Chalmers does it the hard way – again

Mike Taylor

Managing Editor and Publisher

22 June 2026

ANALYSIS

The Treasurer, Jim Chalmers has made back-to back errors in political judgement which have served to undermine the Government’s economic credibility.

The first was his handling of the Division 296 tax changes and $3 million super tax cap and the second has been his handling of the Budget changes to Capital Gains Tax (CGT).

In both instances some old-fashioned war-gaming and listening would have identified the deficits in the Government’s approach and avoided the political fall-out and negative voter perceptions.

Chalmers went through much of 2025 resisting pressure to dump those elements that would have meant the taxation of unrealised capital gains and opposing calls for the indexation of the $3 million concessional superannuation tax.

In this year’s Federal Budget he delivered tax changes which failed to recognise the substantial feedback the Government had received from key stakeholders and, not unlike the experience with Division 293 and the $3 million super tax cap, he has found himself back pedalling.

The Tax Institute has reflected the broad view of stakeholders by stating that while last week’s changes involving expanding access to the CGT small business concessions allowing the 50% CGT discount to continue in certain start-up businesses would be welcome it revealed flaws in process.

“…these announcements also reveal the flaws in the Government’s consultation process, and the unconsidered manner in which these significant tax changes are being adopted,” The Tax Institute’s Head of Tax & Legal, Julie Abdalla said.

“Only two weeks of public consultation was allowed for the Senate Committee inquiry into the legislation implementing major parts of the government’s budget changes. There was no prior consultation, and the Senate committee has not even published its report, yet the government is already making tweaks to the changes,” she said.

“If the government had consulted, it would not be in the position of needing to backtrack from its announced changes. And if it has already decided what further changes it needs to make, it begs the questions of whether the already absurdly short consultation process was a meaningful attempt at consultation to begin with.

“Introducing carve outs and exemptions can greatly complicate an already complex tax system. While there can be a place for carefully targeted exemptions, it seems unlikely that these changes will strike the right balance between complexity, fairness and productivity when they have been based on zero public consultation and just a few weeks ago the government appeared to see no need for them.”

She said the Tax Institute continues to call on the government to commit to holistic tax reform based on broad consultation, including with the tax profession, before implementing major changes to our tax system that will have economy wide impacts.

“This development highlights the importance of due diligence prior to introducing tax legislation,” Abdalla said.

For its part, major accounting group, CPA Australia welcomed the changes while worrying that “critical design questions remain unresolved”.