Labor set to reform capital gains tax discount after parliamentary inquiry

Labor has signalled it will rework the capital gains tax discount in the May budget after a parliamentary inquiry found the Howard-era 50% setting is helping to fuel intergenerational inequality in Australia’s housing market. A Greens-led inquiry concluded the 50% discount "skewed the ownership of housing away from owner-occupiers and towards investors" and found "the benefits of the capital gains tax discount are also unequally distributed, with implications for income and wealth inequality and intergenerational inequality." The discount was introduced in 1999 for assets held for more than a year and, along with negative gearing rules, has been blamed for promoting housing as an investment mechanism over the rights of would-be first-time buyers.

Treasury is modelling changes that could see the discount reduced to 33% for housing investors while retaining the current 50% rate for shares and other investments.

Australia

capital gains, cgt, 50% discount, 33% discount, negative gearing, housing investors, intergenerational inequality, housing market, may budget, labor