Government pushing major tax changes with a rushed and incomplete Bill, CPA Australia warns

• Tax Reform Bill should not proceed in its current form, requires more extensive public consultation.
• CPA Australia’s submission shows the reforms will impose substantial costs on Australian taxpayers.
• Rushed consultation process has produced a flawed Bill that was avoidable.

Australia’s largest accounting body, CPA Australia has recommended that the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 be substantially improved or deferred, warning the government is attempting to push through the most significant tax changes in a generation on the back of an inadequate and rushed consultation process.

CPA Australia Tax Lead Jenny Wong said while the organisation supports well-designed tax reform, the current Bill is technically deficient, falling short of the standard required for legislation of this scale.

“This is not a case of resistance to reform – it is a case of reform that could be done better,” Ms Wong said.

“The Bill has been introduced without an exposure draft, without a consultation paper, and without formal stakeholder engagement and the cracks are showing.”

Stakeholders were given just 11 days to respond to legislation that will affect millions of Australians, while the Committee has only 24 days to report.

“That timeframe is simply not fit for purpose for reforms of this magnitude and complexity. This rushed process has produced avoidable errors that could have been caught through proper consultation,” Ms Wong said.

CPA Australia’s submission to the Senate Economics Legislation Committee includes new estimates showing the reforms will impose substantial costs on Australian taxpayers.

Ongoing annual compliance costs are estimated to be between $295 million and $542 million, while one-off transitional costs, driven largely by the requirement for millions of Australians to establish market values for CGT assets from 30 June 2027, are expected to range from $675 million to $825 million at a minimum.

“The compliance burden is real, it is sizeable, and it will fall disproportionately on everyday Australians rather than the high-wealth investors that this policy was intended to target,” Ms Wong said.
CPA Australia has also warned the Bill fails to adequately account for the realities faced by small and medium business owners and start-up founders.

Under the proposed model, replacing the 50 per cent CGT discount with CPI indexation produces materially worse outcomes for business owners who have built value from a low or nominal cost base.

“A plumber who incorporated for a dollar, a tech founder whose shares cost one cent, an accountant who bought into a practice for nominal consideration – these are not the policy’s intended targets, yet they will bear its full force without a carve-out,” Ms Wong said.

To address this, CPA Australia is proposing a three-tier framework, including retaining the 50 per cent CGT discount for active business assets where aggregated turnover does not exceed $20 million.

“This is a practical, targeted fix that protects genuine small business investment without undermining the broader policy intent.”

CPA Australia has also raised serious concerns about the use of ministerial instruments to define critical aspects of the reform – none of which have been released. The Bill relies on nine separate ministerial instruments to determine who is taxed, at what rate, on which assets, and under what conditions – including the definition of ‘new residential dwelling’ (eligible for CGT concessions) and an alternative method to apportion capital gains pre and post 30 June 2027.

“Parliament is being asked to pass a reform where the key policy settings do not yet exist in a visible or testable form,” Ms Wong said.

“That is not an acceptable way to legislate on matters of this significance.”

CPA Australia has called for these instruments to be subject to affirmative resolution by both Houses of Parliament before taking effect.

CPA Australia is calling on the Committee to recommend that:

• The Bill does not proceed until material gaps and errors are addressed and a revised, disaggregated compliance cost estimate is published
• The draft apportionment methodology instrument be released for public consultation by 1 October 2026 to provide valuation certainty ahead of 30 June 2027
• A small business and start-up carve-out retaining the 50 per cent CGT discount for active business assets with turnover up to $20 million be introduced in second-tranche legislation
• Treasury publish a distributional analysis of the minimum tax before the Bill passes
• The interaction of the CGT and other tax issues are stress tested and consulted on before introduction A statutory independent review commences no later than 1 July 2029.

Ms Wong said the issues identified are not insurmountable but require time and proper consultation to resolve.

“We are not here to block reform. We are here to make it work,” she said

“These are fixable problems, but they need time and proper consultation to get the details right.”

 

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