Australian Treasurer Jim Chalmers has declined to provide specific details on how the government intends to resolve the issue of a so-called 'widow tax' within upcoming legislative amendments. The Treasurer was pressed by ABC Insiders host David Speers on Sunday regarding the government's commitment to fixing tax implications that could affect surviving spouses and divorcees following changes to capital gains tax (CGT) and negative gearing.
The Albanese government's reforms, set to take effect from July 1, 2027, include scrapping the 50% CGT discount and limiting negative gearing to newly constructed properties. While existing investments are to be grandfathered, Senator David Pocock raised concerns that these exemptions might be lost upon the death of an account holder if the property is considered a new acquisition when transferred to a widow.
Chalmers stated that the government would address this concern in subsequent legislation, but when pressed by Speers for clarity on how the amendment would be made and whether individuals would retain access to negative gearing if a partner died in the interim, he demurred. "We'll make that clear in the legislation that follows," Chalmers said, adding, "We've made it really clear that we're going to address that concern. I don't want to pre-empt the outcome."
He confirmed that the current tax system treats such transfers as a new acquisition but reiterated the government's intention to intervene. "The current tax system has arrangements which say that that is an acquisition. But we've said we're going to change that," he stated. Despite these assurances, Chalmers refrained from offering advice to individuals on immediate financial decisions, noting that "nobody has to stop negatively gearing until July 1, 2027."
Speers highlighted the lack of clarity for Australians needing to make immediate financial decisions, noting, "They hear you say you'll address it, but they don't hear you say how." Chalmers responded, "We will address it, if you prefer, we will fix it, and we'll make clear how in subsequent legislation."
When questioned about the speed with which the legislation was passed through Parliament, despite its delayed implementation, Chalmers defended the approach as a measure to provide certainty. "We're very grateful for the support of the Parliament, David, because it means that we're cutting taxes for workers, making it easier for first home buyers, and making the tax system fairer," he said. He added that legislating core elements of significant tax reform early is not unusual and serves to provide certainty for investors and others regarding the main components of the tax package.