Last week’s mainstream and social media were full of handwringing about the Budget’s tax proposals, particularly changes to the capital gains tax (CGT) discount. A lot of this content focuses on the idea that the tax changes will stop young people from buying their own home by undermining their efforts to use the stock market or other ‘investment strategies’ to save for a house. This is nonsense.
Wed 27 May 2026 16.00 AEST
Photo: AAP Image/Susie Dodds
Last week’s mainstream and social media were full of handwringing about the Budget’s tax proposals, particularly changes to the capital gains tax (CGT) discount. A lot of this content focuses on the idea that the tax changes will stop young people from buying their own home by undermining their efforts to use the stock market or other ‘investment strategies’ to save for a house.
This is nonsense. No matter how many individual young people the media find (or invent), the data clearly shows that the tax changes are broadly good for young people.
Let’s take a look.
Yes, some young people have some shares, and a few young people have a lot of shares. But, if you look at the bigger picture, you’ll see that it is overwhelmingly richer and older households that own shares.
You might think, “sure, young people own fewer shares, but maybe the income they get from them is more important to them”. This is also untrue.
Young people get almost all their income from working, and barely any from dividends or capital gains. Even the amount of income from ‘partnerships and trusts’, which includes money funnelled by rich parents through their children to minimise tax, is a negligible source of young people’s overall income.
Young people also receive barely any benefit from the current capital gains tax discount.
We’ve established that the changes don’t hurt young people, but do they help? Well, if the Government wants to help young people buy houses, they need to do two things:
1. Stop house prices growing so quickly
2. Help young people get more money
The tax changes do both of these things.
The current capital gains tax discount helps investors outbid first homebuyers and has contributed to escalating housing prices. The Government’s reforms will likely slow down the growth in house prices.
Since younger and lower-income people get more of their income from working and less of their income from things like capital gains, dividends, profit and interest (known as ‘capital income’), rebalancing the tax system to tax capital more will help improve intergenerational and overall equality.
On this count, the government’s Working Australian Tax Offset, a $250 tax offset for working income, is a small but good idea, and will help young people. The $1,000 instant tax deduction for work expenses (which also only applies to income from work) will also help.
There’s still a lot more the Government could do. One major thing missing from the Budget that would help boost the incomes of young people and pull people out of poverty would be raising Jobseeker and Youth Allowance (which is even lower than Jobseeker).
Additionally, if the Government seriously wants to cut taxes for people on lower incomes (which is more likely to include young people), it could tax gas exports and provide a $2,300 tax cut for people on low incomes.
Overall, these tax changes are a step in the right direction, both for young people and equality more broadly.
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