The Mortgage and Finance Association of Australia has urged Treasury to finalise outstanding capital gains tax and negative-gearing rules well before 1 July 2027.
The Mortgage and Finance Association of Australia (MFAA) has said that unresolved tax rules could shape property and finance decisions before the reforms begin, with the body calling on Treasury to ensure that brokers are equipped with detailed guidance before the changes take effect.
In its submission to Treasury’s consultation on the second tranche of draft legislation, the association said households and businesses would make consequential decisions well before the proposed commencement date.
“Consumers and businesses will make property, restructuring and financing decisions well before the reforms commence on 1 July 2027,” the MFAA said.
“It is therefore important that the remaining elements of the reforms are settled sufficiently early for consumers and businesses, together with their tax and financial advisers, to understand the consequences of transactions before committing to them.”
The association said the implementation task would extend beyond taxpayers, with loan providers and brokers needing time to incorporate the rules into their processes.
“Lenders, brokers and other market participants will also require sufficient time to update systems, processes and customer information where necessary,” it said.
Restructures in focus
One of the MFAA’s central concerns is the interaction between the reforms and CGT rollover relief, which can be relevant when businesses restructure, transfer ownership, or undertake succession planning.
The MFAA said tax ambiguity could affect transactions that also require lender consent, replacement facilities, refinancing, amended guarantees, or changes to security.
It added that the question was not confined to a business’s tax position, due to the fact that funding arrangements can be contingent on how a proposed transaction is structured.
“This is particularly important where a restructure also requires refinancing, lender consent, replacement of facilities or changes to guarantees and security arrangements,” the MFAA said.
“Uncertainty about whether a genuine commercial restructure may crystallise a deferred CGT liability can affect both the commercial decision and associated financing arrangements.”
While Treasury has indicated that CGT rollovers and related matters will be considered in subsequent reform tranches, the MFAA said these issues should not be left unresolved until close to commencement.
“Given the potential implications for business and financing decisions, these matters should be resolved well ahead of commencement,” the submission said.
The association called for protection for genuine restructuring transactions that are eligible for rollover relief, saying deferred gains should not be unintentionally brought to account.
“The MFAA recommends that Treasury prioritise the outstanding treatment of deferred gains under CGT rollovers and similar concessions and ensure that genuine rollover-eligible commercial restructures do not inadvertently trigger deferred CGT liabilities or undermine existing rollover relief,” it said.
Calculations and property definitions
The MFAA said that it backed Treasury’s proposal to offer taxpayers an alternative to a formal market valuation when working out gains or losses accrued before and after 1 July 2027, but said the proposed approach must be simple enough to work in practice.
It added that the apparent cost-saving option could lose value if its calculations proved overly difficult to apply.
“If the alternative method is difficult for taxpayers and their advisers to apply in practice, its benefit as an alternative to obtaining a professional valuation will be reduced,” it said.
Consequently, the MFAA proposed an ATO calculator and acceptance of reliable existing valuation evidence where suitable.
The association also called for safeguards where a genuine commercial restructure changed legal ownership without materially changing ultimate economic ownership – warning that this should not inadvertently strip away existing negative-gearing treatment.
Separately, it called for practical ATO examples clarifying which transactions qualified as purchases of new residential dwellings, including off-the-plan contracts, house-and-land packages, knock-down rebuilds, substantial renovations, subdivisions, staged projects, and delayed settlements.
The association said this clarity was essential before buyers enter contracts and arrange funding, particularly where less conventional ownership structures, such as company-title arrangements, do not involve a standard freehold or strata interest.
[Related: Associations warn trust changes will significantly impact brokers]
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