This bill is currently before Parliament.
Budget, tax & economy
Surviving spouses could keep existing negative-gearing treatment when they inherit a home interest.
The bill's sponsors said earlier tax changes could remove existing negative-gearing treatment and the 50% capital gains tax discountA reduction in the taxable gain when an eligible asset is sold. when property ownership changes after death or separation. David Pocock (Independent) said a 44-year-old domestic-abuse survivor could not refinance a jointly owned investment property and risked losing an asset built over more than 15 years. He said the Treasurer had promised a fix more than 40 days earlier, while the government was conducting a two-week consultation.
Before this bill, the 2026 tax reforms grandfatheredAllowed to keep older rules after the law changes. negative gearingUsing rental losses to reduce other taxable income. and the 50 per cent capital gains tax discountA reduction in the taxable gain when an eligible asset is sold. for some existing assets, while ordinary relationship-breakdown rules could defer CGT on transfers. A gap emerged when jointly owned property became solely owned after a spouse’s death, divorce or separation, creating the “widow tax” controversy; the private bill responds by preserving the earlier tax history and new-dwelling treatment for affected owners.
The evidence pack contains no speech criticising this bill. David Pocock (Independent), one of its sponsors, instead criticised the earlier tax changes. He argued they were rushed through without proper consultation or checking and were too difficult for ordinary taxpayers to understand.
Senator Matthew Canavan and Senator David Pocock introduced this bill. Supportive speeches so far have come from some crossbench members.
Did it become law?
Not yet
Final passage
No final vote yet
The bill has not yet completed passage through Parliament.
Days since introduction
54 days
Updated 06 Oct 2026.
Meaning
Surviving spouses could keep existing negative-gearing treatment when they inherit a home interest. Negative gearingUsing rental losses to reduce other taxable income. allows rental losses to reduce other taxable income.
Surviving co-owners who inherit another owner's share could keep that tax treatment if both held eligible interests before the 2026 Budget cut-off.
Separated spouses could keep that treatment when a home interest is transferred under a court order or approved agreement.
People receiving an eligible new home interest could retain access to the 50% capital gains tax discountA reduction in the taxable gain when an eligible asset is sold. when they later sell.
People inheriting eligible assets could use the previous owner's purchase date when rules for the 50% capital gains tax discountA reduction in the taxable gain when an eligible asset is sold. are applied.
Homeowners who first rent out their main home could keep its original purchase date for the rental-loss rules. This covers homes bought before 7.30 pm AEST on 12 May 2026 or treated as new homes.
26‑156 Extension of exceptions for non‑quarantined residential dwellings—dwelling acquired by surviving spouse (1) This section applies if: (a) your *spouse holds an *ownership interest in a *residential dwelling; and (b) your spouse dies and you *acquire the ownership interest (or part of the ownership interest) in the residential dwelling, either as a surviving joint tenant or because the interest *passes to you as beneficiary in the estate of your deceased spouse. Residential dwelling originally acquired before 2026 Budget time (2) If your deceased *spouse *acquired the *ownership inteTreasury Laws Amendment (Removing the Widows and Spouses Tax) introduced text
26‑157 Extension of exceptions for non‑quarantined residential dwellings—co‑owner of dwelling dies (1) This section applies if: (a) you and another individual, who is not your spouse, each hold an *ownership interest in the same *residential dwelling as either joint tenants or tenants in common (whether or not there are others who also hold ownership interests in the residential dwelling); and (b) the other individual dies and you *acquire that deceased individual’s ownership interest (or part of the ownership interest) in the residential dwelling, either as a surviving joint tenant or becaTreasury Laws Amendment (Removing the Widows and Spouses Tax) introduced text
26‑158 Extension of exceptions for non‑quarantined residential dwellings—relationship breakdown (1) This section applies if, as a result of an order, agreement or award of a kind mentioned in paragraphs 126‑5(1)(a) to (f) involving you and your *spouse (or former spouse), you *acquire an *ownership interest in a *residential dwelling from your spouse (or former spouse) (the transferor) or a company or trustee (also the transferor). Residential dwelling originally acquired before 2026 Budget time (2) If the transferor *acquired the *ownership interest in the *residential dwelling before theTreasury Laws Amendment (Removing the Widows and Spouses Tax) introduced text
