Labor reaches deal with the Greens to pass changes to capital gains tax and negative gearing reforms

The Australian Greens have reached a deal with the Labor government, agreeing to support changes to capital gains tax and negative gearing reforms. This agreement paves the way for the government to pass its key budget measures before the federal parliament adjourns for its winter break.

The Greens' support was secured after the government agreed to several key concessions. These include closing a loophole that allowed investors with self-managed super funds to continue benefiting from tax breaks and limiting the ministerial powers that could be used to reverse the reforms. The government stated that these reforms will help more Australians buy their first home, reduce taxes for millions of workers, and better balance the tax treatment of labor and asset income.

As part of the negotiations, the Greens have also secured an eight-week extension for a Senate inquiry into the National Disability Insurance Scheme (NDIS) changes. They have also negotiated amendments to limit the scope of the minister's authority to make broad cuts to participant support categories. Despite these concessions, the Greens maintain their opposition to the NDIS legislation, which they argue is harmful to over 240,000 individuals expected to be removed from the scheme under the proposed cost-saving plan.

The government had previously adjusted its capital gains tax proposal, including scaling back the treasurer's discretionary powers, to address concerns raised by the Greens. The proposed tax changes involve shifting from a 50% capital gains tax discount to a cost-based indexation model from July 2027. Negative gearing concessions will be restricted for investment properties acquired after May 12, 2026, with exceptions for new constructions and certain government housing programs.