Inquiry finds capital gains tax discount skews home ownership towards investors and benefits wealthier Aussies

A Greens-led senate inquiry has found the capital gains tax (CGT) discount is skewing home ownership towards investors, disproportionately benefiting wealthier Australians and distorting productive investment. The committee handed down a 143-page majority report on Tuesday, which was supported by Labor senators. The Greens further called for the CGT discount to be abolished for investment properties and substantially reined in across all asset classes, along with broader tax reform. “This is the first time since 2019 that Labor has acknowledged the fundamental unfairness of the CGT discount, including its contribution to the housing crisis, wealth inequality and intergenerational equity,” committee chair Senator Nick McKim said. “Labor has now been handed a historic opportunity to pass genuinely ambitious and progressive tax reform in this parliament. “Tinkering around the edges is not going to cut it.” The Labor members agreed the 50 per cent discount for investors who hold an asset for at least a year had resulted in housing stock being a significant share for capital gains that benefit from the discount. “While there are a number of factors that influence housing markets, there is evidence that the concessions provided by the capital gains tax discount, in combination with negative gearing, have skewed the ownership of housing away from owner-occupiers and towards investors,” they said. “The benefits of the capital gains tax discount are also unequally distributed, with implications for income and wealth inequality and intergenerational inequality.” While the Greens sought to abolish the CGT discount on property and reduce it for other asset classes, the Labor members noted the budget committee was currently working on some changes. The Labor members also said any change must be guided by the outcomes from last year’s economic roundtable. They further added that supply was needed to fix the housing crisis. “Tax policy should therefore be considered as one element within a broader housing policy framework,” they said. Meanwhile, Liberal committee members Andrew Bragg and Dave Sharma issued a dissenting view, saying the majority report was “a simplistic and one-dimensional analysis of Australian housing policy” that did not address the supply issue. “Supply of housing has collapsed in Australia as the population has surged. Supply is at the heart of the housing crisis, as repeatedly stated by representatives from the housing sector during the hearings,” they said. “The idea that Australia’s housing woes could be solved by one tax tweak is as shallow as it is cruel. “Abolition of the CGT discount would discourage new construction, undermine supply, and so push housing prices up. It is simple economics.”