Australia’s proposed capital gains tax (CGT) reforms continue to attract strong scrutiny from advocacy groups, accountants and legal experts, who argue the changes could create significant compliance costs and unintended consequences for taxpayers, investors and small businesses.
While the Federal Government has recently moved to expand eligibility for one of the Small Business CGT Concessions, industry groups say broader concerns about the proposed reforms remain unresolved.
CPA Australia has warned that the new rules will require taxpayers to establish market values for all CGT assets held on 30 June 2027, creating what it describes as a substantial compliance burden. The accounting body argues the reforms could affect not only investment properties and share portfolios, but also collectibles, inherited assets and other personal property held by ordinary Australians.
CPA Australia Tax Lead Jenny Wong said many taxpayers may be unaware of the full implications of the changes.
“Most Australians think this reform is about investment properties and share portfolios – but it actually goes much further than that,” Wong said.
CPA Australia estimates the one-off transitional valuation exercise could cost between $675 million and $825 million nationally, with accountants expected to face a surge in demand for advice, record keeping and valuation support.
Meanwhile, estate planning specialist Jennifer Williamson has warned that the reforms could significantly affect wills and estate plans established under existing tax settings. Williamson said beneficiaries could inherit assets carrying substantial tax liabilities, potentially reducing the value of inheritances and increasing the risk of family disputes.
She has dubbed the proposal the “Square Root Tax”, arguing that Australians are increasingly facing multiple layers of taxation throughout the wealth creation and transfer process.
At the same time, the Council of Small Business Organisations Australia (COSBOA) has welcomed the Government’s decision to update eligibility thresholds for one of the Small Business CGT Concessions, describing it as an important step forward for growing businesses.
COSBOA CEO Skye Cappuccio said the change would benefit approximately 180,000 businesses with annual turnover between $2 million and $10 million by improving access to CGT concessions when selling eligible active assets.
However, Cappuccio stressed the reforms do not go far enough.
“This is an important and welcome step in the right direction, but it does not go far enough,” she said.
COSBOA continues to advocate for all four Small Business CGT Concessions to be modernised and has warned the broader reforms could negatively affect investment, entrepreneurship and productivity.
Both COSBOA and other advocacy groups are calling on the Government to provide greater clarity on the operation of the proposed changes, arguing that without further refinement the reforms risk imposing significant costs and uncertainty on Australian households, investors and small businesses alike.