likely to benefit younger workers, although its long-term impact would depend on broader economic outcomes.

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‘Unspoken deal’: Why Aus needs huge tax reform

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The MP representing the richest electorate in Australia is calling for “once in a generation” tax reform, taking the burden off everyday workers but hitting the wealthier.

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The Guardian article highlights the increasingly uneven distributional impact of Australia’s capital gains tax (CGT) discount, demonstrating that the concession overwhelmingly benefits taxpayers in the wealthiest electorates. While the CGT discount was originally justified as a means of encouraging long-term investment and simplifying the taxation of capital gains following the removal of indexation, the data cited in the article suggests that its practical operation has diverged from this rationale.

Instead of broadly incentivising productive investment across the economy, the discount appears to disproportionately reward those already holding significant capital assets, thereby concentrating its benefits among higher-income individuals and raising serious concerns regarding vertical equity within the tax system.

This distributional imbalance also raises questions about the neutrality and efficiency of the CGT regime. By effectively taxing capital income at a lower rate than labour income, the discount creates a structural bias that may distort taxpayer behaviour, encouraging investment in assets that yield concessional capital gains rather than more economically productive activities. As the article suggests, this is particularly evident in the housing market, where CGT concessions—combined with negative gearing—have been criticised for fuelling investor demand and exacerbating housing affordability issues. In this sense, the CGT discount does not merely reduce tax liability but actively shapes market outcomes, undermining the principle that the tax system should minimise distortions unless clearly justified by policy objectives.

In light of these concerns, the growing political and academic support for reducing the CGT discount reflects an attempt to restore greater balance between equity and efficiency. The article’s discussion of potential reforms such as lowering the discount rate which indicates a shift toward recognising that the current settings may no longer be appropriate in light of contemporary economic conditions. Importantly, because the CGT discount is a policy choice rather than a structural necessity, it is amenable to reform without undermining the integrity of the broader tax system. A calibrated reduction in the discount could therefore improve the fairness of the tax system, enhance revenue sustainability, and reduce disproportionate incentives, while still preserving some encouragement for long-term investment.

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Capital gains tax discount ‘overwhelmingly’ benefits investors in Australia’s richest electorates, analysis shows

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Chief executive of Acoss, who commissioned the study says ‘it’s clear this tax break funnels billions into the wealthiest parts of our country’

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Federal Parliament has officially passed the Division 296 bill which will come into effect on 1 July 2026. After the idea of a Superannuation balance tax was first introduced to the Australian public in February 2023, its introduction into legislation has been long anticipated. The effect of this provision is to tax Australian superannuation balances exceeding $3M. Significantly, this measure is the first of Australia's tax policies to directly tax unrealised capital gains - a point of controversy which has been long debated in policy. While intended to make superannuation concessions more equitable, it is highly inconsistent with general capital gains treatment and adds undue administrative complexity to our framework. Some critics go so far as to argue that Parliament has overcompensated on its vertical equity focus, and in doing so sacrificed the integrity of our tax system through its sharp departure from features of good tax principles (Greco, 2025).

https://www.grantthornton.com.au/insights/client-alerts/division-296-tax-has-passed-parliament-and-will-take-effect-from-1-july-2026/

https://www.accountantsdaily.com.au/tax-compliance/21844-lesson-in-ignoring-good-tax-principles

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Grant Thornton Australia | Audit, Tax and Advisory

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Division 296 tax has passed the Senate and will take effect from 1 July 2026

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The Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 and Superannuation (Building a Stronger and Fairer Super System) Imposition Bill 2026 were passed by the House of Representative on 5 March 2026, and subsequently passed through the Senate late on 10 March 2026, with no further changes and will take effect from 1 July 2026.

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Just wanted to share a quick breakdown of why Capital Gains Tax (CGT) is back to spotlight again this month. Basically, the Aussie government is re-evaluating the 50% CGT discount. Since there’s a Senate report due right about now (March 2026) and the Federal Budget is coming up in May, everyone is speculating if the "halve your tax" rule for assets held over a year is about to get axed or tweaked. While it's a huge deal for property investors and housing affordability, don't forget it also hits our stocks and crypto portfolios too.

It’s a classic case of tax policy vs. social reality. The 50% discount was meant to keep things simple, but it’s arguably turned housing into a tax-haven rather than just a place to live. If the government scales back the discount, we might see a massive shift in how people build wealth, i.e. moving away from just "buying and holding" property to maybe looking for more diverse income streams.

For us as students/future investors, it’s a reminder that tax laws aren't static; the "math" we use to calculate ROI today might be totally different by the time we’re actually ready to sell our assets. It definitely pays to stay flexible with your exit strategy.

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First introduced in the 1980s, capital gains tax (CGT) is back in the headlines in early 2026 because potential changes to CGT rules are being discussed ahead of the federal budget, alongside a Senate inquiry that's examining how the tax is applied.

Ongoing concerns about the cost of housing in Australia are one of the key reasons potential CGT changes are back on the agenda. To understand why CGT is back in the news, it's important to know where the tax came from and how it developed.

What is capital gains tax?

CGT is the tax you may pay on the profit you make when you sell or otherwise dispose of an asset.

