Wilkinson says 90% better off in Treasury Capital Gains Tax Error
Jenny Wilkinson said Treasury’s treasury capital gains tax error modelling shows around 90% of young Australians would be better off under the Albanese government’s tax proposals. She shared the previously unreleased figures at an Australian Business Economists lunch in Sydney on Thursday, as the government introduced the tax changes to parliament.
Jenny Wilkinson in Sydney
The modelling looked at the combined effect of the automatic $1,000 tax deduction, the $250 working Australians tax offset, and changes to capital gains tax and negative gearing. Wilkinson said the package was assessed as benefiting around 90% of young people before housing-market effects were counted.
She also said around 90% of Australians would have been better off by age 30 had the proposed changes been in place from 2000. The Treasury secretary linked that result to the combined effect of the Wato and the instant deduction outweighing the impact of the savings tax changes.
Labor Tax Reform Details
The reforms were presented as system-wide changes, not a housing-only measure. Wilkinson said, "OECD research suggests there is not clear evidence to support favourable treatment of capital gains to promote investment, beyond compensating for inflation" and added, "Applying the new arrangements to income across all assets is important from a tax-design perspective to avoid introducing a significant new distortion into the tax system".
That approach leaves one clear friction point in the modelling: Wilkinson said people in the top 10% of lifetime earnings would be worse off by the time they turned 30 under the new reforms than under the old system. She said, "This reflects the unavoidable trade-offs involved in system-wide reform".
Reserve Bank Investor Shift
The Treasury figures landed alongside Reserve Bank research showing how the investor base has changed. People younger than 40 made up 35% of property investors in 2000, while investors over 60 accounted for 12%. By 2023, people younger than 40 were about 20% of property investors, while those over 60 had risen to 28%.
The broader distribution matters for younger readers weighing how the reforms might affect them. Tax office data also show about one in 10 Australians under the age of 35 own shares, which means the modelling touches a group that is not limited to property owners.
What Treasury Set Out
Wilkinson also said there was no conclusive evidence supporting claims that the new settings could worsen productivity. The immediate takeaway for younger taxpayers is that Treasury’s own modelling points to a net gain for most of them, while a smaller group at the top end of lifetime earnings would face higher tax by age 30 under the proposed system.
The figures now sit in parliament with the rest of the package, and the main practical question for affected readers is whether they are more likely to fall inside the broad group Treasury says would gain or the smaller group that would pay more.
