Richard Webb

CPA Australia says proposed changes to self-managed superannuation fund (SMSF) borrowing rules risk overlooking the real driver of consumer harm, following reports the Government has agreed to ban SMSFs from borrowing to invest in residential property as part of budget negotiations.

The Government will move to ban new SMSF borrowing for residential property purchases after reaching an agreement with the Greens, with changes expected to apply prospectively and take effect shortly after legislation passes.

CPA Australia Superannuation Lead Richard Webb said the shift raises broader concerns about the direction and unintended consequences of the current reform package.

“These proposed changes highlight the ripple effects of the Government’s broader tax reform agenda,” Mr Webb said.

“While targeting SMSF borrowing may appear to address risks at the surface, it does not tackle where much of the real harm originates – upstream in unregulated lead generation and high-pressure sales practices.”

CPA Australia said that, as outlined in its recent submission^[1] to Treasury (as part of the Joint Associations Working Group with CAANZ and IPA), issues with the anti-hawking regime – including the personal advice exemption – should be considered in the broader context of lead generation activity.

“Consumer harm often begins well before formal financial advice is provided,” Mr Webb said.

“Unregulated lead generators can influence or direct consumers toward particular products or strategies without being subject to the same licensing, conduct and accountability obligations as financial advisers.”

“Simply tightening or removing the personal advice exemption risks treating the symptoms rather than addressing the root cause.”

CPA Australia is calling for stronger oversight of lead generation activity, including bringing those who materially influence consumer decisions within the financial services licensing framework.

“If policymakers want to reduce harm, the focus should be on ensuring anyone who meaningfully shapes financial decisions is appropriately regulated and accountable,” Mr Webb said.

Mr Webb said the proposed SMSF borrowing changes may also have unintended consequences for investment choice and retirement planning.

“The initial policy direction indicated superannuation would be largely insulated from these tax changes, but what we are now seeing is a shift that could effectively limit investment choice for SMSF trustees,” he said.

“In practice, this would narrow access to residential property investment within super to Australians with significantly larger balances, potentially creating equity concerns across the system.”

CPA Australia said the full implications of the reforms – including interactions with broader tax changes and housing policy objectives – should be carefully assessed before being legislated.

“These are significant structural changes,” Mr Webb said.

“They should be considered on their merits, with a clear focus on consumer protection, system integrity and fairness – not traded off in the context of broader budget negotiations.”

———

Notes:
[1] Submission, 22 May 2026

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Jenny Wong

Australia’s largest accounting body, CPA Australia has recommended that the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 be substantially improved or deferred, warning the government is attempting to push through the most significant tax changes in a generation on the back of an inadequate and rushed consultation process.

CPA Australia Tax Lead Jenny Wong said while the organisation supports well-designed tax reform, the current Bill is technically deficient, falling short of the standard required for legislation of this scale.

“This is not a case of resistance to reform – it is a case of reform that could be done better,” Ms Wong said.

“The Bill has been introduced without an exposure draft, without a consultation paper, and without formal stakeholder engagement and the cracks are showing.”

Stakeholders were given just 11 days to respond to legislation that will affect millions of Australians, while the Committee has only 24 days to report.

“That timeframe is simply not fit for purpose for reforms of this magnitude and complexity. This rushed process has produced avoidable errors that could have been caught through proper consultation,” Ms Wong said.

CPA Australia’s submission^[1] to the Senate Economics Legislation Committee includes new estimates showing the reforms will impose substantial costs on Australian taxpayers.

Ongoing annual compliance costs are estimated to be between $295 million and $542 million, while one-off transitional costs, driven largely by the requirement for millions of Australians to establish market values for CGT assets from 30 June 2027, are expected to range from $675 million to $825 million at a minimum.

“The compliance burden is real, it is sizeable, and it will fall disproportionately on everyday Australians rather than the high-wealth investors that this policy was intended to target,” Ms Wong said.

CPA Australia has also warned the Bill fails to adequately account for the realities faced by small and medium business owners and start-up founders.

Under the proposed model, replacing the 50 per cent CGT discount with CPI indexation produces materially worse outcomes for business owners who have built value from a low or nominal cost base.

“A plumber who incorporated for a dollar, a tech founder whose shares cost one cent, an accountant who bought into a practice for nominal consideration – these are not the policy’s intended targets, yet they will bear its full force without a carve-out,” Ms Wong said.

To address this, CPA Australia is proposing a three-tier framework, including retaining the 50 per cent CGT discount for active business assets where aggregated turnover does not exceed $20 million.

“This is a practical, targeted fix that protects genuine small business investment without undermining the broader policy intent.”

