Now lawMoney & Tax Introduced in the House of Representatives, 28 May 2026

Most investors lose the 50% capital gains discount

This is the biggest tax shake-up in years. It changes how investors pay tax on profits and on rental losses. Some of the money goes to workers. They get up to $250 off their tax and a $1,000 claim with no receipts.

Official name: Treasury Laws Amendment (Tax Reform No. 1) Bill 2026

Who it affects

• People who sell shares, property or other things for a profit: Gains made from 1 July 2027 are taxed after an adjustment for rising prices. The lowest tax rate on them is 30%.
• Property investors buying older homes: Budget night, when the government's yearly money plan came out, was 12 May 2026. If they bought after that, rental losses can only be used against rent or home sale profits from 1 July 2027.
• Investors in brand new homes: They keep negative gearing. They can choose the 50% discount when they sell.
• People on the Age Pension, JobSeeker and other welfare payments: They can be let off the 30% lowest tax rate on capital gains.
• Most workers: You can claim $1,000 for work costs without receipts. You can get up to $250 off your tax.
• Small business owners: The current small business breaks on capital gains tax do not change.

Tax breaks lift house prices

This bill carries out the biggest parts of the 2026-27 Budget tax plan. The Treasurer, Dr Jim Chalmers, brought it in. He is the minister in charge of money. A second bill came with it. It is called the Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026. That second bill sets the actual 30% lowest tax rate.

Capital gains tax is tax on the profit when you sell something for more than you paid. That could be shares or a home you rent out. Since 1999, people who keep something for at least 12 months pay tax on only half the profit. This is the 50% discount.

Negative gearing is when an investment costs more than it earns. The main cost is usually loan interest. The loss can be used to cut the tax on your wages.

The government's notes on the bill say house prices have risen much faster than wages. They say these two tax breaks push investors into older homes and push up prices. They also say one-third of all capital gains go to people in the top 1% of earners over their lives.

Inflation adjustment replaces discount

Before 1999, gains were adjusted for rising prices. That way only the real gain was taxed. Part 1 brings that back for people, family trusts and partnerships. These are ways families and business partners hold things together. It covers gains that build up from 1 July 2027.

Here is how it works. The price you paid is raised in line with rising prices. You pay tax only on the profit above that. You must still keep the thing you own for at least 12 months.

The government says the flat 50% discount gives some investors too much and others too little. It says property has often got too much. It says shares have often got too little.

Gains made before 1 July 2027 keep the old rules. Say you owned something before that date and sell it later. The part of the profit made before 1 July 2027 can still get the 50% discount.

A 30% minimum tax

Capital gains are taxed when you sell. Some people wait to sell until a year when they earn little, such as after they retire. That way they pay less tax.

From 1 July 2027 there is a lowest tax rate of 30% on real capital gains. It covers people who live in Australia for tax. The government says this is close to the rate most people pay while they work.

People on some welfare payments are let off. The government's notes list payments such as the Age Pension, Disability Support Pension, JobSeeker, Parenting Payment and Youth Allowance.

The government looked back at 2022-23. It says over 95% of capital gains that year went to two groups. Some would not be hit at all. The rest already paid more than 30% tax while working.

Old assets and small business

Things bought before September 1985 have never had capital gains tax. From 1 July 2027, gains on them that build up after that date will be taxed. Gains made before then stay tax free.

People who invest in new homes can choose the old 50% discount when they sell. Or they can choose the new rules. Investors in low-cost housing can keep their discount of up to 60%. The minister will set the rules for what counts as a new home.

The small business breaks on capital gains tax stay as they are.

Negative gearing for new builds

Part 2 walls off rental losses on older homes. The loss can only be used against rent from homes or profits from selling homes. It can no longer cut the tax on your wages or other income.

Losses you cannot use yet can be kept for later years. This starts from the 2027-28 tax year.

It only covers homes bought on or after 7.30pm Canberra time on 12 May 2026. That was Budget night. Homes owned before then keep the old rules. Brand new homes are left out of the change too. So investors can still negatively gear them.

Say you buy an old unit to rent out in August 2026. The rent is $20,000 a year. The interest and costs are $30,000. From July 2027, that $10,000 loss cannot come off your wages. You can keep it and use it against future rent or when you sell.

A new worker tax offset

Part 3 creates the Working Australians Tax Offset. A tax offset cuts the tax you pay, dollar for dollar. This one can cut your tax to zero. But it will not give you cash back beyond that.

It is worth up to $250 a year from the 2027-28 tax year. You must live in Australia for tax. Your pay from work must be more than you can earn before paying any tax. Workers who pay less than $250 tax on their pay may get a smaller amount. The minister sets that.

A $1,000 no-receipts deduction

Right now, workers must list and prove each work cost they claim, such as uniforms or tools. Part 4 lets workers who live in Australia claim a flat $1,000 instead. They need no receipts. It starts in the 2026-27 tax year. This flat claim is called a standard deduction.

Your real work costs might be more than $1,000. Then you can still list them and claim the full amount. But then you do not get the $1,000. Some claims sit outside this, such as insurance that covers your pay and union fees.

The law also stops people getting the benefit twice through salary packaging. That is when your boss pays some costs out of your pay before tax. The government says this change will save people $380 million a year in paperwork costs.

Start date

The Treasurer brought the bill to the House of Representatives, Parliament's main house, on 28 May 2026. The House passed it on 4 June 2026. Labor, the Greens party and some independent MPs voted for it. These were Dr Haines, Dr Monique Ryan and Andrew Wilkie.

The Senate, Parliament's second house, passed it on 25 June 2026. First it agreed to 30 changes from the government and 3 from the Greens. The House agreed to those changes the same day. The Governor-General, who stands in for the King, signed it into law on 26 June 2026. It became Act No. 49 of 2026, its official law number.

The negative gearing part started the next day. But it applies from the 2027-28 tax year. The other parts start at the start of the next three-month period, 1 July 2026. The capital gains changes apply from 1 July 2027. The tax offset applies from 2027-28. The $1,000 claim applies from 2026-27.

This article is based on the government's notes on the bill as first brought in. The Senate's changes may have changed some details.

How they voted

Its journey through Parliament

Official sources

• Bill page on aph.gov.au
• Text of the bill
• Explanatory memorandum
• Bills Digest

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