Labor Unveils $475 Million in CGT Concessions Four Days Before Senate Vote, but Apportionment Formula Remains Unpublished

Four days before the Senate reconvened to receive the committee report on landmark tax legislation, Prime Minister Anthony Albanese and Treasurer Jim Chalmers unveiled a multi-pronged package of amendments and concessions designed to clear a path to Senate passage — while leaving the government's deepest unresolved compliance problem, the CGT apportionment formula, entirely unaddressed.

What did the government announce on June 18?

At a Sydney press conference, Albanese and Chalmers detailed four specific implementation steps for the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026^{[1]Tax reform implementation for small business and startupsPrime Minister of Australia · pm.gov.au“Announcing an increase to the turnover threshold for the existing small business 50 per cent active asset CGT reduction from $2 million to $10 million. This will mean all 2.7 million active small businesses and 98% of all active businesses will be eligible for this concession.”}, describing them as the output of an "intensive first round of post-Budget consultation."

The first and most immediate measure is an expansion of the turnover threshold for the existing 50 per cent active asset CGT reduction from $2 million to $10 million^{[1]Tax reform implementation for small business and startupsPrime Minister of Australia · pm.gov.au“Announcing an increase to the turnover threshold for the existing small business 50 per cent active asset CGT reduction from $2 million to $10 million. This will mean all 2.7 million active small businesses and 98% of all active businesses will be eligible for this concession.”}. The change will be implemented by government amendment to the current bill during the June 22–July 2 Senate sitting period. According to Albanese, the move means all 2.7 million^{[1]Tax reform implementation for small business and startupsPrime Minister of Australia · pm.gov.au“Announcing an increase to the turnover threshold for the existing small business 50 per cent active asset CGT reduction from $2 million to $10 million. This will mean all 2.7 million active small businesses and 98% of all active businesses will be eligible for this concession.”} active small businesses — 98 per cent of all active businesses — will be eligible for the concession. Critics had noted the $2 million threshold had not been indexed since the concessions were introduced.

The second measure is a consultation paper on a new Innovative Business CGT Concession that would provide a 50 per cent CGT discount to early-stage investors, including founders and employee share scheme participants^{[1]Tax reform implementation for small business and startupsPrime Minister of Australia · pm.gov.au“Announcing an increase to the turnover threshold for the existing small business 50 per cent active asset CGT reduction from $2 million to $10 million. This will mean all 2.7 million active small businesses and 98% of all active businesses will be eligible for this concession.”}. To qualify, a company would need to be under 10 years old (15 years for biotech and medtech firms), have annual turnover below $50 million, meet principles-based innovation criteria, and have the relevant shares held for at least five years. Consultation closes July 10^{[10]Labor moves to protect select startup discountsGrafa · grafa.com“The consultation period runs until July 10, delaying final legislation on the carveout until the second half of next year.”}, meaning the final startup carve-out will appear in a later tranche of legislation — not in the bill the Senate votes on before July 2.

Third, the government confirmed all types of discretionary testamentary trusts will be exempt from the 30 per cent minimum tax on capital gains, provided they are established for genuine testamentary purposes^{[1]Tax reform implementation for small business and startupsPrime Minister of Australia · pm.gov.au“Announcing an increase to the turnover threshold for the existing small business 50 per cent active asset CGT reduction from $2 million to $10 million. This will mean all 2.7 million active small businesses and 98% of all active businesses will be eligible for this concession.”}. For trusts established on or after July 1, 2028, the exemption will apply only where the trust can benefit individuals and income-tax-exempt entities. Chalmers framed this as putting beyond doubt that there was "no tax on inheritances," following sustained criticism that the original bill created a de facto death tax.

The fourth and politically most significant step was the government's commitment to move amendments removing ministerial powers from the current bill and to embed key provisions in primary legislation^{[2]Press conference — Sydney, June 18, 2026Prime Minister of Australia · pm.gov.au“The negative gearing, capital gains and trust changes are expected to raise about $8.1 billion over the course of the forward estimates. And so, these next steps that we are announcing today represent around one-seventeenth of the total that we expect to raise from these changes.”}.