Even though it is often called a separate tax, CGT is part of Australia's income tax system, with your net capital gain generally taxed at the same marginal rate as your other income.

Right now, CGT is most often mentioned because of the way it applies to property, but it can apply to a wide range of investments, including shares, managed funds and crypto assets.

Under CGT rules, a few key exemptions and rules are applied:

Assets bought or acquired before 20 September 1985 are generally exempt (these are often called "pre-CGT" assets).

Your main residence (your home) is generally exempt, if you meet the conditions.

A "CGT event" is the point when the tax rules switch on, for example when you sell an asset.

Why Australia introduced CGT in the first place

Before CGT began in 1985, Australia had no general tax on capital gains. Treasury's history of Australia's tax system notes a key concern of the time was that without CGT, there were incentives to convert what would normally be considered "income" into capital gains in order to minimise tax.

Here's a hypothetical example of how that worked:

A worker negotiated a $15,000 bonus.

Instead of paying it as cash salary, the employer provided the worker with shares or rights worth $15,000.

If the shares rose in value and the worker later sold them, the profit showed up as a capital gain rather than wages, meaning less tax would be payable.

CGT was introduced partly to reduce the incentive to re-label "income" as "capital", and to broaden the income tax base. (As a side note, "non-cash" employee benefits like shares, company cars and low-interest loans were also the reason Fringe Benefits Tax was introduced in 1986).

A brief history of CGT and how it's changed

CGT started in 1985 and applied to realised gains on assets acquired after the start date.

From 1985 to 1999, the system had two main features:

Indexation, which adjusted the cost base for inflation so that only "real" gains were taxed.

Averaging, which aimed to reduce the "tax spike" from a gain that built up over many years but was taxed in only one year.

Here is a simple illustration of indexation:

You buy shares for $10,000 and sell them years later for $18,000.

If inflation over that entire period was 20% (hypothetically), indexation lifts your cost base to $12,000.

The taxable gain therefore becomes $6,000 instead of $8,000 after adjustment for inflation.

The big 1999 shift: introducing the CGT discount

In 1999, the system changed from indexation and averaging to a CGT discount.

Rather than calculating and making allowances for the effect of inflation, a simple 50% CGT discount was applied instead. While the discount is often discussed in terms of the effect it has had on the housing market, it actually applies in all cases where CGT is payable.

The change was designed to simplify the system and make Australia's tax system more internationally competitive, and the discount structure put in place in 2026 continues today.

What the discount means in practice:

Individuals (and trust beneficiaries) generally include only half of an eligible capital gain in their taxable income if the asset was held for at least 12 months (thus getting a 50% discount).

Complying super funds generally apply a 33.33% discount.

How CGT shows up in shares and other investments

CGT becomes relevant when you start building wealth outside your normal pay packet, for example through shares, ETFs or managed funds.

Common circumstances where CGT becomes relevant include:

Selling shares or an investment property can trigger a CGT event.

A managed fund can distribute a capital gain to you, even if you did not sell anything yourself.

The tax you end up having to pay can depend on how long you held the asset, your marginal tax rate, and whether you have capital losses you can use to offset gains.

How CGT can affect the housing market for buyers, renters and investors

CGT matters in the housing market because it changes the after-tax return property investors can expect. That can influence investor decisions to buy, hold or sell investment property.

For investors, the CGT discount can make long-term capital growth more attractive. Because CGT is typically paid when a gain is realised, it can also affect the timing of when investors choose to sell.

For homebuyers, investor demand can add competition for homes in some areas.

Some argue that the CGT discount has encouraged so much property investment that it is now more difficult for people buying homes to live in to compete.

This is a key reason the government is looking at potential changes to the CGT rules.

But CGT is by no means the only factor shaping Australia's housing market. For example, CommBank economists have repeatedly pointed to tight supply and construction constraints as a key part of the housing story, and a key reason they're forecasting national home prices will rise in 2026.

For renters, the link to CGT is indirect. If investor participation in the housing market changes, the number of available rental homes can shift up or down, which can influence rental costs. But rents are also still driven by broader supply and demand, including how quickly new housing is built.

Why CGT is back in the news in 2026

First, the Senate established a Select Committee on the Operation of the Capital Gains Tax Discount on 4 November 2025, with a final report due by 17 March 2026. Its terms of reference include housing, productivity and distributional impacts.

Second, media reporting has suggested changes to the CGT discount could be considered as part of the federal budget in May 2026.

Adding to that, the Parliamentary Budget Office has released analysis requested by the committee. The analysis paper discusses how much tax revenue is foregone as a result of the CGT discount, as well as how the value of the discount is distributed by income group and by asset class, including property and shares.

The key takeaways

CGT is part of income tax and generally applies when you dispose of an asset, like shares or an investment property.

Australia's core CGT settings in 2026 still centre on the 1999 discount model, including the 50% discount for eligible gains on assets held at least 12 months.

It is in focus again because a Senate inquiry is examining the CGT discount, and changes are being discussed ahead of the May budget.

Things you should know: This article is general information only and is not tax advice. Tax rules can be complex and change over time. Consider the ATO's guidance and independent advice from a registered tax agent if you are making decisions based on your circumstances.

