Labor has struck a deal with the Greens to pass controversial capital gains tax (CGT) and superannuation changes in the upcoming budget, targeting tax loopholes used by wealthy investors and self-managed super funds (SMSFs). The agreement, announced on Thursday, will see the government tighten CGT concessions and limit superannuation contribution caps for high-income earners, generating an estimated $5 billion in additional revenue over the forward estimates.
Details of the Agreement
The deal includes a reduction in the CGT discount from 50% to 40% for assets held longer than 12 months, affecting property and share investors. Additionally, the non-concessional superannuation contribution cap will be lowered from $110,000 to $75,000 per year for individuals with total super balances above $3 million. The Greens secured a commitment from Labor to review the superannuation tax concessions for defined benefit schemes, a key demand during negotiations.
According to Treasury estimates, the CGT changes will affect approximately 2% of taxpayers, primarily those in the top marginal tax bracket. The superannuation measures will impact around 60,000 SMSF members with balances exceeding $3 million. The Greens’ support ensures the passage of the legislation through the Senate, where Labor does not hold a majority.
Political and Economic Impact
Treasurer Jim Chalmers hailed the deal as a win for budget repair, stating, “These changes ensure the tax system is fairer and more sustainable, targeting those who have benefited from generous concessions at the expense of ordinary Australians.” Greens Treasury spokesperson Nick McKim said the party secured important reforms, including a commitment to close loopholes for high-balance super accounts, but criticized the government for not going further on taxing large inheritances.
The opposition has condemned the changes, with Shadow Treasurer Angus Taylor arguing they will discourage investment and savings. “Labor is hiking taxes on mums and dads who have worked hard to build their super and invest in property,” Taylor said. The deal is expected to be finalized in the budget sitting week, with legislation to be introduced in August.
Reactions from Industry
The SMSF Association expressed disappointment, warning that the changes could push some members to restructure their finances. “These measures add complexity and penalize prudent savers,” said CEO Peter Burgess. Meanwhile, the Australian Council of Social Service (ACOSS) welcomed the reforms, calling them a step toward a more progressive tax system.
The deal comes as Labor seeks to balance its election promises with fiscal discipline, amid rising cost-of-living pressures. The $5 billion in savings will be directed toward funding for Medicare, housing, and climate initiatives, according to government sources.