CPA Australia has also raised serious concerns about the use of ministerial instruments to define critical aspects of the reform – none of which have been released. The Bill relies on nine separate ministerial instruments to determine who is taxed, at what rate, on which assets, and under what conditions – including the definition of ‘new residential dwelling’ (eligible for CGT concessions) and an alternative method to apportion capital gains pre and post 30 June 2027.

“Parliament is being asked to pass a reform where the key policy settings do not yet exist in a visible or testable form,” Ms Wong said.

“That is not an acceptable way to legislate on matters of this significance.”

CPA Australia has called for these instruments to be subject to affirmative resolution by both Houses of Parliament before taking effect.

CPA Australia is calling on the Committee to recommend that:

• The Bill does not proceed until material gaps and errors are addressed and a revised, disaggregated compliance cost estimate is published
• The draft apportionment methodology instrument be released for public consultation by 1 October 2026 to provide valuation certainty ahead of 30 June 2027
• A small business and start-up carve-out retaining the 50 per cent CGT discount for active business assets with turnover up to $20 million be introduced in second-tranche legislation
• Treasury publish a distributional analysis of the minimum tax before the Bill passes
• The interaction of the CGT and other tax issues are stress tested and consulted on before introduction
• A statutory independent review commences no later than 1 July 2029.

Ms Wong said the issues identified are not insurmountable but require time and proper consultation to resolve.

“We are not here to block reform. We are here to make it work,” she said.

“These are fixable problems, but they need time and proper consultation to get the details right.”

——–

Notes:
[1] CPA Australia’s submission

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Richard Webb

In a joint submission to Treasury, CPA Australia, Chartered Accountants Australia and New Zealand (CAANZ) and The Institute of Public Accountants (IPA) are calling for proposals to shift Compensation Scheme of Last Resort (CSLR) costs onto self-managed superannuation funds (SMSFs) to be reconsidered, warning it will unfairly burden investors while failing to address the true causes of financial losses.

Richard Webb, Superannuation Lead at CPA Australia, said singling out specific categories of retail investors for reduced statutory rights would not resolve the CSLR’s funding challenges.

“Singling out specific groups of retail investors for the loss of statutory protections won’t fix the unsustainably expensive CSLR levy. It simply shifts costs onto investors while ignoring the upstream drivers of loss – including product failures and misconduct prior to advice and distribution,” Mr Webb said.

The call comes amid rapidly escalating CSLR levy costs, which are projected to rise from just $4.8 million in 2024 to $75.7 million in 2026, and could grow to$127 million by 2027 – far exceeding the $20 million subsector cap and highlighting structural issues in the scheme’s funding model.

Mr Webb emphasised that the CSLR must operate as a genuine last-resort scheme, supported by effective oversight and accountability right across the financial system.

“For the CSLR to deliver the greatest benefit, it must truly be a scheme of last resort, and that means the upstream links in the chain must work properly. A sustainable model requires all sectors responsible for those losses – particularly managed investment schemes – to contribute fairly,” he said.

“It’s critical that costs caused by product failures are internalised by relevant product issuers, rather than being borne by unrelated sectors through special levies.

“Strong product governance must be incentivised, rather than increasing systemic risk and cross-subsidisation.”

Mr Webb said proposals to shift costs onto SMSFs were poorly designed and risked undermining confidence in the system.

“Making SMSFs fund the CSLR directly is poor policy, especially given that the current funding problems were caused by earlier failures. The people responsible for those losses should pay for them – not the investors who were harmed.

“The current CSLR regime already shows the unfair and disproportionate cost burden imposed on currently registered financial advisors and extending this to SMSFs simply compounds the problem.”
CPA Australia is calling for a holistic approach to CSLR funding, including product providers and relevant service providers, to ensure accountability across the financial services sector while maintaining fair protections for all investors.

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Jenny Wong

Australia’s largest accounting body CPA Australia has warned the Government’s tax reform legislation risks creating a more complex and uncertain system, after the Treasury Laws Amendment Bill 2026 was introduced into Parliament yesterday.

While the Bill delivers the core elements of the Federal Budget’s tax package – including changes to capital gains tax (CGT), negative gearing, the Working Australians Tax Offset and the proposed standard deduction – but leaves critical components unresolved.

CPA Australia Tax Lead Jenny Wong said the most structurally significant measure for private business and family wealth had been deferred.

“This Bill is consistent with the CGT and negative gearing changes announced in the Budget, however the proposed minimum tax on discretionary trusts – arguably the most consequential reform for private business owners – has been split into a separate Bill, leaving a major gap in the system,” Ms Wong said.

Ms Wong said the Government’s decision to introduce sweeping reforms before completing consultation was deeply concerning.

