Speaking at a Senate Economics Legislation Committee hearing this morning, Institute of Public Accountants (IPA) senior tax adviser Tony Greco said that the Budget’s proposed changes to capital gains tax are tantamount to a “band-aid on an open wound”.
The “wound” in question was Australia’s stagnating productivity, which Treasury identified as a key focal area of the 2026-27 Budget. Greco argued that, contrary to the government’s stated agenda, the proposed changes – which would see the CGT discount scrapped and a minimum 30 per cent tax on capital gains introduced – will “[skew] investments in favour of low growth” and disincentivise risking capital.
“We’re sending a message to the broader community, which is, ‘Don’t go for high growth.’ And what is the rationale for this change outside of residential investments? Even Ken Henry recognised the importance of treating capital a little bit differently, because it grows the economic pie; it turns the wheels of finance,” Greco said.
“It’s basically the thing that incentivises people getting up in the morning, risking capital, working hard and trying to get ahead.”
While Greco said he wasn’t opposed to tax reform as a means of boosting national productivity, he noted that these changes were announced without any meaningful public consultation.
“We’ve pretty much thrown the book out the window in regard to process, and there’s a good reason why we have protocols in relation to consultation,” he said.
He continued: “Even with consultation, we always put in a post-implementation review process to make sure in the real world the intended outcomes for anything that’s been proposed is actually being achieved. So, bad process invariably leads to bad outcomes.”
This criticism of Treasury’s consultation process – or lack thereof – was shared by Chartered Accountants Australia & New Zealand (CA ANZ) group executive advocacy public and government affairs
Damian Ogden, who also appeared at the Senate hearing, urged the government to provide “legislative clarity and certainty” when making substantial changes to the Australian tax system.
“Key policy elements are being explained in the exploratory memorandum or left to future legislative determinations, rather than being clearly stated in the law itself,” he said.
Oden said the Budget’s proposed changes introduce complexity, particularly with regards to new classifications of capital gains and losses, record-keeping obligations and valuation requirements from July 2027.
“[Our message] is straightforward: if Parliament is undertaking major tax reform, the legislation must be clear, coherent, administratively workable and fair in its application,” he said.
