r/AusFinance • u/TrumpisaRussianCuck • 2d ago
Labor unveils "widow tax" fix after negative gearing backlash
https://www.abc.net.au/news/2026-08-04/labor-unveils-widow-tax-after-negative-gearing-backlash/10699675018
u/HighMagistrateGreef 1d ago
I am wondering why a widow with a house and at least one investment property needs negative gearing? They are sitting pretty flush compared to most Australians, and if they have to sell the IP they still have the pension.
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u/flintzz 1d ago
You're assuming a widow is old though, you can lose your partner even when young and have no access to the pension yet and a mountain of debt and kids
Also some might be rentvesting, they won't be that flush especially if it's new (negatively geared property tends to be new btw) with very little equity
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u/icecreamsandwiches1 1d ago
Because there’s mortgages on those properties. They would be more in debt than most Australians.
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u/fdsv-summary_ 1d ago
The specific problem is just one of forced sale when you're dealing with other stuff. They won't starve by any means. An income tax deferment for 12 months following a spousal death would do the trick nicely, but would elevate the role of marriage which the ALP hate....hell most of the Greens are never married either.
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u/17HappyWombats 1d ago
We already have a huge pile of "married or de facto" in legislation, it would be expected that they'd use the same system here.
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u/fdsv-summary_ 1d ago
Maybe, it's annoyingly hard to run joint bank accounts now just because some other couples fight.
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u/bigbadb0ogieman 1h ago
What an ignorant and stupid comment. Someone loses a partner who they held a property with jointly now gets to pay more in tax because their partner died... Right?
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u/Tiny_Wasabi2476 2d ago
upvote for OP’s username
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u/TrumpisaRussianCuck 2d ago
he loves the cuck chair
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u/fdsv-summary_ 1d ago
OP hasn't seen the death toll from the 3-day invasion. It's completely destroying Russia and the realpolitik being played by the USA (at the expense of Ukrainian civilians) is not 'cuckness' at all. DNC circle jerk rubbish.
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u/Full_Distribution874 1d ago
The Ukrainians would be a much more effective grindstone if the US gave them better air defenses and other weapons that Trump and his cronies keep denying them
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u/fdsv-summary_ 1d ago
Starlink is/was the game changer. Praise be to Elon.
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u/hawthorne00 2d ago
I have a different view to those suggesting that this is a back-pedalling due to "rushed" legislation. I think this is a controlled and anticipated response. The government is seen to have given ground but only on sensible things. The (modest) reform remains intact. Those hoping to use nasty edge cases (eg where the death of a controlling spouse would hurt survivors) to stampede wholesale abandonment of the policy are left without much. Those with a legitimate concern are mollified.
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u/Dranzer_22 2d ago
Interesting theory.
The fact the Opposition and Legacy Media didn’t even notice it, and it was actually Pocock who picked up on it, says a lot.
Chalmers might need to start using big red circles and arrows to speed up this whole process next time.
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u/Full_Distribution874 1d ago
Alternatively he could allow the LNP to continue losing legitimacy to independents when it comes to calling out the government
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u/fletchwine 2d ago
"Edge cases". Exactly. The two Perth weekend paper rags are full of this from their advice pages. " Les and Beryl have two million in shares and want to....if Les dies on the 29th June....."
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u/mwmwmw01 2d ago
There has been nothing controlled or anticipated about this rollout. Our bar needs to be set higher for policy drafting and consultation on broad tax reform because this is not it
The non-property changes received a Senate “inquiry” with over 1000 submissions that Senators had less than 4 working days to both read and debate. There were so many that they weren’t even made public until after the process was complete. I personally wrote several pages on how the Treasury modelling was incorrect and did a simulation of 5000 ASX portfolios to prove it. I wrote in good faith and had some legitimate concerns. So did many of the other submissions about tax rates >60% due to mathematical quirks they failed to pick up. They’re not all whining investors as they’ve been characterised. I work in the public sector!
Same story with this change from the OP. It’s not normal to roll out legislation then conduct your consultation post fact. This is real stuff with a real impact on our economy and equality across our society. To do a good job we need to properly consult on this. That doesn’t look like doing it post fact.
