Concerns raised about government's consultation approach on tax reforms

The amendments aim to address issues such as the widow tax, which was previously raised as a concern with the government’s first tranche of negative gearing reforms.

The bill ensures that where, due to inheritance or relationship breakdown, a person acquires an ownership interest in a residential dwelling from their spouse or former spouse, or a co-owner, and that ownership interest was capable of being negatively geared, the person is entitled to the same treatment for the new ownership interest.

It also ensures that where a person acquires an ownership interest in a new residential dwelling through inheritance from a spouse or co-owner, or a relationship breakdown, the person can choose between applying the CGT discount or cost base indexation and the minimum tax on capital gains.

The additional amendments, while welcome, were passed before the consultation on the proposed amendments had finished.

The bill, which also contains measures such as the $20,000 instant asset write-off for small business entities and the loss carry back tax offset, has now received royal assent.

The government opened consultation on an exposure draft containing amendments to both its CGT and its negative gearing reforms on 4 August, with the consultation closing on 21 August 2026. However, the bill containing the negative gearing amendments was passed on 19 August.

The National Tax & Accountants’ Association (NTAA) said it was not aware of any precedent for public consultation on exposure draft legislation running while the same measures were passing through parliament.

“A consultation that closes after the measures it concerns have passed both Houses cannot influence their design,” the association said.

In its submission to the consultation on the CGT and negative gearing Tranche 2 legislation, the NTAA also said that the 18-day consultation period was inadequate and followed similarly short consultations on the Tax Practitioners Board Sanctions reforms, the $1,000 standard deduction for work-related expenses, and the minimum tax on discretionary trusts.

“A consultation period of this length does not allow representative bodies to adequately canvass member views on these exposure draft materials, test the drafting against practical scenarios and provide considered feedback. Nor is a period of this length necessary: the substantive measures do not commence until 1 July 2027. These are the most significant reforms to the taxation of capital gains in more than 25 years,” the NTAA said.

“They are complex, interact with many other parts of the tax law and require careful analysis to identify whether they will operate as intended or produce unintended consequences. A minimum period of 30 days is the expected floor; given the complexity of these reforms, 60 days is clearly warranted.”

Accurium head of education and tax, Lee-Ann Hayes, said that while the government’s efforts to rectify the widow's tax that would have applied under its tax reforms were welcome, the move raises questions about the authenticity of its consultations.

“It’s good news in a sense [...], but it still shouldn’t happen. If it’s a proper consultation then we should be able to have a full robust discussion about it during that consultation period, knowing a decision is not going to be made until that’s completed,” said Hayes.

The NTAA also raised concerns about the progressive implementation of the government’s tax reforms across multiple tranches.

“A number of significant matters – including further exemptions and rollovers and the treatment of mixed residents making capital gains indirectly through trusts are acknowledged as not yet addressed,” it said.

“Dealing with these matters in successive tranches is confusing and time-consuming, increases the risk of further errors and creates a risk that some changes may not be made if later measures do not pass Parliament. A consolidated approach would also minimise the need to amend recently inserted provisions.”