The 2026 Federal Budget was the biggest tax shake-up Australia has seen in decades. Treasurer Jim Chalmers called it “the most important and ambitious Budget in decades” – and whether or not you agree, the changes it proposes are going to fuel debate motions for years. Add in the Coalition’s counter-proposal on bracket creep, and you’ve got four genuinely meaty topics that intersect with housing, fairness, economic policy and intergenerational equity.
This guide unpacks each one. Watch the videos for the quick version, then come back here for the deeper context, motion ideas, and angles you can take on both sides. If you’re new to policy debates, our Ultimate Guide to Debating breaks down how “That we should…” motions work, and our list of 100 high-quality debating topics gives you a wider catalogue to draw from.
If you want help turning this material into actual debating skill, our Term Programs and Holiday Workshops run motions like these every week.
A quick note: this is an educational resource for student debaters, not financial advice. The worked examples are designed to illustrate how each policy works, not to model anyone’s actual tax situation. If you’re affected by these changes in real life, talk to a qualified accountant or financial adviser.
A quick refresher on how budgets become political
Before we get into the four topics, two pieces of context worth knowing.
First, the federal budget is delivered each May. The government announces its spending and tax plans, and the opposition delivers a formal “budget reply” speech a couple of nights later. The reply is the opposition’s chance to lay out an alternative vision. That’s why three of our four videos cover government policies and the fourth covers the Coalition’s counter-proposal – all four came out of the same budget cycle.
Second, most tax debates come down to a few recurring tensions: fairness versus efficiency, short-term impact versus long-term consequences, and who actually benefits from a given rule. Keep those frames in mind as you read – you’ll see them surface again and again. If you want to get better at spotting these patterns in news as they happen, our blog on building general knowledge for debating has practical tips for staying across current affairs.
Topic 1: Negative Gearing
What it is
Negative gearing is when an investor borrows to buy an asset – usually a rental property – and the costs of owning it are higher than the income it earns. The investor can then deduct that loss from all their other income, including their salary, which reduces the tax they pay.
Worked example: you buy an investment property that earns $20,000 a year in rent. But mortgage interest, council rates and repairs come to $30,000 a year. You’re $10,000 down. Under the current rules, you subtract that $10,000 loss from your other income, so if you earn a $90,000 salary, you only pay tax on $80,000.
Of the roughly 2.2 million Australians who own a rental property, about 1.1 million negatively gear.
What’s changing
From 1 July 2027, negative gearing on existing residential properties is being wound back. Investors who already owned property at 7:30pm on 12 May 2026 keep the current rules until they sell – their arrangements are “grandfathered” (more on that below). But anyone buying an existing residential property after that point can only deduct losses against rental income or capital gains from residential property. Unused losses can be carried forward to future years. Newly built homes are exempt from the change entirely.
The arguments
For the reforms: negative gearing makes housing less affordable. It gives investors a tax advantage that first-home buyers don’t get, which pushes up prices on existing homes – and because none of that money builds new houses, it does nothing to fix the underlying housing shortage. The reform is also expected to save the budget billions.
Against the reforms: pulling investors out of the market could shrink rental supply and push up rents. Critics point to 1985, when the Hawke-Keating government abolished negative gearing – it was reversed within two years after rents rose sharply in Sydney and Perth. Note though: economists still disagree about whether negative gearing was actually the cause of those rent rises, since rents in other cities stayed flat.
Debate motions to try
- That we regret negative gearing for residential properties
- That we support the negative gearing of newly built properties
- That the government should remove the grandfathered negative gearing concession
Topic 2: Capital Gains Tax
What it is
A capital gain is the profit you make when you sell something for more than you paid for it – a house, shares, or other investment. Since 1999, Australians who’ve held an asset for more than 12 months have only had to pay tax on half their gain. This is called the CGT discount, currently set at 50%.
Worked example: you buy an investment property for $500,000 and sell it years later for $700,000. That’s a $200,000 capital gain. With the 50% discount, you only pay tax on $100,000 of it.
What’s changing
From 1 July 2027, the discount is being replaced. Instead of halving your gain, the original cost of your asset will be “indexed” to inflation – so you only pay tax on real gains, the bit above inflation. There’s also a new minimum tax rate of 30% on those gains. Superannuation funds keep their existing one-third discount.
