Chalmers winds back ministerial powers in bid to clear CGT Senate hurdle

Treasurer Jim Chalmers hopes scrapping expansive ministerial powers to administer Labor’s capital gains tax changes will unlock Greens support for the contentious reforms, as the government moves to quell anger among start-ups and small businesses with $475 million worth of concessions.

The government’s overhaul of its signature policies announced in the May budget, including expanded exemptions for small businesses with a turnover of up to $10 million, follows a sustained attack on the measures and a surge in support for Pauline Hanson’s One Nation.

Prime Minister Anthony Albanese said the “generous” changes to capital gains tax concessions would help small businesses stay afloat, describing them as the “blood running through the veins of our local communities”.

“Today, we’re announcing that we’ll increase the existing small business 50 per cent active asset CGT concession from $2 million to $10 million,” he said, revealing that an estimated 2.7 million businesses could continue to claim the 50 per cent discount on capital gains introduced by former prime minister John Howard in September 1999.

Albanese said the government would also propose a “new innovative business tax concession” for start-ups, as first flagged in this masthead.

The Tech Council of Australia welcomed the proposals for start-ups, saying: “This is a constructive response that shows the government has listened to their concerns...To grow more innovative companies here, productive risk taking must be rewarded.”

Chalmers has also wound back ministerial discretion provisions that have given the treasurer of the day the ability to determine which asset classes would be affected by the CGT changes, as well as the definition of new home builds central to the negative gearing changes.

Chalmers argued that such ministerial discretion was standard practice, but said the powers would be scrapped “to provide more clarity and more certainty to people who are interacting with the system”.

Greens senator Nick McKim had warned the government’s legislation could allow future treasurers to “fundamentally alter” the laws once they are in place, as he questioned whether Chalmers would have the theoretical power to exempt property owners in his electorate from the changes.

McKim also questioned whether Labor was worried that “future treasurers who might be from the Liberal Party or, horrifically, a One Nation treasurer, might use these powers to walk back some or all of your capital gains tax reforms”.

The Greens have long argued for changes to negative gearing and capital gains tax rules to mak