26‑159 Application of extended new residential dwelling exception for capital gains purposes If you *acquire an *ownership interest in a *residential dwelling that is taken to be a *new residential dwelling in relation to you under subsection 26‑156(3), 26‑157(3) or 26‑158(3), then for the purposes of subparagraph 115‑102(1)(c)(i) the residential dwelling is also taken to be a new residential dwelling in relation to you for the ownership interest you acquire.Treasury Laws Amendment (Removing the Widows and Spouses Tax) introduced text
Entity is treated as acquiring some CGT assets early (1) Sections 112‑155, 112‑165, 112‑195 and 112‑200 and subsection 960‑275(1D) (the affected provisions) apply as if an entity (the acquirer) had acquired a *CGT asset described in an item of the following table at the time mentioned in the item: When the acquirer is treated as having acquired a CGT asset The affected provisions apply as if the acquirer had acquired this CGT asset: At this time: A *CGT asset the acquirer *acquired in circumstances giving rise to a *same‑asset roll‑over (a) when the entity that owned the CGT asset beforeTreasury Laws Amendment (Removing the Widows and Spouses Tax) introduced text
The amendments at item 3 of Schedule 1 to the Bill ensure that the loss quarantining rule in section 26-155 does not apply to an individual that uses their main residence to produce assessable income if: they acquired their main residence before 7.30pm (AEST) on 12 May 2026; or their main residence was a new residential dwelling under subsection 26-160(3). In these instances, the effect of subsection 118-192(2) which deems the acquisition time of the main residence to be the time it is first used to produce assessable income is disregarded. This means when determining whether the general loTreasury Laws Amendment (Removing the Widows and Spouses Tax) explanatory memorandum
Context
Before this bill, the 2026 tax reforms grandfatheredAllowed to keep older rules after the law changes. negative gearingUsing rental losses to reduce other taxable income. and the 50 per cent capital gains tax discountA reduction in the taxable gain when an eligible asset is sold. for some existing assets, while ordinary relationship-breakdown rules could defer CGT on transfers. A gap emerged when jointly owned property became solely owned after a spouse’s death, divorce or separation, creating the “widow tax” controversy; the private bill responds by preserving the earlier tax history and new-dwelling treatment for affected owners.
Budget tax reforms created a grandfathering gap
The 2026 tax reforms preserved some existing negative-gearing and CGT protections but could remove them when jointly owned property became solely owned after a death or relationship breakdown.
Australian Financial Review ↗The “widow tax” row prompts a draft fix
The Albanese Government released draft legislation to preserve negative-gearing eligibility and address related unintended consequences after the issue became a public controversy.
Australian Financial Review ↗Senator Matthew Canavan and Senator David Pocock introduce the private bill
The bill was presented in the Senate and its second-reading debate began, proposing to retain affected owners’ earlier acquisition history and grandfatheredAllowed to keep older rules after the law changes. tax treatment.
Parliamentary timeline ↗Legislative route
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
Key criticism
The evidence pack contains no speech criticising this bill. David Pocock (Independent), one of its sponsors, instead criticised the earlier tax changes. He argued they were rushed through without proper consultation or checking and were too difficult for ordinary taxpayers to understand.
Only the sponsors' case appears in the supplied debate material. It records no government response or opposing view, so the wider arguments about the bill cannot be established from this evidence.
Further sources
Votes
No recorded votes have been found yet for this bill.
Parliamentary debate
Start here — lead voices
David Pocock supports the bill to immediately repeal the tax changes affecting widows, separated spouses and domestic violence victims, arguing that government delay is causing unnecessary financial harm.
Read in Hansard ↗All speeches by bloc
1 speaker · 1 support
“We're putting forward a Bill to repeal Labor's widow tax.”Read the full speech in Hansard ↗
Record
Senate · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Senate · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