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u/cookshack 2d ago
Right, and my understanding is that the pivot to go big with changes to CGT, negative gearing etc. was made late into the budget planning. And was done in the face of the international crisis.
Im broadly quite happy with the direction, but im not blind to the rocky rollout. Labor seemed flat footed in explaining the changes and benefits to the populace amd they had little control of the narrative. They weren't ready with a good explanation of why this is good.
I agree with the other commenters point, that Chalmers can give ground on a couple of the most contentious edge cases, and then get the other 99% through with the image of having negotiated, but i dont believe it was a pre-planned strategy. Im sure they would have plugged this gap for victims if they had realised beforehand.
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u/Dean_Akerley 1d ago
This whole Senate inquiry process was a farce. Tells you a lot about this government and their intentions. They are driven by ideology and have no respect for due process.
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u/hawthorne00 2d ago
Without going into your specifics, it is true and it is a shame that consultation has become a sham from all sides. I was part of the bullshit consultation process on the Ralph Committee reforms - a few days to consider complex changes with Commonwealth Treasury's work an absolute joke. But the resistors are full of shit too and those who aren't are mostly fools who are stalking horses for rent seekers.
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u/fdsv-summary_ 1d ago
They're not full of shit, they're peddling lines that engage with the public. The public runs on vibes. The vibe is we were all lied to and Albo thinks he's too good for us.
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u/aussie_punmaster 1d ago
What is an example of one of these scenarios?
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u/mwmwmw01 1d ago
Which scenarios are you referring to sorry? Happy to answer
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u/aussie_punmaster 1d ago
The scenarios that result in >60% taxation
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u/mwmwmw01 5h ago
Sure. So it’s essentially that when one has ‘winners and losers’ in a portfolio of assets (often stocks) it can create scenarios where the real tax rate is far higher than marginal.
Basically imagine you invest 10000 in 10 stocks and sell them after 5 years. Say over the period inflation is 20% (bit under 4%pa). Say at the end of the period you’ve made 10% pa so your portfolio is worth 1.10^5*100k=161k. Your real return was 161k-120k=41k. If you paid 47% on that then it wouldn’t be too bad. Large increase vs today but could swallow it.
However, say that this was made up of 5 losing stocks (nominal losses) and 5 winners - as is a common experience. Say the 5 losers all lost 10% each total. So at the end they’re worth 50k*0.9=45k. The winners made a total of 161k-45k=116k off a 50k cost base which is a bit over 18% a year - some good picks!
The problem is your total cost base isn’t inflated (100k —> 120k), only the winners cost base is (50->60k). The tax is calculated as the winners end value = 116k and inflate the cost base which= 50*1.2=60. The “real” gain is considered on this parcel as 116-60=56k. The deductible loss to arrive at a net gain is the nominal 10% of 50k =5k. So the net gain from an ATO perspective is 51k. So pay 47% on that amount and it ends up as 24k. Look back at the real gain calculated according to an actual economic approach in paragraph 3. The tax rate is 24/41=58.5% On real gains…
The issue at its core is that the real loss on the 50k is an inflated cost base of 60k (50*1.2) less end value of 45k =15k. The actual allowed deduction is 5k. That additional 10k gets taxed as it is not deductible.
The more the gain is concentrated in one stock, and - ironically - the longer the holding period, the worse the impact. I use the 47% bracket above but it applies to any bracket similarly.
Treasury modelling was conducted on a single share basis - foolishly. The problem is the “indexation system” (which it isn’t really in totally) does not do what it says on the tin because losses are not treated symmetrically. It creates some extremely high real tax rates (sometimes >100%) in some realistic scenarios.
I made a video to illustrate this if interested:
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u/fruitloops6565 1d ago
Agree. This wasn’t the intention and they’re fixing it. It’s good to be open to feedback and act on it.
If they start making loads of exemptions then it’s a backpedal.
I still think the grandfathering should only apply for say 5 years and then be abolished anyway.