“We would encourage the Government to consult first and legislate later. Introducing significant tax changes into Parliament before properly engaging with affected stakeholders is not how tax reform should be done,” Ms Wong added.

Ms Wong said consultation is still ongoing on critical technical issues, including the treatment of capital gains for small and start-up businesses, interactions with managed investment trusts and tax consolidation.

“Despite these issues still being worked through with additional concerns raised by stakeholders, the legislation has been introduced. This leaves small businesses, investors and everyday Australians with material uncertainty about how these changes will apply to them,” Ms Wong said.

CPA Australia warned that implementing the changes in stages risks undermining investment confidence.

“We acknowledge this is the first tranche of legislation, with more to follow. But Australians cannot plan their financial futures based on half a tax system.

“Implementing reform in tranches creates a two-tier system – where some Australians know where they stand and others do not. That uncertainty has real consequences for investment decisions being made right now.”

Ms Wong rejected comparisons with past reforms such as the GST.

“The GST was the product of years of consultation, negotiation and public debate. This is fundamentally different – a Budget-night announcement followed by staged legislation, with key elements still unresolved,” Ms Wong added.

CPA Australia said the immediate impact of the negative gearing changes highlights the practical challenges of the legislation.

“Negative gearing was wound back on Budget night for investors buying established homes – but the Government hasn’t shared what counts as a ‘new residential dwelling.’ That definition will be written by the Minister, after the Bill passes. This creates avoidable uncertainty at a time when Australians are making significant, long-term financial decisions.”

Ms Wong said the reforms contradict the Government’s stated objective of simplifying the tax system.

“The Government has committed to making tax time simpler, but this package does the opposite,” she said.

“It introduces a new tax offset, a new instant deduction, a new inflation-based CGT framework, a minimum tax rate and revised negative gearing rules, each with different start dates, transitional arrangements and carve-outs.

“That is not simplification – it is layering new complexity onto an already complex tax system.”

Ms Wong said multiple start dates, grandfathering provisions and exemptions will make the tax package arguably one of the most complex in recent memory.

“Australians will need to navigate overlapping rules depending on when assets were acquired, how income is earned and how structures are set up,” Ms Wong said.

“Accountants and financial advisers will be left guiding clients through a system that is still being built, with further changes flagged but not yet legislated.”

CPA Australia is encouraging the Government to reconsider its approach and work more closely with industry.

“We urge the Government to work with us and other stakeholders to get this right. Tax changes of this scale deserve genuine engagement, proper consultation and a complete legislative package that gives Australian and the market the certainty they need. We look forward to consulting with the Government on the next stage of CGT changes.”

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Keddie Waller

Australians’ access to quality and affordable financial advice is under threat as the accounting profession feels the squeeze from regulatory burden, according to a report from CPA Australia.

The pressure on accountants to have multiple licences and fulfil countless hours in education is pushing costs to clients up and driving accountants out of the profession.

The Regulatory Burden Report, conducted by Core Data, shows of the one in four accountants who offer financial planning advice, more than a third (34.6%) are considering reducing the variety of services they offer, and a further 12.5 per cent are considering ceasing to offer financial planning advice due to regulatory burden.

CPA Australia is calling on the Government to streamline the existing regulatory framework to create clearer and appropriate regulation. Recommendations outlined in the report include the introduction of strategic financial planning advice as separate to product advice in order to tackle the growing advice gap. The Report also identifies consolidating Continuing Professional Development (CPD) requirements as a means to eliminate overlapping training requirements.

At present, 79 per cent of accounting firms spend more time each week attending to compliance than they did five years ago and 61 per cent spend more time than they did just a year ago.

Keddie Waller, Head of Public Practice at CPA Australia said, “Australians’ demand for financial planning services is strong but the number of financial advisers available to meet demand is declining due to pressure on accountants from excessive regulation.

“Regulation of the financial services industry plays an important role in protecting consumers, however we need to ensure all pieces of regulation are necessary and effective in servicing the public without hindering affordable access.

“The accounting profession and the public seeking access to accountants are facing a real crisis. As accountants depart the industry, they are not being replaced by new entrants at the same rate, and it leaves less advisers with experience to mentor new entrants requiring supervised experience as part of their qualifications.

According to the Regulatory Burden Report, accountants are trusted and preferred for financial advice if they have the necessary licences or registrations, however tax agents are frustrated by the limited scope with which they are allowed to operate and feel their client relationships are being tested when they are unable to advise on a simple financial matter.

Waller added, “This is being felt by consumers, with more than half of respondents saying they would not see a specialist if they had unmet personal advice needs because they do not want to incur additional costs. Over a third said they would do further research themselves if their accountant could not service their needs.”

Read the report.

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