The Albanese Government is releasing exposure drafts of the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 and related materials for consultation.
This is the next tranche of legislation implementing the reforms to negative gearing and capital gains tax (CGT) announced in the 2026‑27 Budget.
These reforms will help level the playing field for first home buyers, preserve the gains investors have made, and support investment in new housing supply.
The draft amendments build on the core legislation passed by the Parliament in June, addressing a number of more complex issues and ensuring the changes appropriately apply to a range of specific taxpayer circumstances and structures, including:
- Preserving existing eligibility for negative gearing or treatment as a new build in certain circumstances, including for residential dwellings acquired from a spouse as a result of inheritance or relationship breakdown.
- Application of the CGT changes to Attribution Managed Investment Trusts (AMITs), with further consultation to consider options to lessen compliance costs for fund managers.
- Exempting capital gains distributed to beneficiaries via genuine testamentary trusts, deceased estates and special disability trusts from the minimum tax on capital gains, consistent with exemptions from the minimum tax on discretionary trusts.
- Ensuring the CGT changes apply appropriately to taxpayers who are only Australian residents for part of the period they directly hold an asset, and;
- Ensuring the CGT changes do not inappropriately bring forward the taxing point for deferred gains as a result of certain CGT events.
The draft materials also include the definition of a new residential dwelling and types of housing investment exempt from the limits on negative gearing.
A property will generally be considered ‘new’ where it genuinely adds to housing supply, provided the property was acquired within 24 months of a certificate of occupancy being issued. This extends the 12 months set out in the Budget to provide builders and developers time to sell stock on hand.
Following consultation on these materials, the final definition and exemptions will be included in primary legislation.
The materials for consultation also include a draft legislative instrument specifying the method for apportioning capital gains and losses for real property and assets without a readily ascertainable market value.
The release of these draft materials reflects the Government’s commitment to consult on more complex elements of the tax reforms announced in the Budget.
Consistent with other significant tax reforms, the Government will continue to finalise implementation of the reforms in further tranches of legislation.
These will include interactions with CGT rollovers and similar concessions, remaining aspects of the application of the CGT reforms to foreign, mixed and temporary residents, and any amendments required to ensure that the rules apply appropriately for certain special cases such as tax consolidated groups.
The Government is continuing to implement the ambitious tax reform package announced in the Budget to deliver tax cuts for millions of Australians, a fair go for first home buyers, and a fairer tax system that better aligns the treatment of labour and asset income.
The exposure draft materials are available on the Treasury consultation hub. Consultation is open until 21 August 2026.
