Introduction

Australia’s taxation system should be fair, efficient, and reflective of modern economic realities. This policy package outlines a series of reforms aimed at improving equity across households, ensuring that large corporations and resource companies make a fair contribution to the public revenue, and redirecting tax settings toward productive investment and economic growth. Together, these reforms are designed to strengthen the Commonwealth’s fiscal position, improve competition and fairness across the economy, and ensure that the benefits of national wealth are more broadly shared among Australians.

Family Income Splitting Reform

A fair tax system should reflect the economic reality of modern households. While Australia’s progressive income tax system is based on individual earnings, many families operate as a single economic unit, sharing income, expenses, and financial responsibilities. As a result, households with a single primary earner or uneven income distribution between partners can face higher combined tax burdens than households with similar total income distributed more evenly.

To address this, we will introduce a Family Income Splitting framework. This will allow eligible couples and long-term partners to allocate a portion of taxable income between spouses for tax assessment purposes, ensuring taxation more accurately reflects household capacity to pay.

The objective is to improve fairness for households with dependents, caregiving responsibilities, or uneven workforce participation, while maintaining the integrity of the individual tax system.

Eligibility will be based on a dynamic threshold linked to national median household income. Full benefits will apply to households earning up to 1.5 times the median, with a gradual tapering of benefits up to 2.5 times the median, at which point eligibility will phase out. This ensures support is targeted toward low- and middle-income households while automatically adjusting over time with changes in living standards.

Administration of the framework will sit within a dedicated unit of the Australian Taxation Office. This unit will monitor income distribution, inflation, and household financial trends, and recommend periodic adjustments to thresholds and taper rates to maintain fairness and fiscal sustainability.

Based on current modelling, this reform is expected to reduce Commonwealth revenue by approximately $12–16 billion annually, representing a targeted investment in household financial stability and workforce flexibility.

Resource Sector Taxation Reform

Australia’s natural resources are publicly owned assets. The value derived from their extraction should deliver a fair return to the Australian community.

Despite this, resource companies operating in Australia have benefited from subsidies, concessions, and tax arrangements that reduce public returns relative to sector profitability. At a time of growing fiscal pressure, it is appropriate to reassess these arrangements to ensure they remain in the national interest.

This reform package will:

1. Review and phase out direct subsidies to profitable mining and gas corporations
2. Remove selected tax concessions that do not demonstrate clear economic benefit
3. Introduce a 25 per cent levy on gas export revenues
4. Increase the corporate tax rate for large resource companies by 10 percentage points

These measures will maintain a stable and competitive investment environment while ensuring a greater share of resource-sector returns flows to the Australian public.

International best practice, including sovereign wealth fund models such as Norway’s, will inform implementation and long-term design.

Revenue will support infrastructure, healthcare, education, housing, regional development, and long-term fiscal repair. Consideration will be given to establishing a future generations fund to preserve value from finite resources.

Based on current modelling, this package is expected to improve Commonwealth finances by approximately $30–40 billion annually, subject to behavioural and market responses.

Corporate Taxation and Market Competition Reform

Highly profitable corporations operating in concentrated markets play a significant role in the Australian economy. However, where market dominance and sustained profitability exist alongside taxpayer-funded support, it is appropriate to ensure public assistance is justified, targeted, and proportionate.

This reform establishes a framework to improve transparency and fairness in corporate support and taxation.

Key measures include:

1. Comprehensive review of all subsidies, grants, and tax concessions to large corporations
2. Removal of automatic eligibility for government support based solely on company size or market position
3. Requirement that all public assistance demonstrate clear economic or public benefit
4. Establishment of a Corporate Fair Contribution Framework within the Australian Taxation Office to assess ongoing eligibility for support based on profitability, market share, and market conditions
5. Review of corporate tax concessions to reduce avoidance opportunities and improve system integrity

Particular attention will be given to highly concentrated sectors, including supermarkets, banking, energy, insurance, and telecommunications, to ensure competitive neutrality and prevent entrenched market power from being reinforced through public subsidies.

Revenue from these measures will be reinvested into competition policy, small business support, regional development, skills training, infrastructure, and productivity-enhancing investment.

This policy is not designed to penalise success, but to ensure taxpayer support is directed toward genuine public benefit and competitive market outcomes.

Based on current modelling, these reforms are expected to improve Commonwealth finances by approximately $5–10 billion annually, depending on the scope of subsidy reductions and concession reforms.

Negative Gearing Reform (Housing Investment Rebalance)

A phased reform of negative gearing over an eight-year transition period will redirect tax incentives toward housing supply rather than speculative demand in established dwellings.

Under current settings, tax treatment of leveraged property investment can contribute to increased competition for existing housing stock without increasing supply. This places upward pressure on prices in established markets, particularly in major cities.

This reform will:

1. Gradually restrict negative gearing benefits for investment in existing dwellings
2. Retain and strengthen incentives for investment in new housing supply, including new builds, off-the-plan developments that add net stock, and purpose-built rental housing
3. Phase changes over eight years to ensure market stability and allow investor adjustment
4. Apply strong grandfathering provisions to existing arrangements during the transition period

The aim is to distinguish between productive housing investment (which increases supply) and purely speculative investment in existing dwellings.

From a fiscal perspective, the reform is expected to improve Commonwealth revenue by approximately $3–5 billion annually once fully implemented, with a cumulative forward estimate of $20–35 billion, depending on market and behavioural responses.

The primary objective is improved housing supply and affordability, with fiscal gains arising as a secondary outcome of a more efficient allocation of tax concessions.

Overall Policy Objective

This taxation reform package is designed to improve fairness, strengthen fiscal sustainability, and ensure that Australia’s tax system better reflects modern economic realities.

Across households, resource sectors, and large corporations, the guiding principle is consistent: public policy should not provide disproportionate support where private capacity is already strong, and should instead focus on areas of genuine need, productive investment, and long-term national benefit.

Together, these reforms are expected to strengthen the Commonwealth’s budget position while improving fairness, competition, and economic resilience.