Budget night tax reforms grandfathered negative gearing and capital gains tax concessions for investors who held property prior to May 12, but if their marriage broke down or their spouse died, they would have lost the entitlements when a jointly owned property transferred to their name.
The loophole will end after the government and coalition reached a deal in which Labor got support for its controversial slash to ballooning NDIS funding.
The so-called widow tax bill passed the Senate on Wednesday after gliding through the lower house.
Treasurer Jim Chalmers announced plans to close the widow tax loophole in early August, but did not plan to introduce the relevant legislation until later in the year.
Consultation on the draft bill was not due until Friday.
Pressure grew in the Senate for a quick fix when independent senator David Pocock revealed he had been contacted by a domestic violence victim who claimed she had been denied financing on a property because of the loophole.
An out was then offered: Opposition Leader Angus Taylor proposed the government fast-track the widow tax bill and fix other discretionary trust and capital gains taxes in exchange for coalition support for the NDIS changes.
Despite the context, Dr Chalmers declared a win for his party.
"We said we'd address these issues and we've delivered on that today," the treasurer said in a statement after the bill was passed.
The bill will also provide increased security to small businesses through a permanent $20,000 instant asset write-off, estimated to save $32 million in compliance funds annually.
"Our reforms are all about making our economy work in the interests of more Australians, businesses and future generations, delivering more support for small business, more tax cuts for workers, and making it easier for Australians to buy their first home," Dr Chalmers said.
14°C