Capital gains, super and negative gearing widely favoured towards high-income Australians

Australia’s leading social services body has issued a stark warning that the nation’s tax system is “unfair” and “costly” – primarily benefiting the wealthiest households and men while depriving essential public services of billions in revenue. The Australian Council of Social Service (ACOSS) said in a report that newly released Treasury data shows that major tax concessions, including the Capital Gains Tax (CGT) discount, superannuation concessions, and negative gearing, are actively worsening both wealth and gender inequality. In the 2022-23 financial year, the government lost about $81 billion in revenue, which ACOSS said could instead be used to fund essential supports. This includes $28 billion in concessional taxation on superannuation contributions, $25 billion on superannuation earnings, $24 billion from the 50 per cent CGT discount for individuals and trusts, and $4 billion from negatively geared rental deductions. ACOSS noted the disparity in government priorities, pointing out that while $81 billion is spent on these breaks, lifting Jobseeker, Youth Allowance, and Parenting Payments above the poverty line would cost only an estimated $11.2 billion in 2025-26. “These tax breaks represent foregone government revenue that could instead fund essential supports,” ACOSS said. The report also reveals that the benefits of these tax breaks are overwhelmingly skewed toward the highest earners. The top 10 per cent of households currently hold 66 per cent of the value of all investment property, 64 per cent of the value of shares and financial assets, and 41 per cent of superannuation. Consequently, this top tier receives the lion’s share of the tax reductions, with 89 per cent of the benefits from the CGT discount, 54 per cent of the benefits from concessional taxation on superannuation earnings, and 53 per cent of the benefits from both superannuation contribution concessions and rental deductions. Gender inequality is also amplified by these policies. In 2022-23, men received $15 billion more in tax concessions than women overall. On average, men received a tax reduction of $25,200, compared with $18,710 for women. This disparity is particularly pronounced in retirement savings, where the median superannuation balance for men aged 60 to 64 is $56,555 higher than for women in the same age bracket. “Men receive a larger share of every major concession,” ACOSS said, highlighting how the current system reinforces gender inequality in wealth distribution. Despite the high cost of these concessions, Australia remains a relatively low-taxing country. The nation’s tax-to-GDP ratio sits at 29.9 per cent, significantly lower than the OECD average of 33.7 per cent and trailing all G7 nations except the United States. ACOSS points out that even if the government were to reclaim the $81 billion lost to these tax breaks, Australia’s tax-as-a-percentage-of-GDP would rise to only 32.9 per cent, still below the OECD average. To address these imbalances, ACOSS has recommended a series of reforms. These include halving the CGT discount for individuals and trusts from 50 per cent to 25 per cent over five years, ending negative gearing immediately for new investments while phasing it out for existing ones, and introducing higher levies on wealthy superannuation accounts, including a 15 per cent levy on balances over $3 million and a 25 per cent levy on balances over $10 million. The group also proposes a 15 per cent levy on superannuation fund earnings after retirement. ACOSS likens the current tax system to a “leaky bucket”, where billions in revenue intended for essential services leak out to the wealthiest Australians before reaching the pipes that fund social security, healthcare, and other critical programs. The organisation said reducing these concessions would be like patching the holes, ensuring more resources stay in the system to support the community.