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What is capital gains tax and why is everyone talking about it again?

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Capital gains tax is back in the news again. What is it, where did it come from, and what's behind this latest discussion?

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The Tax Institute has officially urged the ATO to reconsider its draft determination, TD 2026/D1, regarding the Main Residence Exemption for deceased estates.

The core of the dispute lies in the ATO’s "unduly restrictive" interpretation of an individual’s right to occupy a dwelling under a will. Specifically, the ATO suggests that if a residency right is structured through a testamentary trust rather than being a direct right in the will, the CGT exemption might not apply. Experts argue this prioritizes "form over substance," potentially exposing families to unexpected tax bills simply due to the technical drafting style of a will.

This case is a good example of how legal structures can conflict with tax benefits. For those of us studying finance or law, it highlights a major risk in estate planning: even if the intent of a will is to let a beneficiary live in a home tax-free, the specific mechanism used (like a trust) could trigger a massive CGT event. If the ATO doesn't adopt a more "substance-based" approach, many existing estate arrangements might become tax-inefficient overnight.

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The ATO's proposed interpretation of the main residence exemption in deceased estate cases is "unduly restrictive" and may disrupt established estate planning arrangements, The Tax Institute has said.
The Tax Institute has urged the ATO to reconsider its draft Tax determination TD 2026/D1 due to concerns with the ATO's proposed interpretation.

TD 2026/D1, which the Tax Office released in late January, concerns individual beneficiaries and trustees of a deceased estate who have an ownership interest in a dwelling acquired from a deceased estate.

The draft tax determination clarifies when an individual has a 'right to occupy a dwelling under the deceased's will', which is relevant in determining whether the beneficiary or trustee of the deceased estate is entitled to the capital gains tax (CGT) main residence exemption when a CGT event happens to their ownership interest in the dwelling.

In its submission on TD2026/D1, The Tax Institute said it was concerned the draft determination adopts an unduly restrictive view of what constitutes a "right to occupy a dwelling under the deceased's will" for the purposes of section 18-195 of the Income Tax Assessment Act 1997.

The submission said the draft determination places disproportionate emphasis on technical drafting form, rather than the substantive rights created by a will, particularly where those rights are affected through testamentary trust mechanisms.

Head of tax and legal at The Tax Institute, Julie Abdalla, said the draft interpretation risks elevating form over substance.

"Where a will clearly provides for a person to live in the family home, the tax outcome should not depend on whether that right is expressed directly or arises through a testamentary trust structure," she said.

"A distinction of that kind is not supported by a coherent reading of the legislative framework."

Abdalla noted that advisers and trustees have long administered deceased estates on a settled understanding of section 118-195.

"A significant narrowing of that understanding, particularly without appropriate transitional safeguards, risks unsettling existing arrangements and exposing families to unexpected capital gains tax consequences," she said.

The Institute's submission also warned that the proposed approach may produce inconsistent outcomes between estates with substantively identical facts, depending solely on drafting differences.

Certainty and coherence were essential to tax administration, Abdalla said.

"The main residence exemption in deceased estate contexts exists to provide continuity and ensure sensible outcomes at a vulnerable time for families."

"An interpretation that elevates drafting nuance above evident intent risks undermining confidence in the integrity and stability of the tax system."

The Tax Institute said it has urged the ATO to adopt a principled, substance-based interpretation that appropriately recognises occupancy rights created under a will, including those arising through testamentary trust structures, and to ensure that final guidance is administrable, equitable and aligned with legislative intent.

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ATO urged to reconsider draft tax determination on deceased states

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The ATO's proposed interpretation of the main residence exemption in deceased estate cases is "unduly restrictive" and may disrupt established estate planning arrangements, The Tax Institute has said.

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The attached news article addressed the federal government’s proposal to allow taxpayers earning labour income to claim a $1,000 instant tax deduction instead of claiming individual work-related expenses.

The proposal is set to take effect from 2026-27, and personally, I find it interesting that it may be contrary to some concepts engaged during the discussion regarding positive limbs of general deduction in the week 4 lecture.

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$1k standard deduction: tax simplicity, or a costly illusion?

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While the federal government’s proposal may enhance pre-filled tax returns, a closer look at this policy reveals that, for many, this simplicity may come at a hidden cost, writes Jenny Wong.

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Hi everyone - this article highlights how Google is reconsidering a $20 billion AI data centre investment in Australia due to concerns that establishing a local presence could create a “permanent establishment” and expose more of its profits to Australia’s 30% corporate tax rate . Such reflects a broader issue in international tax where multinational companies structure operations to minimise local tax liabilities, raising integrity concerns for the Australian tax base.

This directly connects to the week 5 content regarding corporate taxation and the rationale for taxing companies as separate entities. While Australia’s corporate tax system has some methods that aim to prevent double taxation and ensure neutrality, this scenario shows the tension between attracting foreign investment (efficiency) and protecting the tax base (integrity). It raises the question of whether current rules on source and permanent establishment strike the right balance in a globalised digital economy .

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Tax worries give Google pause on $20b Australia data centre dream

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The technology giant has been in discussions with authorities about a major precinct, but is concerned this could mean it pays significantly higher taxes.

