ax experts reveal the reforms that could help millions of people, but some changes are off limits | WHAT’S YOUR TAX WISH LIST?

Chartered accountant Adrian Raftery says significant tax changes that underscore good economic policy should be made, but he doubts the Albanese government will make them for fear of being “crucified in the next election cycle”.

“You are in power to make the gutsy calls like Paul Keating did in the1980s with CGT (capital gains tax), FBT (fringe benefits tax), dividend imputation and superannuation, but sadly a lot of policy decisions these days are driven by popularity contests,” Raftery says.

The comments come as Treasurer Jim Chalmers likely delays a push to tax the nation’s wealthiest investors sitting on more than $3m in their super accounts after a noisy backlash.

Here are some tax changes experts think will improve the system.

Family tax returns

Raftery says joint family tax returns are common in some countries. They remove the current unfairness, where sole-income families pay higher taxes than dual-income families.

For example, a husband and wife each earning $100,000 a year pay a combined income tax of $41,576, but a sole breadwinner earning $200,000 is slugged $56,138 – an extra $14,572 – despite the couple earning the same before-tax income, he says.

“The poor mum or dad who is working needs to generate 13 per cent more gross income, $226,476, just to generate the same net cash, $158,424.

“That invariably means longer hours or more stress, and more likely a higher probability of family breakdown or increased lack of connection with their own children.”

Fix bracket creep

It’s a persistent bugbear. Bracket creep over several years has meant many more people pay higher taxes, even after 2024’s stage three tax cuts.

“We are finding that far more people are now being taxed at the highest marginal tax rate than ever before – is that fair?” Raftery says.

“When you think about the highest marginal tax rate, you think of taxing the rich, but more and more of Middle Australia are now being unfairly taxed a higher percentage as wages naturally rise each year for inflation.

“Throughout the tax legislation, CPI is used for some thresholds, including HELP repayments and various superannuation thresholds, but not others, and it is time that this inconsistency is righted.”

Business owner benefits

Platinum Accounting Australia chief executive Coco Hou wants extra tax incentives for small business owners, entrepreneurs, self-employed people and those with side hustles.

“This would reduce the government’s long-term welfare burden while empowering Australians to upskill, innovate and take ownership of their financial future,” she says.

This could include funding tied to business milestones such as registrations and training, Hou says.

Investment tax overhaul

Raftery says the 50 per cent capital gains tax discount should be scrapped and replaced by indexing an asset’s cost base to inflation, which occurred before the rules changed in 1999.

“While the 50 per cent exemption is a far simpler calculation for taxpayers, it does not equate to economic reality, with it favouring those who significantly increase their wealth with windfall gains and punishes those who hold their investments for extended periods,” he says.

Negative gearing losses should not be banned but could be quarantined to offset only positive gearing gains rather than all taxable income, Raftery says.

AI-related incentives

Artificial intelligence will drive future growth, and Hou says the tax system should encourage business owners to embrace it.

“Allow businesses to claim 1½ to two times deductions on spending for AI tools, automation, digital transformation and related staff training,” she says.

“This helps small businesses lift productivity and stay competitive.”

Higher tax-free threshold

H&R Block director of tax communications Mark Chapman agrees with Raftery in that tax thresholds should be indexed annually, and he also calls for the tax-free threshold to rise to $25,000 per person from its current $18,200.

“It would encourage the lower-paid to work more hours because they would be paying less tax,” he says.

“Whatever the cost, there would be an economic benefit.”

Stop asset write-off confusion

Chapman says the $20,000 instant asset write-off for small businesses should be permanent. This would “reduce the uncertainty of year-to-year expirations, extensions and adjustments”.

“Small businesses don’t know what the threshold actually is,” he says. “It’s been $20,000, $30,000, $150,000, it’s been unlimited, and then it’s gone back to $20,000 just in the space of five or six years. It’s a source of great confusion.”

Chapman says a permanent write-off would help businesses better plan their investment timing decisions.

Ease up on income tax

CPA Australia tax lead Jenny Wong says Australia over-relies on personal income tax, “which is one of the highest among OECD nations and leaves us vulnerable as other revenue bases shrink”.

She says modernising the system means fixing “inefficient” state taxes including payroll tax and stamp duties, and reviewing the GST.

Taxes the government won’t touch

Some tax changes are likely to remain off-limits to the government even if they make financial sense.

Wong says no government will apply capital gains tax on the family home, and death duties are unpalatable.

“Though we believe broadening and increasing the GST is sensible, it is unlikely without proper compensation,” she says.

“However, what is off-limits today isn’t necessarily off-limits forever.”

Broadening the GST base could bring in billions of dollars of extra revenue. However, Platinum Accounting’s Hou says extending it to essentials such as food, health and education would be “politically untenable”.

On the property front, CGT on the family home and abolishing negative gearing are both unlikely, she says.

Original article can be found here in The Australian on 12th September 2025.