Where we can provide that extra certainty and clarity, we'll seek to do so.

Jim Chalmers, Treasurer, press conference Sydney, June 18, 2026

Why does the ministerial discretion pledge matter for Senate negotiations?

The commitment to strip back ministerial discretion is the clearest concession yet to the Greens, who have made those provisions the central technical objection to the bill.

Greens Treasury spokesperson Senator Nick McKim warned that the bill gave the Treasurer "very broad powers" to reapply the 50 per cent CGT discount or unrestricted negative gearing on any asset class without returning to Parliament^{[3]CGT changes: Greens hint they want to scrap grandfathering in Labor's Budget tax changesThe Nightly · thenightly.com.au“Senator McKim also hinted the Greens would seek an amendment to a ministerial discretion clause in Labor's legislation so Treasurer Jim Chalmers, or a successor, would not have a proposed power to decide how the capital gains tax was applied.”}. Greens Senator David Shoebridge went further, labelling the provisions "Henry VIII powers" and a "secret backdoor" capable of gutting the reform after passage.

The June 18 announcement lists the amendments the government will move during the next sitting fortnight: extending the small business threshold; ensuring charitable donations reduce gains subject to the minimum tax; providing the list of income-support payments exempt from the minimum tax; embedding the Working Australians Tax Offset calculation method in primary legislation; and removing ministerial powers no longer required.

A critical carve-out remains, however. The definition of "new residential dwelling" — central to both the CGT discount and the negative gearing rules — will not be moved to primary legislation until a later tranche, following further consultation^{[1]Tax reform implementation for small business and startupsPrime Minister of Australia · pm.gov.au“Announcing an increase to the turnover threshold for the existing small business 50 per cent active asset CGT reduction from $2 million to $10 million. This will mean all 2.7 million active small businesses and 98% of all active businesses will be eligible for this concession.”}. The same applies to the definition of housing investment exempt from negative gearing limits. Both will remain as ministerial instruments in the short term, meaning the Greens' concern about a future Treasurer redefining eligible housing is not fully resolved by the June 18 pledge.

The Greens' primary demand — that grandfathering provisions protecting pre-Budget property investors be scrapped entirely, making negative gearing and CGT changes retrospective — was not addressed in the announcement. Greens Senator McKim has argued that Labor is "letting wealthy property investors keep billions in handouts"^{[9]Labor's tax changes to face Senate inquiryAustralian Greens · greens.org.au“We are hearing countless young people and first homebuyers express their frustration that Labor is letting wealthy property investors keep billions in handouts — an inquiry will help examine the consequences of Labor's decision on grandfathering.”} by maintaining the grandfathering protections. Albanese did not publicly signal any concession on grandfathering at Thursday's press conference.

What does this cost, and what does it raise?

Chalmers confirmed the total indicative cost of Thursday's measures is approximately $475 million over the four-year forward estimates^{[5]CGT overhaul: Labor announces SME and startup carve-outs after backlashSmartCompany · smartcompany.com.au“The carve-outs announced on Thursday were set to cost the budget $475 million over the four-year budget period, Mr Albanese revealed, which is about one-seventeenth of the total expected to be raised by the overall tax changes.”} — roughly one-seventeenth of the $8.1 billion the government expects to raise from the combined CGT, negative gearing, and discretionary trust changes^{[2]Press conference — Sydney, June 18, 2026Prime Minister of Australia · pm.gov.au“The negative gearing, capital gains and trust changes are expected to raise about $8.1 billion over the course of the forward estimates. And so, these next steps that we are announcing today represent around one-seventeenth of the total that we expect to raise from these changes.”}.

What remains unresolved before the June 22 Senate sitting?

Several structural gaps identified during the two-day Senate committee hearing were not addressed in Thursday's package.