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I found this article that discusses the growing signal from the Labor party that it intends to reform the CGT discount in the upcoming May budget. It doesn't state any official policy yet, but has statements from senior ministers and a recent Senate committee report which suggest a shift is imminent. They are framing it as a move toward intergenerational fairness.

The core of the debate centers on the current 50% discount given to investors on the profit made from selling an asset (like an investment property) held for longer than a year. Treasurer Jim Chalmers and Finance Minister Katy Gallagher have pivoted from denials to discussing tax reform options specifically aimed at housing affordability and fairness between generations. Speculation includes reducing the discount (from 50% to perhaps 25% or 33%), returning to an inflation-indexed model (where you only pay tax on gains above inflation), or smoothing tax hits over several years to avoid a massive one-year tax bill.

To avoid reducing housing supply, the government might keep the 50% discount for newly built homes while reducing it for established (old) homes. A major sticking point is whether to 'grandfather' existing investments (leaving current owners unaffected) or phase the changes in for everyone to ensure the policy actually raises revenue and cools the market.

I think this article is important because it highlights a tax divide: older generations who own multiple properties benefit more from this discount as it helps them outbid younger first-time buyers. However, if you tax property investment more heavily, developers might build fewer houses because the after-tax profit is lower.

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To fix the generation gap, Labor may have to leave the grandfathers behind

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A Senate committee report into the capital gains tax was authored by the Greens but littered with clues about Labor’s plans.

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Labor hasn't got a capital gains tax policy yet, but it's already making the case

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Labor hasn't got a capital gains tax policy yet, but it's already making the case

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To fix the generation gap, Labor may have to leave the grandfathers behind

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A Senate committee report into the capital gains tax was authored by the Greens but littered with clues about Labor’s plans.

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The article I brought up in class regarding Allegra Spender's tax reform plan.

I think some interesting points to take away:

1. The AFR spends very little time delving into the substance of Spender's plan, and mostly criticising it. While there are valid criticisms that we should devote significant focus to reducing unnecessary tax breaks that can be abused by entities like the NDIS and the R&D tax incentive, is this the most helpful way to cover tax reform? Does it communicate enough information to readers, and does it unduly undermine the merits of the policy? (or does it take away important airtime that could be used instead to criticise the policy on its actual merits and implementation?)

2. The article's criticism exposes how tax legislation is a balancing act between how much change do we want to our tax policy vs how much can we actually implement now given the political conditions we are in? As Prof Ann said, successful tax policy is usually implemented a bit at a time, not in massive changes to tax breaks.

(and, in my personal bias, why no mention of PRRT reform? Ridiculous! That should be low-hanging fruit for the AFR)

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Australia's bloated tax system is making us all poorer, while the arguments for reform are making us stupider because they continue to deal exclusively with the symptoms while ignoring the underlying cause of reckless government spending.

In the last four years, real wages have fallen to levels not seen since Labor reintroduced centralised wage fixing in 2008. The purchasing power of a worker on $90,000 has been shrinking by more than $2700 a year since 2020, and the Reserve Bank of Australia predicts it will keep falling.

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Spender's tax reform plan doesn't tackle real causes of unfairness

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Anyone who starts a discussion about tax reform without first highlighting the waste, fraud and abuse in our spending is, simply put, not serious.

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Are changes to the discount finally happening? - Mikael Woo

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Are changes to the discount finally happening? - Mikael Woo

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It seems as though CGT is finally getting the much-discussed reform that has been dominating the tax-related news for the last few months.

This article highlights that a parliamentary inquiry has confirmed what we already knew - that the CGT discount settings as they are have been exacerbating intergenerational inequality in the housing market.

Chalmers has signalled that he is willing to make changes to the discount after he is briefed on the report next week, although there is no confirmation as of yet what exactly this change will be. The Treasury has been modelling changes that could see the discount reduced to 33% for housing investors, while retaining the current 50% rate for shares and other investments.

The Coalition is opposing this as expected, although it seems pretty assured something will happen. Keeping the eyes peeled.

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Labor appears set to reform capital gains tax discount after parliamentary inquiry findings

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Report reveals the Howard-era settings are helping fuel intergenerational inequality in Australia’s housing market

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I found this article on a perspective of the superannuation tax I have not considered before. It examines the changes through an inheritance perspective and highlights potential collateral effects that may not be at the forefront of discussions. This could directly provide an argument for deficiencies as to equity and efficiency of the changes.

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Why the new super tax could force you to rethink your inheritance

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For many families, the biggest impact of the new super tax won’t be the headline rate – it will be how it reshapes long-term planning across generations.

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ATO deductibility changes: GIC no longer deductible from 2026

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ATO deductibility changes: GIC no longer deductible from 2026

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This is related to our week 4 topic "Deductions". From next year, the ATO general interest charge, currently 11.17% compounding daily on overdue tax debts, will no longer be deductible, making it significantly more costly to carry a tax debt.

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Tax, super, childcare, medicines and more: Your cheat sheet to big changes in 2026

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From tax cuts to payday super, a number of changes are coming for Australians across childcare, household budgets and medicines.

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The Tax Institute calls for comprehensive reform ahead of Budget 2026–27.

