Opposition slams 'dirty' tax deal between Greens and Labor

The legislation replaces the 50 per cent CGT discount for individuals, trusts and partnerships with cost base indexation and introduces a minimum 30 per cent tax on capital gains with certain exemptions.

Speaking in Parliament last night, Senator Slade Brockman labeled the CGT reforms "a retrograde step" for Australia's taxation system that would generate significant uncertainty for businesses.

"We've seen another dirty deal done with the Greens in the past day, changing the rules from the budget once more and attacking SMSFs which are often controlled by small business owners," said Brockman.

"They've changed the rules again which means all these businesses plus a whole other raft of people involved in SMSFs are going to have to seek advice from their professional service providers, their accountants and their auditors. This is a deadweight loss on the economy."

Brockman said the additional measures announced last week by the government would also add further complexity to the definition of small business by applying different tax treatments to small businesses depending on whether they are classed innovative or not.

"Every business in Australia is now going to have to work out if they fall into one category or another," he said.

Treasurer Jim Chalmers announced adjustments to the budget measures on Thursday last week to address concerns about the impact of the reforms on start-up businesses and small businesses more broadly.

The government announced it would increase the turnover threshold for active asset CGT reduction from $2 million to $10 million and introduce a new innovative business CGT concession for start-up businesses.

Accountants have also been vocal against the deal announced yesterday and the CGT changes, with one Accountants Daily commenter criticising the lack of consultation from the government and accusing the government of "pushing minority agendas" through its deal with the Greens.

Senator Barbara Pococok said the changes secured by the Greens in the deal with Labor would make it harder for wealthy property investors to outbid renters.

"The Greens have managed to win some important amendments to these bills. We've won an amendment to close the exemption for SMSFs from not being able to borrow to fund investments," said Pocock.

"We've also won an amendment to remove the Treasurer's ability to make any additional classes of assets eligible for the 50 per cent CGT discount and to reign in his power to prescribe any type of property investment as eligible for deducting losses against salary and income."

Pocock said the 50 per cent CGT discount was the "most unfair and egregious tax break on the books" and needed to be removed.

Accounting bodies have previously warned that the changes to CGT are expected to introduce considerable complexity for accounting professionals and their clients.

CA ANZ leader of tax, superannuation and financial advice, Susan Franks, said the reforms would require clients to obtain valuations for assets as of 1 July 2027 from a CGT perspective, which will be complicated for certain types of assets.

"If you own a publicly listed company, that's relatively easy, you just get it from the stock market," Franks said.

"[However], those that have investment in private companies or need to value goodwill, valuations can be quite expensive so there's going to be substantial costs," she said.

"There will also be an increase in compliance costs in that when you sell an asset that you own now, you'll have to do two calculations, one for pre- 1 July 2027 and one for post- 1 July 2027.

"You've got four different classes of assets and four different classes of losses, which you need to keep track of, which will require the help of a tax agent."