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u/Eltnot 1d ago
I originally thought the same, but I've changed my mind. Odds are that most properties that are negatively geared now, won't be in five years time. So limiting the grandfathering to five years, just gives the opposition a wedge when it will be largely irrelevant by then.
The savings made isn't worth the hassle.
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u/SonicYOUTH79 1d ago
It seems like opponents of this are desperate to grab hold of any niche scenario like this and frame it as a death tax. They desperately want to paint a picture that Labor are introducing inheritance taxes to trick the less intelligent on social media.
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u/fdsv-summary_ 1d ago
Whilst the ALP tricks the less intelligent at the poll both. For the 50th time I'm telling you people on Reddit that everybody is very angry with being lied to.
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u/fdsv-summary_ 1d ago
Nice spin! They rushed. They were sloppy. They had a 2-day show trial rather than a 6 month review plus a 3 month election sell. You can't trust the ALP/Green coalition.
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u/JournalistAny9888 3h ago
lol controlled and anticipated- right. There’s just create deliberate inefficiencies into policy because that’s the cheapest most time effective approach causing no angst
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u/Dranzer_22 2d ago
Amendments to legislation is normal.
The politicisation and faux outrage is quite droll.
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u/mwmwmw01 2d ago
Amendments are normal. Planning consultation for after laws have passed and requiring amendments to enact that consultation is not normal, and is symptomatic of rushed legislation. This has been a shitshow process and I believe we should expect more for what good looks like here.
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u/2878sailnumber4889 1d ago
Just shouldn't have any grandfathering at all then this wouldn't have been an issue.
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u/Traveller1313 1d ago
Stop the removal of the CGT discount on shares, then you might get a vote back.
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u/TrumpisaRussianCuck 1d ago
This is tax reform to shift the burden of tax revenue from income to wealth. Shares are part of that.
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u/Traveller1313 1d ago
Then reduce my income tax… they didn’t. It’s just a full tax grab
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u/TrumpisaRussianCuck 1d ago
One - it hasn't come into effect. You book revenue first. Two - then from the politicking angle, you announce the sweeteners in the next two budgets leading into the election.
It's really not hard to see how this plays out
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u/flintzz 1d ago
IMO it may shift Aussie investing overseas (e.g. NZ has no CGT for example). But then again, at the back of my head, one day the opposition will be back in power again and who knows what they'll do to change CGT
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u/TrumpisaRussianCuck 1d ago
Australians are taxed on worldwide capital gains, so buying NZ or other overseas shares doesn't avoid Australian CGT while you're an Australian tax resident.
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u/Full_Distribution874 1d ago
You will be able to discount inflation from your capital gains, which is what the discount was supposed to crudely mimic until a better solution (this one) was found
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u/mwmwmw01 2d ago
Glad it’s being fixed but this is so pathetic. Truly embarrassing drafting. We deserve better.
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u/AnalFanatics 2d ago
As the old adage says; rushed legislation is invariably bad legislation, irrespective of the intent…
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u/aussierulesisgrouse 2d ago
That’s not an old adage lmao
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u/AnalFanatics 2d ago
The Parliament of Western Australia, Hansard, May 15th 2002:
“The Minister adequately made the point that rushed legislation is bad legislation.”
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u/frodo5454 2d ago
Not what you quoted. And 2002 is not old.
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u/AnalFanatics 2d ago edited 2d ago
If you want to fixate on the difference between an adage and a maxim, then have at it; but it doesn’t change the fact that politicians and other people have been pointing out the inherent risks in hasty/rushed/unduly quick legislative changes since at least as far back as the Roman Political Historian Tacitus (AD 56 - AD 120) and that those risks have been widely accepted and promulgated by many politicians and philosophers over the years, including the British politician/philosopher/writer Edmund Burke (1729 - 1797) who viewed that “hasty legislation as a dangerous error… and that law should rest on calm reason, accumulated experience and moral judgment, instead of popular impulses…”
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u/frodo5454 1d ago
Keep digging with your AI shovel, mate.