Australia's tax system is increasingly complex, outdated, and burdened by frequent legislative changes. The Tax Institute argues the GST, unchanged for 25 years, needs reform as part of moving away from income tax reliance to ensure revenue sustainability.

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Federal Budget 2026–27: it’s time to take action on tax reform

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SYDNEY, 30 JANUARY 2026: The Tax Institute is calling for tax reform and certainty to be placed at the centre of the Federal Budget 2026–27.

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New superannuation legislation passes: companies, shareholders, and the Division 296 debate   (Ivy Han)

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New superannuation legislation passes: companies, shareholders, and the Division 296 debate   (Ivy Han)

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Superannuation sits at the intersection of company tax, personal income tax, and investment entity rules, which makes it so intellectually rich (and so complex to advise on). From a board governance perspective, the ban on advertising specific funds during employee onboarding reflects a genuine corporate governance concern: employers in a fiduciary-adjacent role should not be nudging workers toward underperforming funds. The Division 296 debate is the more structurally significant issue. Taxing unrealised gains on super balances above $3 million is a conceptual departure from Australia's realisation basis for capital gains, and it raises a fundamental legal question: can a tax on an asset that hasn't been sold be said to tax "income" at all? This is not just academic. It bears directly on Ch 12–13 material on how company earnings, distributions, and investment income interact with the shareholder tax system, and on whether superannuation funds receive genuinely preferential treatment or simply the correct economic treatment for long-dated savings vehicles

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How new superannuation changes will impact you

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The government’s much-debated changes to superannuation have now passed the Senate, and are expected to become law by the end of the week.

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IMF calls for GST rise, lower company tax, and resource sector reform ahead of May budget  (Ivy Han)

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IMF calls for GST rise, lower company tax, and resource sector reform ahead of May budget  (Ivy Han)

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The IMF's 2026 Australia survey recommends raising the GST, cutting company tax, and increasing resource taxation, a classic tax mix switch from mobile to immobile bases. This maps directly onto the efficiency ranking in Table 2.1 of the Henry Review, which we'll reference in readings: land and consumption taxes impose lower efficiency costs than income and company taxes. What's useful about this article is the gap it reveals between technically sound tax policy advice and what governments actually do. The Treasurer explicitly declined to adopt key recommendations. That gap between economic prescription and political reality is something tax law students need to understand, because it shapes every major reform debate we'll encounter this semester.

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IMF calls for tax shakeup as federal budget looms

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An International Monetary Fund report has praised Australia’s economy but called for reform in areas including company and resources taxes and the GST.

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I discovered this article after some more contextual research into the average person who benefits from CGT breaks. The Oxfam report showing that nearly half of the CGT discount went to just 24,000 individuals who earned over $1m in the financial year, costing the budget billions. It serves as a stark real-world example of our class discussions, on how structural tax concessions can inadvertently accelerate wealth concentration at the top end of the income spectrum.

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24,000 millionaires pocket half of capital gains tax break: Oxfam Australia | Media Oxfam Australia

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This article reports that the Australian Government is set to reduce or eliminate the capital gains discount for residential properties in the next budget.

Different approaches are on the table to achieve this goal which balance revenue raising and fairness.

A simple and clear decision can be taken to eliminate the discount for all investment properties, including those purchased before the change was announced. This would maximise revenue generated at the expense of investors whose plans may be disrupted if they ordered their financial affairs in the expectation of receiving the discount.

Alternatively, the government can implement the change to newly purchased properties only. Little revenue would be generated by this move as investors' decision-making about buying investment properties would be altered. In contradiction to the government's commitment to intergenerational equity, younger buyers would bear the brunt of a non-retrospective approach.

The opportunity for bold reform is up for the taking by the government. Whether it will do so will soon be seen.

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OPINION: It is becoming increasingly clear that the federal government will reduce or eliminate the capital gains tax discount in the forthcoming budget, but it is not clear how it intends to do it.

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The article reports that the Australian government is considering a potential windfall tax on gas and coal exports, but has not yet committed to implementing it. Treasury has been asked to model new levy options ahead of the federal budget in May, including possible reforms to the Petroleum Resources Rent Tax (PRRT), with the aim of capturing more revenue from energy companies benefiting from high global prices.

There is broad political for taxing gas profits, with some proposing a flat 25% levy that could raise billions in revenue annually. Critics argue the current PRRT generates relatively little income compared to the scale of industry profits. However, gas companies and the Coalition strongly oppose the proposal, warning it would deter investment, reduce future gas supply, and ultimately increase energy prices. Industry leaders argue that introducing new taxes during a global energy crisis is poorly timed and could undermine Australia’s energy security and international competitiveness.

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Labor leaves door open to gas tax as exporters warn of risk to supply

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The Greens and One Nation are among those that want gas profits levied, with pressure mounting on Labor to respond to growing calls for reform.

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This AFR article argues that Australia’s 50% CGT discount can actually overtax investors during periods of high inflation, challenging the common perception that it is a generous concession.

Under the current system, investors who hold assets for more than 12 months are taxed on only half their nominal capital gain. However, unlike the pre-1999 system, which indexed gains to inflation, today’s approach does not distinguish between real gains and inflation-driven increases in asset prices. This becomes problematic when inflation is elevated, as a significant portion of an asset’s price growth may simply reflect rising costs rather than an actual increase in purchasing power.

