Labor unveils 'widow tax' fix after negative gearing backlash
The government is also consulting on carve-outs and changes covering newly built homes, affordable and disability housing and its new capital gains tax system.
Labor has announced plans to rectify the "widow tax" issue arising from its negative gearing reforms. The government is seeking public feedback on proposed changes that would allow individuals who inherit an investment property from a spouse to retain existing negative gearing benefits. The Albanese government aims to address unintended consequences of its tax overhaul, which initially aimed to restrict negative gearing to newly built homes.
Senator David Pocock, an ACT senator, criticized the flaw in Labor's budget decision, stating it disproportionately harmed women. Labor's proposed legislation would extend the definition of a "new" home to cover properties occupied within 24 months of receiving an occupancy certificate, ensuring negative gearing benefits are preserved for a longer period.
The changes would also exempt properties used for specific types of housing, such as NDIS specialist disability accommodation, affordable housing, and public housing. Additionally, Labor is proposing a simplified method for property owners to calculate capital gains tax after the implementation of an inflation-indexed system. Treasurer Jim Chalmers announced the draft changes, emphasizing the government's commitment to consulting on complex tax reforms and delivering tax cuts, a fair go for first home buyers, and a fairer tax system.
Opposition Leader Jane Hume criticized Labor for rushing the legislation and suggested the Coalition would closely examine the proposed changes.
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