Labor's Tax Reform Bill Is Incomplete. The Senate Should Not Rush It Through.

Australia's Senate opened floor debate June 22 on legislation that, as of that date, remains not yet law^{[9]Tax reform — Boosting home ownership — Reforming negative gearing and capital gains taxAustralian Taxation Office · ato.gov.au“This measure is not yet law. These changes, which are intended to apply from 1 July 2027, will limit negative gearing for residential property investments to new builds and replace the 50% CGT discount with cost base indexation and a 30% minimum tax rate.”} — the most far-reaching overhaul of the country's capital gains tax regime in 27 years. It did so with no deal between the government and its only viable Senate ally, a critical technical instrument still unpublished, and a formal committee report that exposed a deep three-way fracture in what anyone actually wants this bill to achieve.

The committee's verdict should give senators pause before they vote.

What Is the Tax Reform No. 1 Bill?

The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026^{[5]Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and a related bill — Parliament of AustraliaParliament of Australia · aph.gov.au“Committee: Economics Legislation Committee. Date referred: 28 May 2026. Reporting date: 19 June 2026.”}, referred to the Senate Economics Legislation Committee on May 28, bundles four measures: abolishing the 50%^{[9]Tax reform — Boosting home ownership — Reforming negative gearing and capital gains taxAustralian Taxation Office · ato.gov.au“This measure is not yet law. These changes, which are intended to apply from 1 July 2027, will limit negative gearing for residential property investments to new builds and replace the 50% CGT discount with cost base indexation and a 30% minimum tax rate.”} CGT discount for individuals and trusts from July 1, 2027 (replacing it with CPI indexation and a 30% minimum tax on capital gains); restricting negative gearing to new residential builds for properties acquired from Budget night; a $250 Working Australians Tax Offset; and a $1,000 standard work-related deduction. The first two represent the most significant reform to Australia's CGT framework since John Howard introduced the 50% discount in 1999. The last two enjoy cross-party support.

The problem is structural: all four measures are packaged in a single bill, making it impossible to support the popular worker tax cuts without also approving the contested investor provisions.

What Did the Senate Committee Actually Find?

The Senate Economics Legislation Committee released its report on June 19. The Labor-led majority recommended the bill be passed^{[3]Senate committee backs negative gearing and CGT changesMortgage Professional Australia · mpamag.com“The Senate Economics Legislation Committee released its report backing the majority passage of the legislation.”}. That was predictable. The more revealing findings came from the other two parties.