CPA Australia warns against standalone CGT and negative gearing changes, urges broader tax reform

• CGT and negative gearing should not be used as standalone policy levers
• Housing affordability needs a multi-pronged approach, not quick fixes
• Any reform must be whole-of-system and carefully designed

Australia’s largest accounting body CPA Australia is calling on the Australian Government not to make isolated changes to the capital gains tax (CGT) discount or negative gearing, warning that small changes could have unintended impacts on investment, housing markets and overall economic confidence. 

CPA Australia Tax Lead Jenny Wong said housing affordability is a serious national issue, but tax policy on its own will not solve the problem.

Ms Wong said Treasury made it clear during Senate Estimates that the main issue in the housing market is that Australia is not building enough homes.

"Changes to tax settings should go hand‑in‑hand with practical measures to lift housing supply, boost construction capacity and speed up planning systems,” Ms Wong said.

Ms Wong said recent evidence to Parliament shows that CGT and negative gearing operate as part of a broader set of interacting tax rules and incentives.

“CGT and negative gearing are part of a bigger tax ecosystem – tweak one lever on its own and you risk pushing further pressure into the rental market or distorting investment decisions,” Ms Wong said.

CPA Australia also noted that negative gearing is often debated only in terms of residential property, but the broader principle of deducting losses is a long-standing feature of Australia’s tax system and requires careful consideration before any redesign.

“Many Australians use a mix of assets to build long-term financial security, including investments held outside superannuation,” Ms Wong said.

“Any reform should prioritise stability, integrity and transitional fairness, and avoid settings that unintentionally advantage those with access to sophisticated structures.

“Australia’s future prosperity depends on encouraging domestic investment, not concentrating the benefits among foreign investors, super funds or those who can structure their affairs through tax effective vehicles,” Ms Wong added.

“Australians deserve a fair go, and their hard-earned savings should not be undermined by fragmented or short-term tax changes.”

CPA Australia does not support changes that effectively unwind the CGT discount and negative gearing without a clear, whole-of-system plan and appropriate transition arrangements.

Ms Wong said the organisation supports a transparent tax reform roadmap so that individual measures can be assessed properly against Australia’s long-term objectives.

“Australians need certainty,” Ms Wong said. “Reform must be proportionate, well-designed and aligned with long-term economic and fiscal sustainability – not short-term, fragmented changes.”

CPA Australia encourages the government to engage closely with the tax profession, business community and independent experts, with any changes well-designed, proportionate and aligned with Australia’s long-term economic and fiscal objectives.