The Australian Senate is set to vote this week on the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026[1]Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 – Parliament of Australia“The bill — introduced May 28 and passed the House June 4, 2026 — is now before the Senate for final consideration in Winter Week 4.” — described by PwC as introducing the most far-reaching overhaul of Australia's CGT regime since CGT discounts were introduced in 1999[4]2026-27 Federal Budget – CGT and housing tax reform“The apportioning method may be prescribed by the Minister by legislative instrument; the new residential dwelling definition is yet to be determined and will be set by the Minister via legislative instrument.”. The Labor-Greens deal is done and the bill will pass. But three of the legislation's most consequential definitions remain legally undefined: the apportionment formula for the July 1, 2027 deemed disposal, the criteria for the new innovative-business CGT carve-out, and the meaning of "new residential dwelling" for negative gearing. All three will be set by ministerial instrument after parliament has voted.
That is not legislation. It is a pre-authorisation for decisions the executive has not yet made.
What did the Labor-Greens deal actually leave unresolved?
The June 23 deal secured two technical amendments: closure of the SMSF limited recourse borrowing arrangement loophole, and removal of the Treasurer's power to extend the CGT discount to additional asset classes. Senator Barbara Pocock (Greens, SA) confirmed on June 23 the Greens would support these tax changes to pass the Senate this fortnight[3]Treasury Laws Amendment (Tax Reform...): 23 Jun 2026: Senate debates“Senator Barbara Pocock (Greens) confirmed the Greens would support these tax changes to pass the Senate this fortnight while acknowledging Labor had missed a critical opportunity.” — while acknowledging Labor had missed a critical opportunity and the housing crisis would now be squarely on Labor's shoulders. What the deal did not address were the bill's three foundational definitional gaps.
Three provisions still undefined at Senate vote
- Apportionment formula — how taxpayers value assets under the July 1, 2027 deemed disposal; to be set by ministerial instrument, unpublished as of vote day
- Innovative business definition — criteria for the new 50% CGT carve-out for founders and employee shareholders; not in primary legislation
- New residential dwelling meaning — determines which new builds qualify for negative gearing from July 1, 2027; to be set by ministerial instrument, not yet published
Each gap was identified in expert submissions before the Senate Economics Legislation Committee reported. None was resolved by the Labor-Greens deal.
Why does the missing apportionment formula matter?
Under the bill's deemed disposal rules, assets held by Australian resident individuals and trusts on June 30, 2027 will be treated as sold just before July 1, 2027 and reacquired at market value — or at an amount worked out under an apportioning method that may be prescribed by the Minister by legislative instrument[4]2026-27 Federal Budget – CGT and housing tax reform“The apportioning method may be prescribed by the Minister by legislative instrument; the new residential dwelling definition is yet to be determined and will be set by the Minister via legislative instrument.”. For taxpayers holding interests in private companies, trusts, real property or other illiquid assets, obtaining a reliable market value at a specific point in time may be costly.
Critically, the choice between market value and the apportioning method does not need to be made until a taxpayer lodges their return for the year of actual realisation — meaning Australians may hold assets for years without certainty as to the outcomes arising from the deemed disposal. The apportioning method, the relief valve the legislation offers, has not been published. CPA Australia's submission to the Senate committee estimated annual compliance costs at A$295 million to A$542 million per year and one-off transitional costs at A$675 million to A$825 million — figures that hinge entirely on that instrument being sensibly designed before taxpayers must plan around it.
What does "innovative business" mean, exactly?
Days before the Senate committee reported, the government announced a new 50% CGT discount for innovative businesses — startups, founders and employee shareholders who took equity instead of full wages. Eligibility turns on criteria including growth potential and scalability. Those criteria will be set by ministerial instrument, not primary legislation. Senator David Pocock (Independent, ACT) warned the chamber on June 22[2]Treasury Laws Amendment (Tax Reform...): 22 Jun 2026: Senate debates“Senator Pocock foreshadowed a split-bill amendment and warned the innovative business carve-out gave taxpayers a guessing game with no certainty about eligibility.” that this approach gave taxpayers no certainty about eligibility.
A rule this vague does not give people confidence; it gives them a guessing game.
