Jim Chalmers defends negative gearing and CGT reforms to support first-home buyers

Australia’s Treasurer Jim Chalmers is defending the federal government’s proposed changes to capital gains tax and property investment rules, saying the reforms will make the tax system fairer without making Australia uncompetitive for investors. In a television interview following the budget, Chalmers argued that the changes are aimed at easing pressure on wage earners and first-home buyers, while still leaving Australia with capital gains tax treatment that he said would remain attractive compared with some overseas markets.

The reforms, announced in the 2026-27 federal budget, would limit negative gearing to new residential builds from 1 July 2027 and replace the current 50 per cent capital gains tax discount for individuals, trusts and partnerships with a system based on inflation indexation and a minimum 30 per cent tax rate on gains. The government says existing investments will be largely protected, with properties held before the announcement time exempt from the negative gearing changes. According to the budget materials, the aim is to “rebalance” the system so investors do not receive tax advantages seen as greater than those available to owner-occupiers.

Chalmers has also pushed back against criticism that the measures amount to a break with the government’s earlier position on tax. In the interview with ABC’s Insiders, he said the government is cutting income taxes in several ways and argued the changes were designed to support home ownership rather than simply to raise revenue. He rejected the idea that the policy was meant to produce a political bounce, saying the goal was to make housing more accessible, especially for younger Australians.

The proposals have attracted strong interest because they could affect not only property investors but also broader investment decisions. Market analysts quoted in other reporting have said the changes may encourage a shift away from capital-growth strategies toward income-producing assets, including dividend-paying shares. That could matter for retail investors and superannuation funds, though the budget says widely held trusts and super funds will be excluded from some parts of the new rules.

The debate also comes against the backdrop of long-running concern about bracket creep, where rising incomes push workers into higher tax brackets even when real wages do not keep pace with inflation. Chalmers was challenged on that issue as well, but he pointed to the government’s tax cuts and other measures as evidence that it is trying to reduce pressure on ordinary taxpayers.

The changes are set to take effect in mid-2027 if they pass parliament, and the political fight around them is likely to continue. For the government, the argument is that the tax settings are being adjusted to better support homebuyers and working Australians. For critics, the concern is that the reforms could change incentives for property and equity investors, and become one of the budget’s most contentious measures.