Teal MP warns tax hit on young investors threatens housing fix

The government’s flagship tax overhaul is set to hit hundreds of thousands of everyday investors, casting fresh doubt on whether it will actually help younger Australians into homes.

Under the 2026 budget, the government will scrap the 50% capital gains tax (CGT) discount, replace it with an inflation-based model, and impose a minimum 30% tax on gains from July 2027. 

At the same time, negative gearing will be wound back for existing homes in a bid to tilt the market toward first-home buyers.

Read more: How will the federal budget impact savers?

The policy problem

Despite the housing focus, most capital gains in Australia come from assets outside property.

This means the changes will hit shares, ETFs, and business investments just as much as housing.

That matters because the investor base has shifted. A majority of people reporting capital gains are now also wage earners, reflecting the rise of everyday investing, particularly among younger Australians.

That’s where the policy risks backfiring.

Speaking on the Savings Tip Jar Podcast, independent MP for Bradfield Nicolette Boele said the reform goes too broad and fails to reflect how younger Australians actually build wealth.

“It allegedly has tried to fix something around housing affordability and intergenerational inequality… but on the other hand, they’ve just got this blind eye to all of those other assets that are hugely productive,” she said.

A housing fix that goes too far?

Housing affordability remains one of Australia’s most pressing economic challenges. 

Home prices have surged close to 40% over the past five years, while wage growth has hovered around 3% annually, widening the gap and pushing home ownership further out of reach.

Ms Boele argues the government’s aim of levelling the playing field between owner-occupiers and investors overshoots by applying changes across all asset classes.

“Why create all these headwinds for small business and start-ups and even renewable energy infrastructure?”

That concern reflects a broader economic reality: Australia relies heavily on private investment to fund innovation, and changes that reduce after-tax returns can dampen capital flows, particularly from younger, risk-tolerant investors.

Startups and investment at risk

The impact could extend well beyond housing.

Australia’s startup sector, already competing globally for capital, may face new pressure if long-term equity investment becomes less attractive.

“You just can’t throw a capital gains tax change to that because it doesn’t back the small businesses and those innovative companies that we want on the world stage,” Ms Boele said. 

There are also concerns about sovereign risk. Proposed changes affecting international investors, including retrospective elements, could deter foreign capital.

“That’s like the opposite way that you attract investment into our country,” Ms Boele said.

With legislation still to pass Parliament, changes appear likely. Early signals suggest the government is already consulting on carve-outs for startups and specific industries.