Labor has been examining a broad package of tax reforms ahead of the May 12 federal budget, with changes to three key tax settings under consideration.
Sky News understands the Albanese government will restrict negative gearing, slash the capital gains tax discount and eliminate family trust tax breaks.
The move comes as the national debt has been forecast to soar past $1 trillion following heavy borrowing from successive governments.
The latest indications suggest the government will move to restrict negative gearing to new properties, while grandfathering existing investments.
Existing owners would be shielded from changes but future investors would no longer be able to deduct losses on established properties, under such an arrangement.
At the same time, the government appears ready to overhaul capital gains tax, replacing the 50 per cent discount with an indexation model that taxes inflation-adjusted real gains.
Assistant Treasurer Daniel Mulino did not rule out any of the changes when asked by Sky News Sunday Agenda.
“People want governments to have an agenda where they’re willing to look at new policy ideas based on the nation’s longer-term challenges,” he said.
It remains unclear whether the change would be fully grandfathered or applied through a partial reset, where existing assets are revalued before the new system takes effect.
Sources have also told Sky News that a tax on family trusts – used by higher-income households to minimise tax – remains under consideration.
While a final decision has not been confirmed, expectations within government circles are that such a measure will be included.
The tax reform agenda marks a significant shift from Prime Minister Anthony Albanese’s pre-election stance when he ruled out capital gains tax changes.
“The proof’s in the pudding. If we were going to make changes, then why haven’t we?” Mr Albanese told Sky News in May 2025, two days before the election.
The government did not take any of the floated tax changes to voters at the 2025 election, when it won a supermajority.
Treasurer Jim Chalmers had also struck a cautious tone earlier in the year, insisting no decisions had been made even as options were being developed.
“We haven’t taken any decisions on (capital gains tax) … We’re working up a number of tax reform options for the colleagues,” Mr Chalmers told Sky News Sunday Agenda in March.
“But let’s not forget we’ve already got a tax policy, that tax policy hasn’t changed,” he said at the time.
Despite those assurances, Mr Albanese has increasingly hinted at his intentions to repeal tax breaks for investors.
During the week, he linked the government’s economic agenda to concerns about intergenerational equality.
“For many young people, they feel like they haven’t got a fair crack compared with my generation,” he said.
Subsequently, Labor MP Ed Husic confirmed the government was exploring changes to the capital gains tax discount.
“I do think it’s a good thing we’re looking at the CGT discount,” Labor MP Ed Husic told Sky News on Wednesday.
The Coalition has seized on government’s change in position on taxes since the federal election, accusing Labor of preparing a tax grab that will worsen cost-of-living pressures.
Shadow treasurer Tim Wilson said the leaks confirmed the Albanese government was “doubling down on their failed active inflation agenda”.
“Labor’s addiction to spending is driving up the cost of living today and leaving a trillion-dollar-plus debt bomb for my generation, and the next, to pay off,” he said.
“After four years of budgets for an economy Labor built for themselves, real wages have gone backward, our living standards have had the largest collapse in the developed world.”