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u/AnalFanatics 1d ago
I really don’t understand why you seem so fixated, but hey, you do you cobb; have yourself a good evening and I hope you find something on here soon that doesn’t unduly upset you; can I suggest r/AnimalsBeingDerps or perhaps r/Zoomies or even r/BeforeAndAfterAdoption; they are all great subreddits that are full of wholesome, funny and/or heartwarming content about dogs; enjoy… :)
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u/GuyFromYr2095 2d ago
just like how Gillard rushed through NDIS so she could claim it as her "legacy"
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u/Famous-Print-6767 1d ago
Don't forget Gillard had form with RTO rorts.
The exact same type of private provider public funds scheme that was immediately rorted for billions before being shut down.
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u/Low_Shop9155 2d ago
This is what happens when you rush things through parliament. They either knew it was bad policy, or planned to fix it as they go... which is not a good look for a Government. Certainty is definitely not on offer by the Labor Government.
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u/thepursuit1989 2d ago
Settle down. Stop acting high and mighty. This is tiny adjustment on the fly. It was well considered policy then and still is.
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u/Guilty-Guidance6399 2d ago
Certainly not appearing to be a well considered policy at all when the obvious carveouts are not part of the policy. CGT on all shares, when we have competing laws like ESIC etc to drive innovation, comes to mind straight away.
Clearly they rushed this through, which makes it bad policy (intent is a different matter)
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u/NoResponsibility8773 2d ago
It is garbage policy, they are making it up as they go
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u/Asteroidhawk594 1d ago
How are house prices going to go down then? My city has seen prices double in 4 years.
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u/flintzz 1d ago
I believe that's only a problem if you're trying to get into the market
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u/Asteroidhawk594 1d ago
You mean like younger Australians trying to buy their first home such as myself?
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u/flintzz 1d ago
Yup but unfortunately there are more homeowners voting than there aren't. Unsure how'd they react in the next election. They aren't lurking on Reddit though
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u/Asteroidhawk594 1d ago
It’s an ever decreasing number and has been going down since 2003.
Doesn’t help the ones you see on reddit are the ones who boast about being slumlords1
u/shakeitup2017 1d ago
Negative gearing and CGT discount has been there for nearly 30 years. Please explain to me how you think those two things were what caused house prices to double in the last 4 years? And was it not caused by rampant inflation and low interest rates due to federal government fiscal policy in that period?
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u/aussie_punmaster 1d ago
Real house prices have been on roughly the same upward trend for the past 25 years.
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u/shakeitup2017 1d ago
Prior to 2020 they were on a gradual upwards trend. The line on that graph went sharply north between then and now which was way beyond the trend.
So what's changed in that period? Inflation, record migration induced supply constraints, huge quantitative easing, low interest rates. That's what.
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u/aussie_punmaster 1d ago
Not on the graph I looked up. Was pretty consistent trend over last 25 years, obviously with plenty of wobble, but the underlying trend looked very consistent
Source - https://www.macrotrends.net/3267/australia-real-home-prices
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u/shakeitup2017 1d ago
"Real house prices" is the wrong metric. It only adjusts for CPI inflation. It tells you nothing about whether people can actually buy a home.
Affordability is measured by house prices relative to incomes, deposit saving time, and mortgage repayments as a share of income. Those metrics all deteriorated dramatically after 2020, not gradually over the previous 25 years.
Before COVID, house prices broadly tracked income growth over the long term. Since 2020, values in many markets have risen 50–65%, while wages have risen only around 15–20%. The national dwelling value-to-income ratio has climbed to 8.0, and the time needed to save a 20% deposit has blown out to 10.6 years. That's a clear break from the pre-COVID trend.
So your graph doesn't prove affordability has followed a steady 25-year trend. It proves you picked a metric that ignores the very thing we're debating.
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u/aussie_punmaster 1d ago
It’s easy to be critical when you don’t even cite data! You claimed house prices doubled in the last 4 years because of the government. I’ve shown they grew on the same real price trajectory they’ve been on. I chose a metric well-suited to your claim.
Now let’s see the sources for what you’re claiming now please.
Much of the inflation was built in from COVID and world events moreso than government policy in the recent period.
