6 February 2026
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The PM is hush on what a change to the Capital Gains Tax (CGT) would look like. But here's what everyone wants to happen to Capital Gains Tax. Here's how it could look when the CGT is almost-definitely revised in May.
The CGT discount windback talk all started in earnest after reporting from the AFR this week from 'confidential government sources' heralded an upcoming change to the scheme was being seriously considered by the Albanese Government. To refresh your memory, the CGT discount scheme introduced during the Howard-era made trading shares more attractive to Aussies and turned property into our national sport by reducing the tax burden on investments. Currently, the tax discount means that if you've owned an investment - be it property, shares, bonds, etc - for over 12 months and make a capital gain on it when it's sold, you'll see your CGT bill cut by 50% on that transaction.
While there are no concrete details on what a windback of the CGT scheme would look like just yet, everyone has an opinion on what they want.
Thanks to the Greens, the Senate has been holding a public inquiry into the current CGT discount scheme with a view to rolling it back. Submissions from think tanks, concerned citizens and industry interest groups have all now been made public ahead of the March 17 hearings into the matter.
Here's what everyone wants to happen.
HIA argues against any reduction in the CGT discount. Its central recommendation is that the 50 per cent discount be retained unchanged.
The association frames housing affordability as a supply problem, not a tax problem. It contends that investors are essential to new housing construction, particularly apartments, townhouses and build to rent projects, and that even small reductions in after tax returns would push marginal projects below feasibility thresholds.
HIA explicitly opposes proposals to cut the discount to 25 per cent. It argues that higher CGT on both new and established housing would reduce expected resale values, deter investment, and ultimately shrink housing supply. The submission warns that investors would not redirect capital from existing dwellings to new builds but would leave the housing sector altogether.
The policy implication is clear. Do not change CGT or negative gearing until supply constraints, planning delays and infrastructure costs are addressed. In HIA’s view, tax reform now would worsen rents and affordability, particularly for lower income households and first home buyers.
The Property Council also recommends retaining the current 50 per cent CGT discount.
Its argument is slightly different in emphasis but aligned in outcome. The council defends the discount as a practical replacement for inflation indexation, arguing that taxing nominal gains would over tax long held assets and distort investment decisions.
The submission rejects the idea that the CGT discount is a meaningful driver of housing prices. It points instead to planning constraints, regulatory costs, infrastructure charges and falling construction productivity. It argues that reducing or abolishing the discount would reduce housing completions, lift rents and weaken employment and growth.
Rather than targeting CGT, the Property Council calls for a holistic, cross jurisdictional review of property taxes and regulation. Its recommendation is to leave the CGT discount untouched and focus reform on supply side barriers if governments want to meet housing targets.
NSW Treasury takes the opposite position. It argues that the CGT discount should be reviewed and likely reduced.
The submission concludes that the discount no longer meets its original objectives and now materially worsens housing affordability, home ownership and economic equity, particularly in NSW. Treasury highlights the scale of forgone revenue, the concentration of benefits among high income households, and the way the discount amplifies investor purchasing power.
NSW Treasury recommends reconsidering the level of the discount, with explicit discussion of reducing it or replacing it with inflation indexation. It argues that advances in technology have removed the administrative case for a flat discount and that current inflation outcomes mean the 50 per cent rate overcompensates investors.
While it acknowledges that supply constraints matter, Treasury’s position is that reducing the CGT discount would lower investor demand and place downward pressure on prices over time. It also flags reform of trusts as a priority, given their role in magnifying the benefits of the discount.
The core recommendation is not a single prescriptive model, but a clear policy direction. The CGT discount should be wound back or redesigned to improve equity, reduce housing demand pressures and better align capital allocation with productivity objectives.
ASFA’s core recommendation is that the CGT discount as it applies to superannuation funds be retained unchanged.
ASFA argues that the CGT discount is not a concession layered on top of superannuation, but a foundational part of how super funds are taxed. It emphasises that capital account treatment is the primary tax code for super, with the one third CGT discount producing an effective tax rate of about 10 per cent in accumulation and zero in pension phase.
The submission explicitly warns against removing or reducing the discount for super funds. ASFA argues this would immediately lift tax on unrealised gains from 10 per cent to 15 per cent, crystallising large deferred tax liabilities and cutting member balances. It quantifies the impact as several thousand dollars a year for a typical member with a mid range balance, with compounding effects over time.
Beyond member outcomes, ASFA recommends against CGT changes on the grounds of capital allocation. It argues that the discount underpins super fund investment in long term, illiquid assets, including residential rental housing, commercial property and infrastructure. Reducing the discount, in its view, would reduce domestic investment and weaken housing supply rather than improve affordability.
Its submission is deliberately narrow and institutional. APRA confines itself to explaining how prudential regulation interacts with housing lending, investor risk and financial stability. It makes no argument for or against the CGT discount as a tax policy.
What APRA does recommend, implicitly, is that housing market risks should be managed through prudential and macroprudential tools, not tax settings. It outlines existing measures, including higher risk weights for investor loans, stricter serviceability buffers and the activation of debt to income limits from February 2026, which it notes will fall more heavily on investors than owner occupiers.
APRA’s position is that bank capital requirements and lending standards are already calibrated above international norms to reflect Australia’s housing concentration, and that these settings have not constrained business lending or damaged productivity.
In effect, APRA is telling the committee that it sees financial stability risks as manageable within the prudential framework, without needing to rely on CGT reform as a blunt instrument.
The ACTU explicitly recommends scaling back the capital gains tax discount and reshaping how it applies to property investment.
Its central recommendation is to reduce the CGT discount from 50 per cent to 25 per cent for capital gains on investment properties beyond an individual’s first investment property. The ACTU pairs this with a proposal to limit negative gearing to one investment property per person.
The submission recommends that these changes apply to new investments, with existing arrangements grandfathered for five years. This is designed to limit market disruption while still altering incentives at the margin.
A core part of the ACTU’s proposal is hypothecation. It recommends earmarking a significant share of the additional revenue raised for co-investment with the states in public and social housing, and for funding energy efficiency upgrades in rental properties.
Beyond housing specific measures, the ACTU also calls for a broader review of the CGT discount across all asset classes, arguing that the problems identified in housing reflect deeper structural flaws in how capital gains are taxed.
Again, no plans are on the table just yet but it's fair to say that any decision would have an impact on your varying portfolios. Watch this space.
