Government amendments to Tax reform Bill

The Government has made amendments to Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and the accompanying Imposition Bill as follows:

Capital Gains Tax

The amendments will:

• remove the power for the Minister to determine, by legislative instruments, kinds of CGT assets that would retain the 50% CGT discount for individuals and trusts;

  
  

• increase the aggregated turnover threshold for entities to access the small business 50% reduction in Subdiv 152-B from the disposal of active assets to $10m (from $2m);

• maintain incentives to make deductible charitable gifts or donations by providing for the gains subject to the minimum tax to be reduced where a taxpayer has made a deductible gift or donation; and

• amend the provisions exempting recipients of specified social security and other related payments from the minimum tax to insert a list of specified such payments (see para 1.26 of supplementary Explanatory Memorandum for full list) and remove the power for the Minister to specify payments by legislative instrument.

  
  

Date of effect: These amendments broadly apply to assessments for the 1 July 2027 income year and later income years.

Negative Gearing

The amendments will remove the following Ministerial determination powers:

• the power to determine a kind of business or enterprise for which a residential dwelling could be used for that would exempt it from the loss quarantining requirements;

• the power to determine a class of entities which are exempt from the loss quarantining requirements; and

• the power to determine a class of dwellings which are exempt from the definition of residential dwelling (and therefore exempt from the loss quarantining requirements).

  
  

Date of effect: These amendments commence the day after Royal Assent.

Working Australians tax offset (WATO)

The amendments will remove the power for the Minister to determine, by legislative instrument, the amount of the WATO for the purposes of new s 61-160(1)(b) of the ITAA 1997 and replace it with the method for calculating this amount based on what would be an individual’s basic income tax liability if their taxable income consisted solely of net labour income.

Date of effect: These amendments apply to assessments for the 2027-28 income year and later income years.

Note: The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and the accompanying Imposition Bill) is expected to be passed by parliament today [Thurs 25 June 2026].