Coalition links NDIS reform support to 'widow tax' loophole repeal

Key facts

• The Coalition will support NDIS reform only if the 'widow tax' loophole is repealed.
• The 'widow tax' loophole relates to the taxation of inherited investment property shares.
• The NDIS reform bill is projected to save the federal budget $37.8 billion over four years.
• The government has proposed changes to NDIS eligibility and participant assessments.
• The Greens have stated they will not support the proposed NDIS changes.

The Coalition, led by Angus Taylor, has stated it will only support the Albanese government's proposed National Disability Insurance Scheme (NDIS) reforms if the government first removes a loophole in investment property taxation, dubbed the 'widow tax'. This warning comes as the government seeks to pass the NDIS bill in the Senate, which is projected to save the federal budget $37.8 billion over four years. The Greens have already indicated they will not support the changes.

In a letter to Prime Minister Anthony Albanese, Taylor described the delay in repealing the 'widow tax' as 'unconscionable', noting the government was warned about the issue and promised to fix it. The loophole reportedly allows individuals to inherit a partner's share of a property or receive it in a divorce settlement without the same tax implications as other investors under new negative gearing rules. The government has proposed closing this loophole as part of broader tax changes, but the Coalition argues this is being used to create a political wedge.

The proposed NDIS reforms include tightening eligibility criteria, introducing independent functional assessments from 2028, and granting the NDIS minister the power to significantly reduce funding categories for participants. The government estimates the scheme's cost will more than double in a decade without these interventions, leading to an estimated 241,000 participants being shifted off the scheme by June 2031 to state-run programs. Crossbenchers have previously criticized these NDIS changes, deeming them too rapid and potentially harmful to disabled individuals and their families.