Independent Senator David Pocock has urged Treasurer Jim Chalmers to urgently address a loophole in recent budget tax reforms, dubbed the 'widow's tax,' which has placed a domestic violence survivor at risk of losing an investment property.
Pocock met with Chalmers' staff on Monday to discuss the issue after a 44-year-old woman, who recently left a violent marriage, detailed how the tax changes could force her to sell an investment property she had built over 15 years. The woman reported that lenders withdrew their pre-approval for refinancing her loan once they realized the property could no longer be negatively geared under the new rules, which take effect from July 1, 2027.
The reforms, announced in May's Federal Budget, alter negative gearing rules for new investment property owners. Properties purchased before May 12 are grandfathered, retaining their existing benefits. However, when a co-owned property is transferred to a single owner due to divorce or death, it is treated as new ownership, disqualifying it from negative gearing.
In a letter to Chalmers, Pocock noted that the practical consequence for the domestic violence survivor is devastating, potentially forcing her to lose a key retirement asset. He also cited anecdotal evidence from family law practitioners in the Australian Capital Territory who are observing similar issues impacting family law outcomes. Pocock described the situation as an urgent and deeply concerning development adversely affecting an indeterminate number of Australians, many of whom are in vulnerable circumstances.
The Albanese government had previously pledged to address the 'widow's tax' loophole in its second round of budget legislation. Pocock is pushing for the matter to be resolved when parliament next convenes. Draft legislation to fix the issue is expected to be released by the Treasurer later this week.
