This note on the capital gains tax (CGT) discount focuses on leverage distortions by investigating data on housing investments. By examining the individual rental income and capital gains returns for 900,000 housing investments held over 2008 to 2025, the note demonstrates how and why the CGT discount encourages investors to borrow more than they otherwise...

The role of inflation in determining the merits of different forms of capital gains taxation is widely misunderstood. This paper finds the discount is not always more generous than the previous system and can produce very high effective rates of taxation on real capital gains because taxation is levied on both real and inflationary gains.

A report from the inquiry into the operation of the capital gains tax discount in Australia including its contribution to inequality, how it influences the types of assets purchased, its distributional effects and its role in suppressing productivity and whether it is fulfilling its original intended purpose. The report finds Australia’s tax system is broken.

This paper examines the economic case for the capital gains tax (CGT) discount and concludes that many of the arguments for reducing it are based on persistent myths rather than evidence. The paper argues that housing should not dominate the CGT debate. It finds that some form of concessional treatment for capital gains is economically...

There are various proposals regarding how to reform capital gains taxation in Australia. Using data on realised capital gains in 2022 for a subset of housing investors (those holding for between one and nine years) this paper describes how four different tax systems, including the current system, would have treated individuals differently.