Labor-Greens deal on tax reforms, NDIS delays, and SMSF borrowing restrictions
Consensus Summary
The Australian government’s tax reforms, including changes to negative gearing and capital gains tax, have secured passage through the Senate after Labor struck a deal with the Greens. Key provisions include ending the exemption for self-managed super funds (SMSFs) to borrow for residential property investments, replacing the 50% CGT discount with inflation-based indexation, and restricting future negative gearing to new builds. The Greens agreed to support the bill but criticized it as insufficient, particularly regarding grandfathering of existing SMSF arrangements. In exchange, Labor extended a Senate inquiry into the National Disability Insurance Scheme (NDIS) overhaul by eight weeks, delaying its passage until at least August 14, 2026. The NDIS changes, projected to save $37.8 billion over four years, face opposition from the Greens and disability advocates, who argue they will harm participants. The Coalition opposes the tax reforms and has pledged to repeal them if elected, while remaining non-committal on the NDIS bill. Both sides acknowledge the reforms are contentious, with Labor framing them as necessary for fairness and sustainability, while critics argue they do not go far enough to address housing affordability or adequately protect disabled Australians.
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Key details reported by multiple sources:
- Labor and Greens agreed to end the exemption allowing self-managed superannuation funds (SMSFs) to borrow money to invest in residential property, effective prospectively (contracts signed before commencement are protected with a 45-day grace period).
- The tax bill, including changes to negative gearing and capital gains tax (CGT), is expected to pass the Senate on Thursday, June 26, 2026, with Greens support.
- The 50% CGT discount for assets will be replaced with a cost-based indexation model from July 2027, with a 30% minimum CGT rate to prevent deferral strategies.
- Negative gearing concessions will no longer apply to investment properties bought after 7:30 PM on May 12, 2026, with exceptions for new builds and government housing programs.
- The Senate inquiry into the NDIS overhaul has been extended by eight weeks, with a new reporting date of August 14, 2026.
- The NDIS changes are projected to save $37.8 billion over four years, primarily through eligibility tightening and functional assessments.
- Greens leader Larissa Waters called the tax reforms a 'small step in the right direction' but criticized the grandfathering of existing SMSF arrangements.
- Prime Minister Anthony Albanese stated the reforms aim to 'rebalance generational inequities in the tax system' and help first-home buyers.
- The Coalition opposes the tax bill and has vowed to repeal it if elected, while not committing to support the NDIS changes.
- Only about 1% of total residential property borrowing and less than 0.5% of new residential borrowing each year involves SMSF borrowing arrangements.
Points of Difference
Details reported by only one source:
- SMSF Association president Peter Burgess described the borrowing change as 'shocking' and warned it 'reduced choice' for investors, calling it a 'patch-up job on the run'.
- Institute Public Accounts senior tax advisor Tony Greco criticized the bill as 'policy on the run without a lot of thinking' and said indexation for inflation is 'not a just reward for the amount of risk businesses take on'.
- The SMSF sector represents about 1.1 million members, who are 'disappointed' by the sudden announcement, according to Burgess.
- Labor agreed to amendments limiting ministerial powers to impose cuts to NDIS participant supports and increasing transparency around automated decision-making.
- The Greens secured protections to prevent disabled people from being forced into 'harmful restrictive practices' to access NDIS support.
- The Greens will vote against the NDIS legislation, calling it 'cruel' and harmful to over 240,000 people expected to be affected.
- Health Minister Mark Butler defended the NDIS changes as 'hard reform' but acknowledged the need for 'big change' to address sustainability.
- The Coalition offered to extend the NDIS inquiry for six months in exchange for more scrutiny of the tax bills, which Labor rejected.
- The government will need to draft a second piece of legislation to address trusts and startup CGT concessions, requiring fresh negotiations with the Greens.
Contradictions
Conflicting information between sources:
- The Guardian states the Greens will vote against the NDIS bill, while ABC does not explicitly mention a Greens vote against it but notes they will 'continue to fight night and day' against the changes.
- ABC reports the tax bill is expected to pass on Thursday, while the Guardian mentions it will pass 'this fortnight' without specifying the exact date.
- The Guardian implies the Greens secured amendments to shield specific NDIS support categories (daily living, technology, consumables) from ministerial cuts, while ABC only mentions 'greater protections' without detailing the categories.
Source Articles
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