Australia’s peak real estate body says CGT changes will ‘disrupt and damage’ housing market
Australia’s Real Estate Institute of Australia and accounting bodies criticized the federal government’s proposed capital gains tax (CGT) and negative gearing reforms, warning they would disrupt investor behavior, reduce housing supply, and increase tax complexity. The reforms, introduced in May, aim to replace the 50% CGT discount with an inflation-based concession and impose a minimum 30% tax on gains starting July 1, 2027, but critics argue they will harm the economy and housing affordability while failing to address supply shortages.
Australia’s Real Estate Institute of Australia (REIA) and accounting bodies have strongly opposed the federal government’s proposed changes to the capital gains tax (CGT) and negative gearing, warning they will worsen housing shortages and economic instability. REIA president Jacob Caine told a Senate inquiry that the reforms, introduced in May, will disrupt investor behavior and fail to increase housing supply, instead raising rents, lowering GDP, and cutting construction employment by nearly 4,000 full-time workers. Caine argued the tax system should be reviewed holistically across federal, state, and local levels, calling the current bills ‘unacceptable’ in their current form. The Institute of Public Accountants (IPA) also criticized the government for increasing tax complexity and bypassing proper consultation. Senior tax adviser Tony Greco stated the reforms were rushed, with consequences including unintended outcomes, disputes, and implementation issues. He described the process as ‘throwing the book out the window,’ emphasizing the risks of legislating first and consulting later. Meanwhile, tax academic Miranda Stewart dismissed concerns that the changes would drive businesses offshore, noting that companies already avoid high-tax jurisdictions. She called for closer scrutiny of small business CGT concessions, which she deemed overly generous, and urged a review of labor income tax rates and corporate taxation. The proposed reforms will replace the existing 50% CGT discount with an inflation-adjusted concession and introduce a minimum 30% tax on gains, effective July 1, 2027. The Australian Council of Social Service (ACOSS) defended the changes, arguing they will make the tax system fairer and improve housing affordability. ACOSS acting chief executive Edwina MacDonald stated the current settings are ‘not justifiable,’ claiming the reforms will benefit the economy while addressing wealth inequality. Critics, however, argue the changes will disproportionately affect investors and small businesses, further tightening an already strained housing market. The Senate inquiry continues as stakeholders debate the economic and social impacts of the proposed legislation.
This content was automatically generated and/or translated by AI. It may contain inaccuracies. Please refer to the original sources for verification.