Senator David Pocock, Independent (ACT), Senate second reading, June 22, 2026
PwC confirmed the definition of new residential dwelling — for which negative gearing losses will not be quarantined — is yet to be determined, as it will be set by the Minister via legislative instrument[4]2026-27 Federal Budget – CGT and housing tax reform“The apportioning method may be prescribed by the Minister by legislative instrument; the new residential dwelling definition is yet to be determined and will be set by the Minister via legislative instrument.”. The explanatory memorandum identifies possible criteria — whether a dwelling was built on vacant land, whether it has a separate legal title, whether it genuinely adds to Australia's housing supply — but none of those criteria appear in the bill parliament is voting on. PwC noted a single dwelling demolished and rebuilt as one unit may fail the supply test; demolished and rebuilt as two separately titled duplexes may pass. Investors who purchased properties after Budget night face years of planning decisions on rules that have not been written.
What was Senator Pocock's alternative?
Senator Pocock proposed splitting the bill[2]Treasury Laws Amendment (Tax Reform...): 22 Jun 2026: Senate debates“Senator Pocock foreshadowed a split-bill amendment and warned the innovative business carve-out gave taxpayers a guessing game with no certainty about eligibility.”: the Working Australians Tax Offset, negative gearing changes, the permanent instant asset write-off and the standard deduction would pass immediately; the CGT provisions — the deemed disposal rules, the 30% minimum tax and the inclusion of pre-CGT assets — would return to committee for exposure-draft consultation and a proper inquiry timeframe. He also foreshadowed amendments for income averaging, a low-income threshold protecting pensioners and part-time workers from the minimum tax, and grandfathering for inheritance and divorce situations where ownership changes outside the taxpayer's control. None attracted Labor or Greens support.
"The government is rewriting major parts of this bill on the run, days before the committee even reports after a two-day inquiry," Pocock told the Senate.
Did Australia's peak tax body back the bill?
The Tax Institute — Australia's peak professional body for tax practitioners — formally recommended the bill not be passed as introduced[6]Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 – The Tax Institute submission“The Tax Institute recommended the bill not be passed as introduced, citing ATO system readiness not aligned with the bill's requirements.”, citing zero prior public consultation on the CGT and negative gearing measures, an insufficient inquiry timeframe, and ATO system readiness not aligned with the bill's commencement dates. Significant system changes would be required across the ATO, digital service providers and taxpayers simultaneously with Payday Super implementation, the Institute warned.
Senator Sarah Henderson (Liberal, Victoria) argued the Prime Minister had confirmed $273 billion in taxes Australians did not vote for over nine years[7]Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026, second reading — Senator Henderson“Senator Henderson argued the Prime Minister had confirmed $273 billion in taxes Australians did not vote for over the next nine years.” — a figure repeated across four days of Senate debate. A June 23 hours motion compressed the two Tax Reform bills and 11 others into the final sitting fortnight.
What is the cost of passing a framework with undefined rules?
PwC warned the bill introduces four new categories of capital gains calculations — deferred non-residential, deferred residential, non-residential and residential — requiring significant changes to reporting processes and systems across managed funds in a short timeframe. The explanatory memorandum itself expressly signals that further tranches of legislation will be needed for part-year residency, tax consolidation and interaction with attribution managed investment trust rules.
The government's official budget tax reform page confirms negative gearing will be limited to new builds from July 1, 2027, with existing arrangements unchanged for properties held before Budget night[5]Tax reform | Budget 2026-27“The Government will limit negative gearing to new builds from 1 July 2027, to focus tax support on new supply.” — but the definition of "new build" remains to be determined by the very ministerial instrument parliament is about to pre-approve without reading.
Budget papers forecast approximately 35,000 fewer homes built under the CGT and negative gearing reforms[8]2026 Australian federal budget – Wikipedia“The 2026-27 budget presented by Treasurer Jim Chalmers on 12 May 2026 includes CGT and negative gearing reforms projected to affect new housing construction.” — a supply impact embedded in official documents before the Senate committee held a single hearing. Parliament is being asked to ratify a framework built on projections it lacked time to test, turning on definitions it has not yet read.
The Greens told Australians the deal stripped out Henry VIII powers. What was removed was one specific discretion — the Treasurer's power to extend the CGT discount to entirely new asset classes. What remains, untouched by the deal, is the executive's authority to determine by instrument, after royal assent: how taxpayers calculate their deemed disposal value; whether their business is innovative enough for the 50% carve-out; and whether their new investment qualifies as a new build. A Senate vote will close the political argument. It will not write the law.