As a result, investors can end up paying tax on illusory gains. For example, if an asset rises by 10% during a period of 7% inflation, the real gain is only 3%, yet tax is still applied to a large share of the nominal gain. Even with the 50% discount, this can produce an effective tax burden that exceeds what would be considered fair on a real-return basis.

An important takeway this article suggests is that the flat discount is a blunt instrument that fails to adapt to changing economic conditions, raising questions about whether reforms should better account for inflation.

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CGT discount ‘overtaxes’ investors during high inflation

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It was not concessional during times of high price rises over the past five years, new research by the Institute of Public Affairs shows.

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I came across this article written about Andrew Hastie MP's comments about the tax system made in an interview with the ABC.

Hastie, a Liberal and aspirant for his party's leadership, signalled his openness to a wholesale reform of the tax system. He floated changes to capital gains discount, negative gearing and the introduction of a tax on gas exports.

These policies go against the grain of his party's traditional stances in order to garner support from younger Australians who are struggling to climb the property ladder.

A constellation of figures across the political spectrum are expressing the need for tax reform. The exact contours of the coming changes are to be determined, but it is clear that momentum is building.

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Hastie breaks ranks to back major tax reform, a windfall gas tax

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The Liberal MP says many people feel the system is “rigged” against them, warning colleagues there is “no medal” for a “final last stand for neoliberal politics”.

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With the budget set to be handed down in May, the conflict in Iran has prompted renewed discussions about taxes on gas companies.

The AFR reports that the Prime Minister’s Department has asked Treasury to prepare “new levy options” to capitalise on an expected surge in prices. These levy options could help shield Australians from higher fuel and energy costs, while also addressing concerns about windfall profits in the resources sector. A windfall levy would be imposed on gas companies earning elevated profits due to external factors such as the Iran conflict.

There is also increasing discussion about tightening the Petroleum Resource Rent Tax (PRRT), a profit-based tax applied to offshore oil and gas projects. Currently, the tax allows companies to first recover their costs, after which they pay 40% tax on remaining profits, with unused costs carried forward if a project is not yet profitable.

Both proposals have garnered criticism from gas companies, which argue that should these changes be implemented they could compromise energy security in Australia.

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Gas tax on the agenda as war prompts budget rethink

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Proceeds from a new levy on gas giants could be used to help Australians cope with any spike in energy prices caused by the Iran conflict.

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I recently came across this ABC article reporting the Government's consideration of temporarily halving Australia’s fuel excise in response to the ongoing fuel crisis. The current excise rate is 52.6 cents per litre, which means the proposal would save motorists around 26 cents per litre if fully passed on. It remains to be seen whether the Government will adopt this change after the national cabinet meeting today.

The fuel crisis was driven largely by global supply disruptions linked to the Iran conflict, so it is uncertain how effective such a measure would be at alleviating petrol prices at the retail level. Savings of 26 cents are a drop in the bucket compared to diesel prices, which have soared above 3 dollars per litre. Businesses are also unlikely to pass the full benefit of the excise reduction onto consumers, further minimising the impact on fuel prices.

The discussion on fuel excise highlights the fact that taxation alone may not be an effective mechanism for regulating the supply and demand of daily necessities. This is especially relevant to the debate surrounding CGT discount reforms as a means of combating the housing crisis.

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PM leaves door open to halving fuel excise temporarily

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The prime minister leaves the door open to halving taxes on petrol and diesel, after the Coalition demands temporary relief from sky-high fuel prices.

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The piece explains that Google is reconsidering a potential $20 billion AI data centre investment in Australia due to uncertainty about how existing tax rules would apply to its operations. A key concern is that establishing a local data centre could trigger a “permanent establishment,” meaning more of its profits would be taxed in Australia at the corporate rate. Despite this, Jim Chalmers has indicated the government will not change tax laws or offer special concessions, instead requiring Google to work with the ATO under current rules.

The article also highlights the ATO’s broader focus on multinational tech companies, particularly concerns about profit shifting and whether companies are under-reporting Australian-sourced income. Rather than issuing blanket guidance, the ATO prefers case-by-case rulings, reflecting the complexity of applying existing tax frameworks to emerging industries like AI and cloud infrastructure.

Overall, the article shows the tension between attracting large-scale foreign investment and maintaining the integrity of Australia’s tax system, especially as digital business models challenge traditional concepts of where income is earned and taxed.

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Chalmers tells Google to deal with Tax Office on AI data centre rules

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The treasurer has downplayed the possibility of tax law changes, telling the tech giant to work with the ATO on rules for a potential $20 billion investment.

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The attached news article discusses the proposed tax on gas exporters in addition to the existing profit tax. The proposed tax aims to lower the cost of living and adopts a model used by Norway (similar to that used by the UK).

According to the Cost of Living Index, Norway ranks 10th, the UK 28th, and Australia 27th (https://www.numbeo.com/cost-of-living/rankings_by_country.jsp). Also, given the potential side effects of the proposed tax (e.g., a rise in gas prices, as addressed in the article), it is uncertain to what extent the proposed tax would achieve its purpose of lowering the cost of living.