Using the same example, if inflation lifted the cost base of your $500,000 property to $575,000, you’d be taxed on $125,000 rather than the full $200,000 gain – but at the minimum 30% rate. It’s essentially a return to the rules Australia had before 1999.
Gains that arose before 1 July 2027 will keep the 50% discount, even if the asset is sold later – another example of grandfathering.
The arguments
For the reforms: the CGT discount overwhelmingly benefits the wealthy – around 83% of it goes to the top 10% of income earners, according to Treasury. Inflation indexing is fairer because it only taxes real growth in value, not gains caused by inflation. And a 30% minimum rate stops high earners paying less tax on capital gains than ordinary workers do on their wages.
Against the reforms: the changes could discourage long-term investment, push more money into superannuation (where the old rules still apply), and penalise long-term savers. A 30% minimum rate also hits people who rarely sell big assets – like a family selling one investment property after decades – by pushing their tax rate above what they’d normally pay.
Debate motions to try
- That we regret the capital gains tax discount
- That the government should apply a minimum tax rate to all taxpayers
- That the government should remove the 50% CGT discount on pre-2027 gains
Topic 3: Discretionary Trusts
What it is
A trust is a legal arrangement where someone called a trustee holds money or assets on behalf of others called beneficiaries. In a discretionary trust, the trustee chooses each year how much to give each beneficiary. Wealthy families often use them – they’re sometimes called family trusts – because income can be distributed to whichever family member pays the lowest tax rate.
Worked example: a family trust earns $100,000 in business income. The trustee gives $40,000 to a parent on the top tax rate, $40,000 to the other parent, and $20,000 to an adult child at university who pays no tax. The family’s overall tax bill drops sharply.
There are over 900,000 family trusts in Australia, and the number has more than doubled in the last 20 years.
What’s changing
From 1 July 2028, before that $100,000 can be distributed at all, the trustee has to pay a minimum 30% tax on it – so $30,000 goes straight to the tax office. Beneficiaries still report their share on their own tax return but get a credit for the 30% already paid. Think of it like a franking credit on share dividends – with one key difference: the trust credits are non-refundable, so if a beneficiary’s tax rate is below 30%, the extra tax is just lost.
Notably, there’s no grandfathering on this one – the new rules will apply to all discretionary trusts from 1 July 2028, regardless of when they were set up. Fixed trusts, charitable trusts, superannuation funds and deceased estates are exempt entirely.
The change is expected to raise about $4.5 billion over five years.
The arguments
For the reforms: family trusts let wealthy households split income with family members on lower tax rates – something ordinary workers simply can’t do. A 30% minimum stops high-income families using trusts to dodge their fair share of tax, while leaving the legitimate non-tax uses of trusts (asset protection, succession planning) intact.
Against the reforms: the rules are complex and risk punishing small business owners and farmers who use trusts for legitimate reasons – like protecting family assets or passing a business to the next generation. The changes also add compliance costs for thousands of small operators who weren’t really the target.
Debate motions to try
- That the government should ban discretionary trusts
- That the government should introduce a tax on inheritances
- That we regret the use of family trusts
Topic 4: Tax Bracket Indexation
What it is
Australia has tax brackets – the more you earn, the higher the tax rate on each extra dollar. But the boundaries between brackets are set in dollar amounts, and only get updated occasionally. So when inflation pushes wages up – even though purchasing power stays flat – more of your income gets taxed at higher rates. That’s called bracket creep.
Worked example: you earn $45,000. Inflation one year is 11% (very high, but useful for the example), and your boss gives you a $5,000 pay rise to match, taking you to $50,000. Because everything costs 11% more, you can’t actually buy more than before. But because tax brackets haven’t moved, that extra $5,000 is taxed at roughly double the rate – meaning your real income has actually gone backwards while the government quietly collects more tax.
What’s being proposed
Unlike the other three topics, this one isn’t budget legislation – it’s the Coalition’s counter-proposal, called the “tax back guarantee.”