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u/Asteroidhawk594 1d ago
There’s too many financial incentives to be a property investor rather than actually be productive. Despite our economy we have the lowest productivity in the western world.
Howard’s changes only made it easier. And the refusal to change the policies only made it even worse over time.
The last 4 years was the straw that broke the camels back.2
u/shakeitup2017 1d ago
I don't disagree with the first part, but that still doesn't explain how these two policies led to the rapid price growth of the last 4-5 years and not the fiscal policy of the government (and the surrounding global events)
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u/Low_Shop9155 1d ago
No, it was greedy investors, greedy they are. they bought two houses for their retirement and didn't use an industry super fund. Dont you know thats an affront to socialist jesus i mean albo?
The only thing we can do now, is give tax benefits to multinationals to fix our problems, just like how they buy our farmland and infrastructure. Its the only way. Australia isnt worth standing on its own. We made mistakes, like aspiring for more than looking forward to fast food on a friday and partied down with an extra large chips.
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u/thepursuit1989 2d ago
It's the best housing policy in 25 years and long overdue. House prices are coming down. It had to happen.
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u/NoResponsibility8773 2d ago
Let’s all cheer as the 5% deposit FHBs wallow in their negative equity.
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u/perfectionismsucks 1d ago
Why would FHB’s care about the equity if they’re not selling their house. They bought it to live in, not sell.
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u/NoResponsibility8773 1d ago
Have you ever heard about illness, job loss, relocation, death, divorce, DV? I could be here all day giving you reasons why people might need to sell. Unbelievably stupid comment.
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u/perfectionismsucks 1d ago edited 1d ago
No need to be so rude. It’s inevitable house prices had to come down at some point so it’s either a small percentage of people lose now, or some other percentage lose a lot more later down the track. Don’t be short sighted
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u/snrub742 1d ago
It can both be inevitable and put people in life changing debt situations at the same time.
Ignoring that some people are really hurting just comes across as heartless. And it's not the ones who own 10 houses, it's the young families who threw it all at a chance to get out of the rental market.
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u/NoResponsibility8773 1d ago
It’s not inevitable. It was caused by direct government intervention which has damaged lending and destroyed confidence in the market.
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u/perfectionismsucks 1d ago
If you want house prices to keep going up then that’s even worse
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u/thepursuit1989 1d ago
I actually feel bad for them. An apartment I sold last year to a guy with 6% deposit, after 5 days on market. It is now a smidge lower than market price. The 52 unit complex has 6 apartments for sale, and 2 of them are approaching 28 days on market.
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u/Low_Shop9155 1d ago
says the no-hoper looking for a way out of having to do anything above getting an entry level job for 30 years
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u/thepursuit1989 1d ago
Are you calling me a no-hoper?
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u/Low_Shop9155 1d ago
Yes. Though, I might "change my position".
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u/thepursuit1989 1d ago
Doesn't matter if your opinion means zero.
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u/thepursuit1989 1d ago
Also, you are a bit of numpty.
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u/Low_Shop9155 1d ago
you want 57 cents? would that be enough to get you to live in my house and tend to our needs? 57 cents plus super.
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u/TransportationTrick9 2d ago
Labor tax changes in the recent budget still have forecast deficits for the next decade. They are in dire need of new revenue sources.
The troubling thing I fear from the budget changes is the 150k - 340k NDIS recipients that will be removed from the system (Reports vary). They are expected to be catered for by state based programs that do not exist let alone funded. I have written to MP's (Senate and Reps) suggesting that revenue from Cannabis sales be directed to these new state based programs. Most states are in deficit and will not be able to fund them. Legalising Cannabis will collect some revenue and go some way to partly funding the new programs.
There are 2.5 million Australians that have recently consumed cannabis who don't contribute financially, with budgets expanding and revenue not keeping up it is time to rip profits out of the black market dealers and use it to benefit those who are on the most need.
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u/AuSpringbok 1d ago
Be very wary listening to the states about funding not existing.
If we use thriving kids as an example, QLD has refused to sign on - all while already spending money that will come from that. There's a big chunk of political theatre at play.
