Tax reform is a topic that always gets Australians talking—and for good reason. With the cost of living rising, the housing market as unpredictable as ever, and the federal budget always under scrutiny, any hint of a shake-up to our tax system is bound to make headlines.
This week, Treasurer Jim Chalmers has added fuel to the fire by announcing his ambition for economic and tax reform, but he’s also made it clear that some of the most controversial changes are firmly off the table.
Speaking at the National Press Club, Chalmers revealed that the government will host a productivity roundtable from 19 to 21 August.
The aim? To gather fresh ideas for reform from 25 participants, including business leaders, union representatives, civil society advocates, and policy experts.
The event will take place in the Cabinet room at Parliament House, setting the stage for a pivotal moment in shaping Australia’s economic future.
But before anyone gets too excited (or worried), the Treasurer quickly clarified that not every idea will be up for discussion.
‘Obviously, there are some things that governments, sensible, middle of the road, centrist governments like ours don’t consider,’ Chalmers said.
‘We don’t consider inheritance taxes, we don’t consider changing the arrangements for the family home, those sorts of things.’
For many older Australians, the mere mention of inheritance tax is enough to send a shiver down the spine. Once a fixture in most states, inheritance taxes were abolished across Australia by 1981.
Since then, the idea has occasionally resurfaced in policy debates, often sparking heated reactions.
Chalmers’ decision to rule out any inheritance tax return will be a relief to those who worry about passing on their hard-earned assets to the next generation without the taxman taking a slice.
Another sacred cow in Australian tax policy is the family home. For decades, the principal place of residence has been exempt from capital gains tax, and any suggestion of changing this arrangement is usually met with fierce resistance.
Chalmers has made it clear that the government has no intention of touching the family home, reinforcing its status as a cornerstone of financial security for millions of Australians.
The elephant in the room
While inheritance tax and the family home are off-limits, the Goods and Services Tax (GST) remains a hot topic. The GST has been stuck at 10 per cent for 23 years, and there’s growing pressure from state governments to consider an increase.
However, Chalmers has long been sceptical about raising the GST, arguing that it’s difficult to adequately compensate those for whom such a move would have the most impact.
‘You know that historically I’ve had a view about the GST,’ he said.
‘I think it’s hard to adequately compensate people. I think often an increase in the GST is spent three or four times over by the time people are finished with all of the things that they want to do with it.’
Despite this, the Treasurer said he’s open to hearing ideas at the roundtable but hasn’t changed his fundamental position.
He also pointed out that since all GST revenue goes to the states and territories, increasing it wouldn’t directly help repair the federal budget.
Superannuation changes still on track
One area where the government is pushing ahead is superannuation. The proposed changes would see higher taxes on investment returns for super balances above $3 million.
Chalmers was clear that the roundtable isn’t an opportunity to walk back on policies the government has already committed to, especially those taken to the last election.
‘I suspect people will come either to the roundtable itself or to the big discussion that surrounds it with very strong views, and not unanimous views about superannuation,’ he said.
‘But our priority is to pass the changes that we announced, really some time ago, that we’ve taken to an election now, and that’s how we intend to proceed.’
He also dismissed the idea of extending capital gains tax to other areas, saying it hadn’t been considered ‘even for a second’.
Tax reform is a complex and often contentious issue, but it affects us all, from how much we pay at the checkout to what we can leave behind for our loved ones.
As the government prepares for its productivity roundtable, now is the perfect time to have your say.
What do you think about the Treasurer’s decision to rule out inheritance tax and change the family home? What tax reforms would you like to see on the table? Share your thoughts in the comments below.
Also read: Claim $36,650 a year with this little-known property tax tip
This is a high spending Labor government. Higher than any previous. Can expect imputation credits and trusts to be next.
I hope so. Negative gearing as well.
This government are making the tax system fairer across the board. Make the wealthy pay their fair share instead of 100’s of multi millionaires pay no tax under the current system.
This government is very conservative for a Labor government. I would not support anything that affects the family home or an inheritance tax so am with Jim Chalmers on that.
But I certainly support removing many of the tax concessions like negative gearing, the 50% capital gains tax concession, and the refunding of franking credits to people who pay no tax.
None of those are fit for purpose because they offer no benefit to the country and serve mainly as tax avoidance schemes for the rich. Also remove tax incentives on fossil fuel producers for the same reason.
On the spending side remove rent assistance for social security recipients as that is really a subsidy for landlords which allows them to charge higher rents to low income people. Without it their rents would become unaffordable for the tenants and they would either have to reduce them or have empty properties. Governments should be constructing cheap basic accommodation for low income renters and bypassing the private rental market completely.
Plus a lot more on both the spending and taxing but this post would be too long to include everything I think needs fixing.
I would not expect any of these changes to happen overnight as that would be too disruptive but a timetable for phasing them in over several years should be put in place.
Rent… with the bi-annual increase in the pension, be it only $7 each time the govt take 25% of that from people living in rental GOVT HOUSING so don’t think that private landlords only benefit from rises and the rent assistance is a pittance compared to the actual rent, it also depends on the landlords, good and bad but their costs also go up and without negative gearing it would really soar.
You dont know what you are talking about regarding franking credits. Fr
anking credits are there to compensate SFR who are on a similar income to the pension without the perks. The only reason we cant get the pension is because our assets are a few
dollars above the allowable amount not all people that are SFR are wealthy . People that think the way you do must be very wealthy or on government payments
David Ryder You dont know what you are talking about regarding franking credits. Fr
anking credits are there to compensate SFR who are on a similar income to the pension without the perks. The only reason we cant get the pension is because our assets are a few
dollars above the allowable amount not all people that are SFR are wealthy . People that think the way you do must be very wealthy or on government payments
we already have a inheritance tax! it is in your superannuation! any funds left in your super account when you die are taxed again at 15% plus a 2% medicare levy even though you are already dead!