In the Senate inquiry into Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, the Institute of Public Accountants and Chartered Accountants Australia and New Zealand noted the new laws will create confusion, increase costs and ultimately impact productivity.
Tony Greco, senior tax adviser for the IPA, told the inquiry under the previous rules that included indexation there was the ability to average and a recognition of the “lumpiness” of selling capital assets.
“We don’t have that now, and it makes things worse when you impose a minimum tax rate. here are people not engaged in tax minimization, people out of the workforce for part of the year or self-funded retirees, there’s lots of scenarios where they’ll end up paying more tax, and it’s not about tax minimisation, it’s just the way that 30 per cent will work going forward,” Greco said.
In his address to the inquiry Greco said the bill does not “completely revert back to 1999 indexation”.
“There is no averaging, that’s off the table. The ability to use losses, there is a mandatory ordering of the way you can use losses under what’s been proposed. The minimum 30 per cent tax rate is a new feature. There are no longer any pre-CGT assets,” he said.
“And this one’s particularly important because of what else has been proposed in the budget. I’m referring to the discretionary trust companies that do not get access to indexation.”
Greco also noted the lack of consultation process that was afforded in regard to the changes.
“We’ve pretty much thrown the book out the window in regards to process. There’s a good reason why we have protocols in relation to consultation. Even with consultation, we always put in a post-implementation review process to make sure in the real world the intended outcomes for anything that’s been proposed is being achieved,” he said.
“This bill was, in the main, introduced without public consultation, except for Schedule Four. We did see an exposure draft for Schedule Four. We only had 11 days to respond, and I’m referring to the standard deduction.
“There are lots of interactions with CGT. Treasury have done a reasonable job trying to put the legislation before us, but there are interactions with employee share schemes, with the small business CGT concessions and early investor concessions. There are consequences for doing it this way. Legislate, consult later. We end up with unintended outcomes, subsequent amendments, uncertainty disputes, and real-world implementation issues.”
Greco said in reference to “good tax principles referring to fairness, efficiency, and simplicity” the proposed CGT changes have a “black mark against all of them”.
“There’s also the issue of compliance and complexity. Treasury has put a number in the explanatory memorandum, and I think it’s in the vicinity of $88 million. Our belief is that is grossly underestimated. Valuations, particularly for illiquid assets, cost a lot of money, so we’re almost forcing people to get a valuation for these illiquid assets,” he said.
“There are three particular legislative determinations that should be in the primary legislation. I’m referring to the definition of new residential, which is important in regards to the apportionment methodology, and what other assets are eligible for the 50 per cent discount. No one likes to sign a blank cheque book. We don’t want to go into this debate with our hands behind our back.”
He added the IPA does not see the CGT changes helping with what the government has said is a significant long-term problem – productivity.
“You’re skewing investments in favour of low growth instead of high growth. We need more entrepreneurs, we need people to risk capital, we need innovation, all these things reduce the economic pie,” he said.
Chartered Accountants Australia and New Zealand group executive, advocacy, public and government Damian told the inquiry the proposed changes to negative gearing and the capital gains tax regime are “significant”.
“Our focus is ensuring that, if implemented, the law is clear, coherent, and workable in a self-assessment environment, and where the taxpayers and their advisers can apply it with confidence and ease,” he said.
“Poorly drafted and overly complex laws increase compliance costs, create uncertainty, and risk unintended consequences. From our perspective, more comprehensive consultation upfront will reduce the risk of technical issues and the need for later amendments.”
Ogden said the proposed changes introduce complexity, particularly in the CGT rules, including new classifications of gains and losses, valuation requirements at 1 July 2027 and more complex record keeping obligations over time.
“This will impose real compliance costs on Australians. CAANZ has three suggested changes to the proposed CGT provisions,” he said.
“First, changing the ordering in which capital losses are to be used to reserve the grandfathering of the 50 per cent discount. Second, changing the rules that currently prevent a taxpayer from accessing indexation if they’ve been a non-resident at any time when they own the asset. And third, allowing companies to access indexation.”
He added that CAANZ acknowledges the concern of tech startups about the difficulty of indexing an asset that has a low-cost base but noted they are not the only businesses that face that situation.
“Increasing the thresholds for the small business capital gains tax provisions that provide a 50 per cent discount for active business assets, and reconsidering the use of an income averaging mechanism could help remediate this issue without requiring industry-specific provisions,” he said.
In an open letter to parliament, Stockbrokers and Investment Advisers Association chief executive Maria Lykouras also raised concerns about the unintended consequences the bill will have for Australian investors and capital markets.
“Australia’s tax settings should support long-term wealth creation for everyday Australians and a capital markets ecosystem that funds Australian businesses and drives economic growth and innovation,” she said.
“Our key concerns are the proposed CGT changes work against these objectives and will reduce investor confidence and participation in markets outside superannuation thereby cutting off an accessible path to long-term wealth creation for everyday Australians.”
She said the changes will also have a disproportionate impact on those with lower incomes such as women and younger investors who are investing their after-tax savings from a smaller base and will be subject to the 30 per cent minimum capital gains tax.
Additionally, they will increase complexity and cost for investors who will need professional advice to understand the tax they will have to pay on sales of their securities.
“We are particularly concerned about the impact the CGT changes will have on younger Australians who have invested in shares and ETFs in an effort to build wealth and save for their first home,” she said.
“Stakeholders are being given too short a time to respond to these significant changes to CGT. We call on the government to split the CGT changes from the Bill to allow more time for considered, broad and meaningful consultation with stakeholders on the impact that they will have on Australian investors and capital markets.”
Interesting article. When multiple professional bodies raise the same concerns, it highlights just how challenging these CGT rules may be for both advisers and taxpayers.
The Treasury Laws Amendment bill and Division 296 legislation show a Government instigating a wholesale tax grab.
The fact that there is minimum consultation and a short Senate inquiry indicates that the Government doesn’t want the Bill scrutinized closely.
The same applies to Divisions 296 and 293.
The Government has no intention of reducing expenditure in any meaningful way and looks for money wherever it can find it. This is a Government totally out of control.