Most critically, the apportionment formula — the legislative instrument prescribing how taxpayers holding illiquid assets such as private company shares, farmland, and trust interests calculate the split of their capital gains at the July 1, 2027 deemed disposal date — remains unpublished. Law firm Corrs Chambers Westgarth confirmed in its analysis that the apportionment method "has not been released yet" and will be determined by the minister via legislative instrument at a future date^{[6]Capital gains tax and negative gearing amendments: key changes and implicationsCorrs Chambers Westgarth · corrs.com.au“The capital proceeds for the deemed [disposal] will be determined by the Minister in a legislative instrument. This apportionment method has not been released yet.”}. Neither the June 18 media release nor the press conference transcript addressed this instrument.

The definition of "new residential dwelling" — which determines both CGT discount eligibility and negative gearing access — will also remain in ministerial instrument form for at least the next sitting period. Corrs had identified the absence of this definition in primary legislation as a separate critical compliance risk.

The SMSF limited recourse borrowing arrangement question — under which self-managed super funds remain exempt from both the CGT changes and the negative gearing restrictions, and can still borrow to buy established residential properties — also went unaddressed in Thursday's announcement.

What happens next in Parliament?

Albanese said on Thursday that discussions had been held "across the Senate" and indicated the committee report would arrive the following day. Finance Minister Katy Gallagher had confirmed "active discussions" with all Senate parties on June 16^{[4]Labor refuses to fast-track CGT carve-outs as business waits for details on Budget tax changesThe Nightly · thenightly.com.au“The government believes the Greens will ultimately back the tax changes and the Coalition will help it put the NDIS on a sustainable footing, but the final Senate sitting days before a big break are often unpredictable.”}, and the government's position remains that the Greens will ultimately back the reforms.

The Senate crossbench arithmetic is unchanged: Labor holds 30 of 76 Senate seats and needs the support of the 10 Greens senators — or an equivalent crossbench combination — to reach the 39-vote threshold for passage. The Coalition remains firmly opposed to the CGT and negative gearing measures^{[8]Push for bigger tax concessions fails as 'toxic' CGT bill passes Lower HouseSmartCompany · smartcompany.com.au“Labor would require the Greens' support in the Upper House to pass its reforms into law, although reports suggest the Coalition could be open to a highly unlikely alliance with the Greens to stall some of its most contentious measures.”}, making a Labor-Greens agreement effectively the only viable path to passage by July 2. Reports have noted the possibility of a highly unlikely Labor-Greens-Coalition combination to stall some of the bill's most contentious measures^{[8]Push for bigger tax concessions fails as 'toxic' CGT bill passes Lower HouseSmartCompany · smartcompany.com.au“Labor would require the Greens' support in the Upper House to pass its reforms into law, although reports suggest the Coalition could be open to a highly unlikely alliance with the Greens to stall some of its most contentious measures.”}, though no such arrangement has materialised.

The government also confirmed it will introduce a separate bill next week to make the loss carry-back and $20,000 instant asset write-off for small businesses permanent — adding to the Senate's business for the June 22–July 2 sitting period.

Chalmers rejected suggestions at Thursday's press conference that the concessions represented a backflip, framing them as planned post-Budget consultation. "It's not unusual for big, ambitious tax reform like this to involve a lot of consultation," he said. "It will be worth it."^{[2]Press conference — Sydney, June 18, 2026Prime Minister of Australia · pm.gov.au“The negative gearing, capital gains and trust changes are expected to raise about $8.1 billion over the course of the forward estimates. And so, these next steps that we are announcing today represent around one-seventeenth of the total that we expect to raise from these changes.”}

The Senate Economics Legislation Committee was referred the bill on May 28, 2026, with a reporting date of June 19^{[7]Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and a related bill — Senate Economics Legislation CommitteeParliament of Australia · aph.gov.au“Committee: Economics Legislation Committee. Date referred: 28 May 2026. Reporting date: 19 June 2026.”}. Whatever the committee recommends, the final shape of the bill will be determined in Senate negotiations during the sitting fortnight — negotiations in which the grandfathering question and the still-missing apportionment formula loom as the two largest unresolved problems.