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Tax Reform No. 3 Bill 2026: what stage is it at, and what should investors do now?

· Yannick Ieko

Answering: What is the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 process and timeline, and what should a property investor do while it is still before the Senate?

Estimated reading time: 13 min read

The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 is a Bill, not a law. It was introduced to the House of Representatives on 14 October 2026, it had not passed the House as at 27 October 2026, and a Senate committee is due to report on it by 13 November 2026.

So the decision rule is simple. If a purchase only works on what this Bill might finally say, it is not ready to be made yet. If it rests on the law already passed and on the income the property earns, the Bill’s dates are checkpoints to watch, not a reason to stop.

The Harmony Group designs purpose-built nine-bed co-living investments in Melbourne, and our investors come from every state. A committee date is not a commencement date, and the gap between them decides when a tax question can be answered.

Key Insights

  • Introduced 14 October 2026; referred to the Senate Economics Legislation Committee on 15 October; report due 13 November 2026.
  • Its status on the Parliament’s bill page on 27 October 2026 was “Before Reps”.
  • A committee report is advice to the Senate. It does not make law.
  • The 1 July 2027 negative gearing limit is already law under a different Act.
  • Act on what is settled; diarise what is not.

Table of Contents

Where does the Bill sit in Parliament today?

The Parliament of Australia keeps a public page for every Bill, and it is the most reliable place to check the stage. As read on 27 October 2026, the page for this Bill shows the following.

Stage Date What the record says
Introduced and read a first time 14 October 2026 House of Representatives
Second reading moved 14 October 2026 House of Representatives
Referred to committee 15 October 2026 Senate Economics Legislation Committee
Committee report due 13 November 2026 As listed on the bill page
Status 27 October 2026 “Before Reps”

The page also lists proposed amendments circulated in the House by a crossbench member, Kate Chaney MP. Proposed amendments are not agreed amendments. They show that the text is still open to change.

It is a Government Bill in the Treasury portfolio. The Parliamentary Library’s Bills Digest, published 22 October 2026, describes it as an omnibus Bill: one Bill carrying several measures from the 2026-27 Budget, introduced alongside a companion Bill, the Income Tax Rates Amendment (Minimum Tax on Discretionary Trusts) Bill 2026, which the Digest calls the Imposition Bill.

What that means for you: the Bill has cleared none of the votes that turn a Bill into an Act. It has been introduced, its second reading has been moved, and a committee is examining it in parallel. Anything you read about its contents describes the text as introduced.

What is in the Bill, at the level the record describes?

The Bill has six Schedules. The Digest lists them in this order:

  • Schedules 1 to 3: a minimum tax on certain discretionary trusts, roll-over relief for trusts that restructure, and an election regime for trustees.
  • Schedule 4: how the capital gains tax reforms apply to trusts, deceased estates, and foreign and temporary residents.
  • Schedule 5: negative gearing, including a new definition of “residential dwelling” and a legislated definition of “new residential dwelling”.
  • Schedule 6: a one-off transitional measure for Payday Super.

For a property investor, Schedule 5 is the part that draws attention. Under the enacted Tax Reform No. 1 Act, “new residential dwelling” was to be defined by the Minister in a legislative instrument. The Digest records that this Bill would instead write the definition into the Act itself. In his second reading speech on 14 October 2026, the Treasurer said “schedule 5 legislates the definition of a new residential dwelling”, alongside exemptions from the negative gearing limits for certain housing and other purposes.

That draft is first-reading text before a committee, and it may be amended. How a final definition applies to a particular dwelling is a question for your own tax adviser once the text is settled. Whether a nine-bed co-living property meets the reform’s definition of an eligible new build depends on the final legislation and your own advice.

How is this different from the Tax Reform No. 1 Act?

The two are easy to blur, because both carry “Tax Reform” in the title and both touch negative gearing. They are at opposite ends of the process.

