Treasurer Jim Chalmers refuses to explain ‘widow tax’ fix, insists ‘generous’ deal for small businesses

Jim Chalmers has refused to spell out exactly how the government will apply key concessions in its tax reform package after Labor again agreed to amend legislation amid mounting concerns about how the changes could affect divorced Australians and widows.

But the Treasurer conceded on Sunday that Federal Labor knows the so-called ‘widow tax’ is a problem.

Pressed on the issue during ABC’s Insiders program, Dr Chalmers was asked directly by host David Speers: “What are you actually going to do?”

“Well, we’ll make that clear with the pieces of legislation that follow,” he replied.

The Treasurer was also challenged on whether surviving spouses could be affected by changes linked to property tax settings and capital gains tax treatment.

“So you’re not sure at the moment whether if someone dies - will the widow or widower be able to keep negatively gearing the property or not?” Mr Speers asked.

Dr Chalmers said the government was aware of the concerns but refused to provide details ahead of the final drafting of the laws.

“We’ve made it really clear we’re going to address that concern that people have raised with us … I don’t want to pre-empt the outcome but in saying that we’re going to address it,” he said.

“I think we’re making it incredibly clear that we understand that this is an issue that has been raised with us.”

Dr Chalmers insisted Australians did not need to make immediate decisions based on the Government’s proposals.

“Nobody has to stop negatively gearing until July 1, 2027, and I am not going to provide advice to individuals, but I can say to you, as I‘ve said probably half a dozen times already in this interview but also in the course of the last week, we will address that issue and make it very clear how,” he said.

The Treasurer was also questioned on whether small businesses would be worse off under the changes to capital gains tax concessions.

He defended the package, arguing the majority would benefit from “generous” concessions.

“Well, every single one of the active small businesses will now have access to generous carveouts and concessions in the CGT system because we are taking the turnover threshold from $2 million to $10m, so at the very least every businesses between a $10m and $2m turnover will be better off,” he said.

“For all of the others, it depends on the inflation rate, it depends on the marginal tax rate and who owns the small business. Some will be better off, for example, in periods of higher inflation the inflation measure will be more helpful to them.

“But every single one of them will have access to carveouts and concessions, every active small business . And that’s because we have lifted the threshold.”