Government tax overhaul moves forward as Greens back key measures in Parliament

The Federal Government has made progress on its proposed tax reform program after gaining backing from the Australian Greens for the initial set of legislative changes. The support increases the likelihood that the first stage of the reforms will pass Parliament, although further negotiations in the Senate are still required.

The proposed changes form part of a wider plan aimed at adjusting Australia’s tax settings for individuals, businesses, and investors. The Government says the package is intended to support working Australians through tax reductions, improve pathways into home ownership, and adjust how different types of income are treated under the tax system.

Parliamentary debate remains divided. While the Greens have agreed to support the initial legislation, other political parties have expressed opposition, particularly in relation to the balance between tax relief for workers and concessions available to property investors.

A major component of the reform involves expanding eligibility for capital gains tax concessions. The Government plans to broaden access so that millions of small and medium-sized businesses would be covered, representing almost the entire active business sector in Australia. The aim is to encourage investment, simplify tax outcomes for business owners, and support long-term business stability.

The legislation also includes amendments designed to improve clarity in how the reforms will operate once implemented. These adjustments follow earlier policy announcements and are intended to reduce uncertainty for individuals and organisations affected by the changes.

In a separate development, the Government has agreed to support a Greens-led proposal that would stop new borrowing arrangements within self-managed superannuation funds when used to purchase residential property. Existing arrangements would remain in place, and no changes would be made to current investments already established under the system.

The proposal reflects ongoing concerns raised over a number of years about the risks associated with borrowing inside retirement savings structures. While these arrangements currently make up a very small share of the property lending market, policymakers argue that limiting future use may help reduce potential financial risk for superannuation members.

Officials have emphasised that the broader superannuation tax framework remains unchanged and that the focus is on future borrowing arrangements only, not existing investments.

If passed, the reforms will set out tax rules intended to take effect from July 2027, giving individuals, businesses, and advisers time to prepare ahead of implementation.

Further stages of the Government’s tax reform agenda are expected to be introduced later, continuing the broader restructuring of Australia’s tax system over time.