Tax Reform No. 1 is law. The Parliament’s record for the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 shows it finally passed both Houses on 25 June 2026 and received Royal Assent on 26 June 2026 as Act No. 49 of 2026. Its summary says it limits “negative gearing for residential property investments to new builds from 1 July 2027”. In mechanical terms, the Digest explains that net losses from residential dwellings will generally no longer be deductible against unrelated income such as salary, with exceptions that include dwellings last acquired before 7.30pm (AEST) on 12 May 2026 and new residential dwellings.

Tax Reform No. 3 is a Bill. The Digest describes it as enacting or refining measures announced in the 2026-27 Budget, including how parts of the No. 1 reforms would work. Until it passes both Houses and receives assent, nothing in it changes the law.

The No. 1 Bill’s own path shows why that distinction matters. It was introduced on 28 May 2026 and passed the House on 4 June. The Senate committee reported on 19 June. In the Senate, 30 Government amendments and 3 Australian Greens amendments were agreed on 25 June, the House agreed to the Senate’s amendments the same day, and assent followed on 26 June. The text that became law was not the text that was introduced.

You can read the enacted position, and what it left open, in our explainer on the 2027 negative gearing changes now being law.

What has to happen before it becomes law?

A Bill becomes an Act through a fixed sequence. The committee inquiry runs beside that sequence; it does not replace any step.

  1. House of Representatives. Second reading debate and vote, consideration in detail, third reading. The Bill was “Before Reps” on 27 October.
  2. Senate committee report. The Senate Economics Legislation Committee is due to report by 13 November 2026. A report can recommend passage, amendments or neither. The Senate is not bound by it.
  3. Senate. First reading, second reading debate, committee of the whole (where amendments are moved), third reading.
  4. Back to the House, if amended. If the Senate changes the Bill, the House has to agree before it can pass.
  5. Royal Assent. As the Digest puts it, “When Bills have been passed and have received Royal Assent, they become Acts”.
  6. Commencement. The Digest records that Schedules 4 to 6 commence “on the first 1 January, 1 April, 1 July or 1 October after that Bill receives Royal Assent”.

Nobody can tell you today which sitting week each step will fall in. What you can do is check the bill page after 13 November, read the committee’s recommendations, and see whether amendments are moved in the Senate. Each is a public record, not a rumour.

Before the Bill, there was a consultation. Treasury’s “Capital Gains Tax and Negative Gearing – Tranche 2 Legislation” consultation ran from 3 to 21 August 2026 and is now closed. Among other things, it sought feedback on “Defining a new residential dwelling”. The Bill is the step that followed that consultation.

What should an investor do while the Bill is before the Senate?

Sort every pending decision into one of two piles.

Pile one: decisions that rest on settled law. The 1 July 2027 limit on negative gearing for established residential property is enacted. Whether a property you already own was acquired before 7.30pm on 12 May 2026 is a fact you can confirm now with your accountant. These decisions do not need to wait for this Bill.

Pile two: decisions that rest on the Bill’s text. If the case for a purchase depends on how the final definition treats a particular dwelling, the Bill’s current wording is not a safe foundation. It may be amended, as the No. 1 Bill was. Hold the tax-dependent part of the decision until the text is final, and ask your adviser to read the Act as passed, not a summary of the Bill.

A practical checklist while you wait:

  • Bookmark the Parliament’s bill page and check it after 13 November 2026 for the committee report and any amendments.
  • Read the committee’s recommendations yourself, or ask your accountant to summarise them against your situation.
  • Treat any article, including this one, that applies the draft definition to a specific property as commentary, not law.
  • If you are weighing whether to hold, sell or replace a property that costs you money each month, work through that on today’s law. Our guide to holding, selling or replacing a negatively geared property walks that decision.
  • Model any new purchase on its income first. A purchase that only works with a tax outcome you cannot yet confirm is carrying risk you have not priced.