Relevant to week 5’s lecture is that the proposed tax would have a huge impact on relevant shareholders and companies. It is expected that the proposed tax may not receive strong support.

On the bright side, the government could use the tax collected to provide subsidies. The article highlights that the Australian Government could have collected a considerable amount of additional tax revenue if the proposed tax had been in place since 2022. The additional subsidies for health care and other essential services would make them more accessible. And more importantly, the proposed tax is likely to make Australian gas benefit Australians.

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As regular Australians struggle, gas companies are making massive profits and paying minimal tax. It is perverse | Rod Sims

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Australia’s gas belongs to all of us. The benefits should be shared fairly rather than hoarded by companies that pay some of the lowest taxes in the world

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This AFR article comments on the effect that the Commonwealth government's decision to cut fuel excise will have on the economy.

By freeing up consumers' money spent on fuel, that same money will distribute itself throughout the rest of the economy. This increased demand acts as a mini-stimulus that will challenge the RBA's efforts to curb inflation. This is one example of how politics, economics and monetary policy are all impacted by tax.

More worryingly, the AFR notes that this 'sugar-hit' signals that the Treasurer's reform budget is in dire straits.

In the end, the immediate political pressure for relief to households' hip pockets may outweigh the long-term need for tax reform.

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Fuel excise cut will alarm the RBA over inflation risks

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The knee-jerk reaction is just the start of more inflationary spending and puts Jim Chalmers’ pledged “reform” budget on life support, writes John Kehoe.

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The fuel excise cut shows us that taxation is not only used to raise revenue but also as an economic policy tool. By reducing the excise on fuel, the government is deliberately lowering petrol prices to ease cost-of-living pressures on households.

This reflects the broader function of tax law as a mechanism to influence behaviour and economic outcomes, rather than merely collect revenue. This article also goes into the potential inflationary risks that the policy runs.

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Fuel excise cut will alarm the RBA over inflation risks

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The knee-jerk reaction is just the start of more inflationary spending and puts Jim Chalmers’ pledged “reform” budget on life support, writes John Kehoe.

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Yesterday (30 March), the Government announced a temporary halving of the fuel excise, reducing petrol and diesel prices by 26.3 cents per litre for the coming three months starting on Wednesday. Albanese and Chalmers framed the measure, which will cost $2.55bn, as an essential ‘cost-of-living’ relief in response to global energy price hikes. Additionally, the road user charge for heavy vehicles will be cut to zero to aid the trucking industry’s cash flow.

This decision aligns with the launch of a four-step fuel emergency plan which extends from ‘plan and prepare’ to ‘protecting critical services.’ As of right now, the Government is at Level 2, monitoring supply and encouraging voluntary usage reductions. I think it was an interesting choice to release this ‘plan’, as I cold envisage it creating some panic from members of the public, although I do think it is a good thing to be prepared for what might be to come, particularly noting the uncertainty of the global conflict.

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‘Serious pressure’: Albanese cuts fuel excise by 26.3c per litre for three months

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Anthony Albanese will slash the fuel excise on petrol and diesel for three months, cutting prices by 26.3 cents per litre, and the road user charge for trucks.

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I felt this article was highly relevant and thought-provoking to read, given the current oil shock affecting Australia and the rest of the world.

The article frames the oil shock as a catalyst for the accelerating shift towards EVs, and argues that this transition exposes a structural weakness in Australia's tax system - declining fuel excise revenue. I'd argue that this article focuses rather narrowly on replacing fuel excise revenue, rather than the deeper tensions in the Australian tax system relevant to excise discourse.

To me it highlights how taxes like fuel excise simultaneously serve revenue raising purposes and behavioural purposes (in pricing environmental externalities) and how that dual role is now harder to sustain, or perhaps increasingly ineffective as the economy shifts towards EVs. As such the transition to EVs exposes the challenge of maintaining revenue without undermining environmental policy goals.

The article also doesn't seem to account for tensions within existing tax arrangements. Fuel excise has been noted to fall more heavily on people with older, less efficient cars who are often of lower income. In that sense the EV transition doesn't just create a new gap in revenue but exposes an existing equity and structural issue in how the tax is designed.

Keen to hear the class's discussion given how pressing of an issue petrol prices have been lately!

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As more EVs hit the road, this gap in our tax system needs fixing

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The fuel crisis helps to illustrate why a road user charge makes sense – and why it should happen sooner rather than later.

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The ATO is pursuing errors in family trust elections as part of a crackdown on tax issues related to succession planning. The ATO has issued a warning to wealthy families that owe millions in back taxes, revealing a decrease in the discount it will allow family trusts that fail to confess to historic mistakes before December 31. The crackdown is associated with what are known as family trust elections and the payment of distributions tax dating back to 1998.

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ATO warns family trusts its amnesty on back taxes won’t last

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The discounts on the interest charged for making an incorrect family trust election fall off sharply the longer a trust delays coming forward.

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I found this article particularly interesting for understanding our capital gains tax class and for other relevant considerations. Any tax reforms have impacts beyond a simple tax implication, altering investor behaviours and the population’s spending habits.

