The final report of a snap two-day parliamentary inquiry into the government's contentious tax changes was handed down on Friday and the recommendations followed a familiar format.
The Labor-led committee said the legislation should be passed by the Senate.
The coalition, in a dissenting report, blasted the government for lying to the Australian people and called for the bill to be scrapped.
It wants tax cuts for workers to be extracted from the legislation and passed separately.
The Greens supported reining in tax breaks for investors but criticised the government for grandfathering the concessions.
As the opposition paints itself out of the picture, Labor needs the support of the Greens to get the legislation passed.
With a massive majority in the lower house, the coalition in disarray and a left-wing minor party supportive of ambitious tax reform, the government had a "once-in-a-generation" opportunity for progressive tax changes, Greens Senator Nick McKim wrote in the report.
"Unfortunately, Labor's ambition remained low,'' he said.
"This means that Australia's housing crisis will continue to be more harmful than it should be, for longer than it needs to be.Â
"The enduring housing crisis will now be Labor's housing crisis."
Senator McKim recommended grandfathering arrangements be limited to one investment property, which would free up more homes for renters and provide extra revenue for deeper tax cuts for workers.
Labor has offered to extend an unrelated inquiry into a proposed overhaul of the NDIS in exchange for Greens support for the tax changes.
But the minor party is reserving its position until it sees amendments which would provide carve-outs for innovative small businesses.
The tax changes, first announced in the May budget, proposed to replace the 50 per cent discount with an inflation indexation model and a minimum 30 per cent tax rate.
That sparked a backlash from startups, which tend to have a negligible initial cost base to index from, meaning their maximum effective tax rate on capital gains would be doubled to nearly 47 per cent.
Carve-outs announced on Thursday would allow "innovative businesses" to continue to access the existing 50 per cent capital gains tax discount, while eligibility for the existing 50 per cent active asset reduction for small businesses would be expanded.
The Tech Council, which represents Australia's technology industry including many startups, said the carve-outs were a "constructive response" to the sector's concerns.
But one founder, who asked not to be named so he could speak freely, said the startup community felt the government was making it harder to attract top talent.
The flow of young talent in their 20s or 30s moving to the US would accelerate after the changes, he told AAP.
"Every frontier lab is now chock-full of Australians working in the US," he said.
"You get paid way more, you get taxed less. You get a bit of an adventure."
Senator McKim said the Greens were inclined to support "targeted adjustments" to the tax changes for startups, but the design must enable genuine productive investment and not just open up another avenue for tax planning.
Treasurer Jim Chalmers said Labor had been engaging with the Greens.
"I've learned not to pre-empt outcomes in the Senate until the final votes are counted," he told reporters.
The reforms were worthwhile, but Labor had "lost some political paint" as a result of the campaign against them, Dr Chalmers said.
In a speech to business leaders on the NSW Central Coast, the treasurer tried to play down the impact of the overhaul, pointing to Treasury analysis showing 60 per cent of all net capital gains were earned by just 0.2 per cent of taxpayers.