Where co-living fits while the tax detail is moving

We design for income, not for a deduction. A purpose-built nine-bed is one title with nine rooms and nine bathrooms, single storey, leased room by room. Its case has to stand on rent, because its tax treatment under the reform is not something we can settle for you, and we do not try.

That is also why the process starts with education rather than a sales call. Before any property is put to an investor, the team runs it through the 118-point method: Market Analysis (42 points), Area Selection (38) and Property Specification (38). Typically only four to six of the 20 to 30 markets analysed each quarter pass. Overall, the team rejects about 85% of the opportunities it looks at.

Clients pay The Harmony Group $0. The builder pays the fee at settlement, at the same rate whichever panel builder is used, so there is no incentive to steer you toward one. The minimum to take part is $600,000 in cash, usable equity, or a combination of both.

If you want the wider picture of how the 2027 changes affect investors, start with what the 2027 negative gearing changes mean for property investors. If your question is who to speak to about income-focused new builds, read who to talk to after the negative gearing changes.

Frequently asked questions about the Tax Reform No. 3 Bill

Q: Has the Tax Reform No. 3 Bill 2026 passed?

No. As at 27 October 2026, the Parliament’s bill page showed it as “Before Reps”: introduced and read a first time on 14 October 2026, with its second reading moved the same day. It has not been voted on by the House or the Senate, and it has not received Royal Assent. Until it does, nothing in it changes the law.

Q: What does the Senate committee report on 13 November 2026 actually decide?

Nothing, on its own. The Senate Economics Legislation Committee examines the Bill and reports to the Senate with recommendations. The Senate can follow them, amend the Bill differently, or pass it unchanged. With the Tax Reform No. 1 Bill, the committee reported on 19 June 2026 and the Senate then agreed 33 amendments before the Bill passed on 25 June.

Q: Does this Bill decide whether a nine-bed co-living property is a new build?

Not yet, and a draft cannot settle it. The Bill proposes a legislated definition of “new residential dwelling”, but the text may change before it passes. Whether a nine-bed co-living property meets the reform’s definition of an eligible new build depends on the final legislation and your own advice.

Q: When would the Bill’s negative gearing changes start, if it passes?

The Parliamentary Library’s Bills Digest says Schedules 4 to 6 commence on the first 1 January, 1 April, 1 July or 1 October after the Bill receives Royal Assent. The assent date is not known yet, so the commencement date is not either. The separate 1 July 2027 start of the negative gearing limit comes from the Tax Reform No. 1 Act, which is already law.

Q: What should I do first if I am considering a co-living investment now?

Learn how the asset works before you assess it. Our free co-living education program covers what you would own and how a purpose-built nine-bed is designed and run, and its core takes about 45 minutes. Take tax questions to your own accountant on the law as it stands.

Learn the asset first, then decide

The Bill’s timetable is not yours. A committee date, a sitting week and an assent date will come when they come, and none of them changes what a property earns from rent. The decision you can make now is whether income-first co-living suits you at all, and that starts with understanding the asset.

The free co-living education program walks through what you would own, how a purpose-built nine-bed is designed and run, and why the team puts income first. Finish any 9 modules and a booking link opens for a one on one with one of our directors. The team brings 15+ years of specialist accommodation experience to that conversation, and if co-living isn’t suitable for you, we’ll tell you why.

Citations

General information only. The Harmony Group provides general information about property and co-living investment, not personal financial, tax or legal advice, and does not hold an Australian Financial Services Licence (AFSL). It does not account for your objectives, financial situation or needs, so consider its appropriateness and seek advice from a licensed financial adviser, mortgage broker, accountant or the ATO before acting. Past performance is not a guide to future results and historical figures may not be repeated. The 2027 negative gearing reform was enacted on 26 June 2026 and applies from 1 July 2027. The definition of a new residential dwelling is still being settled after Treasury’s consultation, so whether a nine-bed is an eligible new build remains unsettled. Other tax or regulatory measures described are subject to change.