The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 risks doing the opposite, warns CPA Australia. The legislation delivers reforms to capital gains tax, negative gearing, and work deductions—but leaves a critical gap by splitting the discretionary trust minimum tax into a separate bill. Â
Australia’s largest accounting body, CPA Australia, has sounded a warning over the government’s newly introduced Treasury Laws Amendment Bill 2026, cautioning that the legislation risks making the tax system more complex rather than simpler.
The Bill delivers the core elements of the Federal Budget’s tax package — including changes to capital gains tax (CGT), negative gearing, the Working Australians Tax Offset, and a standard deduction — but leaves critical components unresolved.
CPA Australia Tax Lead Jenny Wong flagged a key structural concern: the proposed minimum tax on discretionary trusts, considered the most consequential reform for private business owners, has been split into a separate Bill, leaving what she described as a major gap in the system.
Beyond the gaps. Wong criticised the Government’s decision to introduce sweeping reforms before completing consultation, calling it deeply concerning and urging a “consult first, legislate later” approach.
CPA Australia also warned that implementing the changes in stages creates a two-tier system where some Australians know where they stand and others do not — with real consequences for investment decisions being made right now.
Treasury Laws Amendment (Tax Reform No. 1) Bill 2026Â
The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 introduces a comprehensive package of tax reforms designed to improve the fairness and sustainability of the Australian tax system.
The bill is divided into four primary schedules, each targeting specific areas of tax law.
The key measures are as follows:
Capital gains and housingÂ
From 1 July 2027, the 50% capital gains tax discount for individuals and trusts will be retired in favour of cost base indexation, ensuring only inflation-adjusted gains face taxation. However, a new 30%Â minimum tax on capital gains will prevent high-value investors from reducing their tax burden by timing asset sales during low-income years. Low-income individuals receiving Age Pension or JobSeeker payments are protected from this floor.
Legacy assets acquired before 20 September 1985—previously untouched by CGT—will be brought into the tax net for gains accruing after 1 July 2027. To preserve housing investment incentives, developers and affordable housing investors retain the option to apply the existing 50% discount (or up to 60% for affordable housing projects).
Rental losses containedÂ
Negative gearing restrictions take effect for established residential properties purchased on or after 12 May 2026. Investors can no longer offset net rental losses against unrelated income such as wages; losses become “quarantined” and may only reduce future property-related income or gains. New residential dwellings remain exempt from quarantining, and properties acquired before the cutoff date retain grandfathered treatment under existing rules.
Relief for wage earners and simplified deductions
The Working Australians Tax Offset (WATO), rolling out from the 2027–28 income year, delivers a maximum AUD 250 non-refundable tax offset to workers with net labour income above the tax-free threshold. In parallel, a new AUD 1,000 standard deduction for work-related expenses simplifies claims from 2026–27 onwards, allowing workers to claim without receipts. Those with genuine expenses exceeding AUD 1,000 may still itemise and substantiate their claims, though this forfeits the standard deduction. The change eliminates the former AUD 300 substantiation exemption and $150 laundry expense concession.
