Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) | Hansard source

I rise to make a few remarks here. I also would like to table a supplementary explanatory memorandum relating to the government amendments to be moved to the Treasury Laws Amendment Bill (Tax Reform No. 1) Bill 2026. I would like to outline what those amendments are going to be because it relates directly to some of the discussions we've been having on amendment 3882.

The government amendments and the explanatory memorandum that I just tabled implements the government changes to the bill announced on 18 June 2026. As we announced on that date, the government is proposing target amendments to the bill to provide certainty on implementation detail consistent with the original intent of the policies. The amendments extend the eligibility of the 50 per cent active asset reduction to more businesses by increasing the turnover threshold from $2 million to $10 million. They also ensure deductible gift and donations reduce capital gains that are subject to the minimum tax to maintain tax incentives in relation to charitable giving, provide the list of income support payments that qualify for an exemption for the minimum tax on capital gains, embed the calculation method for the working Australian tax offset in legislation and remove ministerial powers no longer needed to give effect to the government's policy intent.

The increase in the small-business concession eligibility threshold brings eligibility for this concession into line with the turnover threshold for the instant asset write-off. This will mean that all 2.7 million active small businesses and 98 per cent of active businesses will be eligible for a 50 per cent CGT discount on active business assets on top of the discount for inflation where eligible once these reforms are in place. The payments that exempt recipients from the minimum tax on capital gains include age pension, Austudy, carer payment, disability payment, JobSeeker parenting payment, youth allowance, family tax benefit, parental leave pay and veteran payment.

The government also intends to remove ministerial discretion in relation to the following aspects of the bill, with legislation to be introduced later this year following consultation around the definition of new builds that are eligible to choose a 50 per cent discount on gains accrued from 1 July 2027 and eligible to access negative gearing for properties purchased after 12 May 2026, consistent with the details outlined in the bill, and also the definition of types of housing investment exempt from the limits on negative gearing, including affordable housing. The government will amend these two ministerial powers to limit the scope of both definitions in line with their intended use as an interim step ahead of removing these powers and moving the full definitions into primary law in subsequent legislation. These amendments reflect the substantial consultation undertaken since the budget, consistent with the government's commitment to engage with stakeholders on implementation. They provide more clarity and confidence to investors and more support for small business.

I note also that, in some of the amendments that have been circulated and will be moved through the course of the committee stage this morning and into the afternoon, there are some amendments that relate to some specific interactions of how the tax system operates and the reforms that are being put in place today.

I know there are discussions happening with interested parties on this across the parliament, but we have made clear from the get-go, from the evening the budget was announced, that we were aware that there would be tranches of legislation, as I said in response to Senator Chandler's amendment earlier, that would require us to work through some particular and specific interactions of tax law in subsequent legislation. We were aware of some of the issues that Senator Pocock is raising around grandfathering and shared ownership. We are working through them in the usual way, and we intend to address the arrangements for jointly owned assets in circumstances like inheritance or divorce in subsequent legislation.

In both answers that I and the Treasurer gave yesterday we took care around our response given. We are still considering the amendments that were being circulated in the Senate throughout the day but we have been clear on a number of occasions that the complex details that arise through these reforms remain to be worked through following consultation. The core arrangements in the bill are consistent with the existing arrangements in the tax system around the acquisition of assets, because wherever possible we have aligned the core legislation with the existing system. Now there are a number of complex considerations here, including ensuring the right treatment for new-build properties, ensuring consistency with existing CGT rollovers that apply to property transfers in these circumstances and ensuring that changes don't introduce unforeseen integrity risks.

As we've said all along, legislating significant reforms in tranches is the standard approach. Past reforms such as the GST and other major changes have similarly been implemented in tranches. I hope that just provides some additional information about how the government has been and will continue to work through the tax reform package as a whole, including dealing with some of those issues that are being raised in amendments that we were aware of, and we will bring back our response to that through subsequent pieces of legislation.