Labor’s tax changes to be scrutinised by Senate inquiry

It also implements the $1000 tax deduction and the tax offset for working Australians that will apply from the 2027–28 financial year.

The bill has also been referred to the Senate economics legislation committee for inquiry, with the committee due to report back on 22 June.

Greens economic justice spokesperson, Senator Nick McKim, said the inquiry by the Senate would ensure that the bill receives the scrutiny that it deserves.

“We will use this inquiry to examine how and why Labor decided to leave in place the vast majority of tax handouts for the ultra wealthy,” McKim said.

“As with so many parts of Labor’s budget, this bill is a missed opportunity to finally put people ahead of profits and make the ultra-wealthy pay their fair share.”

McKim said Labor’s generous grandfathering provisions had left a lot of money on the table.

Speaking before Parliament, Treasurer Jim Chalmers said that further consideration would also be given to a range of specific details regarding the CGT changes, such as interactions with attribution managed investment trusts, tax consolidation, residency changes, along with other relevant issues.

“Where appropriate, these details will be finalised in subsequent legislation following consultation,” Chalmers said.

The Treasurer also addressed some of the campaigns opposing the budget measures.

“We know that these changes are contentious. We have seen dishonest scare campaigns already and deliberate distortions of the truth, but the facts matter, and I want to make those facts clear,” he stated.

“Firstly, we are not introducing a tax on inheritances or inherited assets. Secondly, people will still have their capital gains tax reduced under the new system, with the reduction now accurately reflecting inflation. Thirdly, the vast majority of small businesses in this country will remain eligible for generous CGT concessions.

“This means the overwhelming majority of small businesses can pay reduced or no capital gains when they sell.”

Chalmers said that overall, the changes would make it easier for people to buy their first home, better align the tax treatment of labour income and asset income, and deliver tax cuts for Australian workers.

“The bill also delivers on our commitment to introduce a $1,000 instant tax deduction from the 2026–27 year. Not only will this make tax time simpler for millions of workers, it will put cash back into their pockets as well,” Chalmers said.

“Around 6.2 million people will benefit, with the average worker receiving an extra $205 at tax time, and more than a quarter of those who will benefit are under 30, and more than half are women.”