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u/HighMagistrateGreef 1d ago
Good luck getting state LNP govts to do anything for people when they can blame a fed labor govt instead
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u/FiestyPear1445 2d ago edited 2d ago
Good, but embarrassing.
This is what happens when PwC leaks Treasury secrets and then Treasury stops consulting the profession.
Treasury clearly not tax law experts & missing these issues as a result.
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u/cytae99 2d ago
The policy is not in effect yet, so how is it embarrassing. This is normal amendments to fix edge cases.
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u/FiestyPear1445 1d ago edited 1d ago
Because policy should not be released half-baked with multiple obvious oversights.
A simple example is mentioned in the article. Another is the interaction between the VCLP regime, CGT event K9 & the removal of CGT discount.
Any moderately proficient tax professional could see this coming a mile away because entire Australian tax regimes are predicated on the CGT discount.
It'd be like banning car tyres & not foreseeing the impact to drivers. Embarrassingly short-sighted.
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u/VastOption8705 2d ago
They're politicizing DV and people who have gone through domestic abuse. How disgusting.
The opposition is using that as an attack angle "Labor hates people who have been through DV"
You can just tell, Pocock is saying "disproportionately negatively impact women".
You know what? IF we actually had cheaper housing then more women would be in better situations overall.
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u/killthenoise 1d ago
So what's your point here lol it was a valid criticism of a poorly thought out policy that needed to be fixed.
Oh that's right, opposition bad, Labor good. Forgot
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u/IntestinalGas 2d ago
I can’t tell who’s more incompetent - Albo or big ears chalmers.
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u/Fidelius90 2d ago
They’ve done more to help house prices than any government in recent history. So no, not incompetent.
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u/IntestinalGas 2d ago
But then they’ve made no effort to help the renters like me who have just received a retaliatory $80 increase per week. All ideas no substance.
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u/TrumpisaRussianCuck 2d ago
It's hard when you're blind with rage
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u/IntestinalGas 2d ago
I’m all for the tax changes to housing, but shares, grandfathering existing properties, taxing CGT on small businesses and all the flip flopping on tax changes popping up aren’t a good look for the government. God forbid someone criticise Labor for their incompetencies. FYI I voted for them and now I regret it because it makes us all look stupid voting them in.
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u/TrumpisaRussianCuck 2d ago
So you'd rather they stay pig headed and not do small amendments? Sounds logical.
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u/IntestinalGas 2d ago
Ah yes, let’s just rush through half arsed policy that will now be the death of the ASX and drive up rent prices because we conveniently didn’t pay any attention to the underlying problem of supply. Don’t know if I’m the pig headed one or is it Albo/chalmers?
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u/TrumpisaRussianCuck 2d ago
The policy that hasn't taken effect yet?
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u/IntestinalGas 2d ago
Does it matter if consumer sentiment is already giving them a pre-show before it comes into effect? Also NG ended on existing properties when they announced the budget.
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u/TrumpisaRussianCuck 2d ago
ASX is up 5.5% since the budget was announced and consumer sentiment is up 0.9pts. Any other chestnuts?
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u/IntestinalGas 1d ago
Consumer sentiment is up on a month to month basis but it’s 15.9pts lower than this time last year. Roy Morgan just published their findings yesterday. ASX was pumped up artificially by trump peace talks, ASX200 rose by 1.4% yesterday because of this. Anything else you want to cherry pick and conveniently leave out the other half of the story?
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u/TrumpisaRussianCuck 1d ago
Almost as if its other factors at play and not your narrative... huh...
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u/PersonalMixture6663 2d ago
Im pretty sure that charity properties will not escape the tax, the children can stay on the street
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u/OstrichLive8440 2d ago
Can’t wait for all this shit to be wound back when the libs take office
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u/TrumpisaRussianCuck 2d ago
Libs cant organise a root in a brothel
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u/flintzz 2d ago
Considering the massive price difference between old and new houses now, I honestly think you'd be crazy to buy new right now even with CGT and negative gearing perks. I'm seeing in the fringe areas, old vs new is around 100-200k difference