Speculation about how investors will approach property investing after potential changes to CGT suggests buyers may now take a ‘buy and hold’ approach, and some investors may sell. The impact of this reform has already been evident. Some people are looking to sell their properties before the May budget to take advantage of the full 50% discount. However, the ‘never sell’ investor approaches the potential policy change with greater optimism, since policies evolve over time. Furthermore, other ownership structures with lower tax rates are explored. Such as using a company structure (25-30% tax), family trusts (still eligible for a 50% discount as long as the property has been held for at least 1 year), and SMSFs (15% tax rate in the accumulation phase/no tax in the pension phase). Noting that the Div 296 legislation change will impose higher taxes on super balances over $3m.

Lucia Zou z5422252

https://www.afr.com/wealth/personal-finance/property-investing-will-probably-never-be-the-same-what-to-consider-20260318-p5ospr

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Property investing will (probably) never be the same. What to consider

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With a capital gains tax overhaul anticipated in the May budget, buyers’ agents say some investors are selling but others are preparing for a long-term “buy and hold” approach.

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2026 ATO Crackdown on trusts and others 

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2026 ATO Crackdown on trusts and others 

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During COVID, the ATO was 'nice' to preserve economic stability. Now, they are catching up, and focusing on trusts among others.

In particular, 'historic documentation, election validity and distribution patterns are now being revisited by the regulator' as per this article.

Especially distribution patterns are being audited, as they are classic to reduce taxes by using people or organisations that pay less taxes than the trust itself.

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ATO Crackdown: Key Updates for Families & Business Owners

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ATO crackdown on trusts, income splitting and family structures - here’s what business owners need to review now to stay compliant.

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2026 ATO Crackdown on trusts and others by Amazing GK

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2026 ATO Crackdown on trusts and others by Amazing GK

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(New version due to lack of ID) During COVID, the ATO was 'nice' to preserve economic stability. Now, they are catching up, and focusing on trusts among others.

In particular, 'historic documentation, election validity and distribution patterns are now being revisited by the regulator' as per this article.

Especially distribution patters are being audited, as they are classic tools to reduce taxes by using people or organizations that pay less taxes than the trust itself as 'recipients' for the distributions.

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ATO Crackdown: Key Updates for Families & Business Owners

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ATO crackdown on trusts, income splitting and family structures - here’s what business owners need to review now to stay compliant.

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Family trust distribution tax: unlimited review periods, 47% rate, and a system that punishes honest mistakes   (Ivy Han)

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Family trust distribution tax: unlimited review periods, 47% rate, and a system that punishes honest mistakes   (Ivy Han)

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The Tax Institute describes the family trust distribution tax as having "catastrophic and unintended" consequences: 47% on distributions outside the defined family group, compounding non-deductible interest, and — most troublingly — an unlimited ATO review period. That means a distribution decision made in good faith twenty years ago can generate a liability today that may exceed the value of the assets involved. For Week 7, this is a stark real-world illustration of the trust taxation complexity we'll encounter in Ch 15. But it also raises a rule of law question that goes beyond tax: should any tax provision have an unlimited review period? The Cooper paper's analysis of trust complexity is likely to show us that the rules have drifted far from any coherent policy rationale — and this article is evidence of that drift in practice.

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Federal Budget 2026–27: it’s time to take action on tax reform

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SYDNEY, 30 JANUARY 2026: The Tax Institute is calling for tax reform and certainty to be placed at the centre of the Federal Budget 2026–27.

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This article is pretty important (not for us as of yet) because it differentiates between the states and federal governments in response to the fuel crisis resulting from the Middle East conflict. Two Australian states (Vic and Tas) will offer free public transport to incentivise people not to drive as fuel prices soar. Other states may follow suit and introduce a reduction in prices. This means that the State governments are willing to absorb the cost of fuel inflation, instead of the consumer. An average consumer who travels 5 days a week will be expected to spend $20, which is subject to sales tax.

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Two Australian states offer free public transport as war pushes up fuel prices

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Victoria and Tasmania incentivise commuters not to drive as the Iran war causes the price of petrol to shoot up.

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The government’s decision to halve fuel excise, as discussed in the Sydney Morning Herald article, reflects a clear trade-off between short-term cost-of-living relief and long-term inflation control. Lower fuel prices directly reduce CPI, offering immediate relief to households facing rising petrol costs.

However, this policy risks being inflationary in the medium term. By increasing disposable income and lowering transport costs, it can stimulate demand across the economy, particularly in sectors already affected by global oil shocks. This may reinforce cost-push inflation, especially as higher fuel prices are rapidly passed through to goods and services.

In the context of the Reserve Bank of Australia, this creates a dilemma. While headline inflation may temporarily fall, underlying pressures remain, meaning further interest rate hikes are still likely.

Ultimately, the excise cut appears more like a political response to immediate pressure rather than a sustainable solution to inflation, potentially shifting the burden back onto monetary policy.

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Nick Newling and Broede Carmody and Brittany Busch

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Australia fuel crisis as it happened: PM announces fuel excise to be halved for three months as petrol prices soar across nation; question time begins

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Follow our live coverage following a national cabinet meeting to discuss the fuel crisis.