Under the proposal, from 2028-29, the bottom two tax brackets (covering income up to $135,000) would rise automatically each year with inflation. By 2031-32, all brackets would be indexed. The Coalition estimates it would save the average worker up to $1,000 a year, costing the budget around $22.5 billion over four years.
The arguments
For indexation: bracket creep is a “stealth tax” – governments quietly raise revenue every year through inflation without ever having to legislate a tax rise. Indexation forces them to be honest: if they want more tax, they have to vote for it. The United States and many other comparable countries already do this.
Against indexation: it locks in a big ongoing revenue loss, limiting what future governments can spend on services like healthcare and the NDIS. Regular tax cuts already address bracket creep when the budget can afford it – and automatic indexation reduces political accountability rather than increasing it, because the choice gets made once and never revisited.
Debate motions to try
- That we support indexing tax brackets to inflation
- That we should abolish progressive income tax brackets
- That we should replace income tax with a flat tax
The Grandfathering Question
You’ll have noticed something running through two of the four topics: grandfathering. With negative gearing, existing investors get to keep the old rules; only new buyers face the new ones. With CGT, gains that built up before July 2027 keep the 50% discount, even if you sell the asset later. Discretionary trusts and bracket indexation don’t involve grandfathering at all – the trust rules will apply to everyone the day they start.
Grandfathering is one of the most interesting features of major reforms, and a great place to find strong debating arguments – especially because both sides of any of these motions will probably end up arguing about it.
Why governments grandfather
The standard arguments for grandfathering:
- It’s fair to people who planned around the existing rules. If you bought an investment property in 2024 based on how negative gearing worked then, it feels unfair for the government to change the deal on you years later.
- It avoids market shock. If every investor had to sell on the same day, prices would crash. Phasing the change in gives the market time to absorb it.
- It makes reforms politically possible. Reforms that hit existing arrangements head-on tend to fail. Grandfathering builds enough consensus to actually pass.
Why grandfathering can be a problem
The arguments against:
- It can take a generation to actually work. If the point of negative gearing reform is to make housing more affordable for younger Australians, grandfathering existing investors means it won’t fully kick in for decades. The people who need help most wait longest.
- It locks in existing inequality. The people who benefited most from the old rules get to keep their advantage. Everyone else is locked out of both the old benefit and the full impact of the reform.
- It creates two-tier markets. Two investors doing the same thing pay different amounts of tax based only on when they bought.
- It encourages last-minute rushing. Knowing the deadline is coming, investors pile in before it – which can pump up prices in the short term, exactly the opposite of what reformers want.
Whichever side of these motions you draw, expect grandfathering to come up. Make sure you’ve thought through both how it works and whether you think it should be there at all.
How to use this material in your next debate
These four topics work together. Negative gearing and the CGT discount are deeply linked – the 1999 introduction of the CGT discount is what really turbocharged negative gearing as a tax strategy. Discretionary trusts often hold the same kinds of assets – investment properties and shares – that the other two changes affect. And bracket indexation is the broader question hanging over all three: who decides how much tax we pay, and how openly?
When you’re prepping a speech on any of these:
- Define the concept clearly. Half the work is making sure your judge actually understands what you’re arguing about. Don’t assume.
- Use one concrete example. The worked examples above are designed to be repeatable in a speech.
- Think about stakeholders. Who actually benefits? Who actually loses? Our education debates blog explains stakeholder analysis in more depth – the same techniques apply here.
- Weigh the trade-offs explicitly. Most of these debates involve weighing things people legitimately disagree about – fairness against simplicity, short-term costs against long-term benefits. Name the trade-off your side is accepting.
- Engage with intergenerational fairness. It’s the through-line in all four topics. If you ignore it, your opponent will use it against you.
For more on argument structure, rebuttal, and how to win a debate, our blogs on the top 10 tips experts use to win every debate and five ways to improve at debating are good places to start.
If you want to build sharper debating skills on topics like these, our Term Programs for Years 7-10 cover current affairs motions every week. Debating Pandas (Years 7-9) and Debating Club (Years 7-10) are designed for students ready to take on motions of this complexity. Our Holiday Workshops also run intensive programs that focus on debating technique and topic preparation. You can also get in touch if you’d like advice on which program would suit you best.
Good luck with your debates!
