The Government has been forced into yet another change to its tax package hours before it passed Parliament after revelations it would have imposed what’s been dubbed a “widow tax” on property owners whose partner died or divorced.

Prime Minister Anthony Albanese and Labor MPs celebrated after the legislation for the bulk of the Budget’s tax reforms passed both houses of Parliament on Thursday afternoon.

“This is legislation that will make Australia stronger and make Australia fairer,” Mr Albanese thundered during Question Time, minutes after the bill passed through the Senate,” he said.

“Most Australians have nothing to sell but their time, nothing to give but their hard work . . . They deserve a tax cut and we are giving them one, they deserve the opportunity to buy their own home and we’re making sure they have it.

“Governments are here to make a difference, not to just occupy the space.”

The legislation replaces the 50 per cent capital gains tax discount with one based on inflation and a minimum 30 per cent rate on the taxable portion, limits negative gearing for properties bought after May 12 to new builds, and sets up the $250 working Australian tax offset and $1000 standard deduction.

The Coalition voted against the package at every point.

Once the final votes were taken, senior frontbencher Dan Tehan tried to call on the lower house to censure Mr Albanese “for his budget of broken promises and toxic taxes”.

But even as it was making its way through the lengthy series of votes, the Government had to promise to make further changes to deal with unintended consequences.

Independent senator David Pocock brought to light the fact the grandfathering of tax arrangements for jointly-owned properties bought before Budget night wouldn’t survive a divorce or death where the ownership transferred to just one person.

He put up amendments to fix the problem, which the Coalition labelled a “widows tax”, but withdrew it after Finance Minister Katy Gallagher assured him it would be dealt with in a subsequent bill later in the year.

“I don’t think this is ideal. This should have been sorted out in this primary legislation. The Senate should have had more time to actually look at these issues that we are identifying,” Senator Pocock said.

“These amendments do go to fairness and are also ensuring that this legislation doesn’t disadvantage predominantly women who, as I said yesterday, statistically outlive us.”

However, he was disappointed that some ministers — including Senator Gallagher, Treasurer Jim Chalmers and Housing Minister Clare O’Neil — were claiming it was “something that they knew about all along and were going to address” while others were “on radio saying that it wasn’t an issue, it was just how the system worked and there was nothing to see here”.

“I think we could have a far more constructive politics,” Senator Pocock said.

Earlier, Assistant Minister to the Treasurer Andrew Leigh had told ABC Canberra that it was how existing arrangements worked in the tax system.

“We’re not making changes to those, and you know, I do want to be careful about giving what sounds like specific advice for quite a detailed situation,” Dr Leigh said when pressed over the transfer from joint to sole ownership in cases of divorce or death.

The Coalition pursued first Dr Chalmers then Ms O’Neil over the change during Question Time.

“Yesterday, the Treasurer was asked about his plan to force thousands of widows and divorcees to pay more tax by removing their access to grandfathering for capital gains tax and negative gearing . . . This morning, the Prime Minister had to step in again and dump the Treasurer’s plan. How many more humiliating back downs will it take for the Treasurer to admit his budget is a failure?” Nationals MP Alison Penfold asked.

The ministers insisted there had been aware of the issues and were “working through them in the usual way”.

The Greens backed in the tax changes but leader Larissa Waters still complained that the reforms didn’t go far enough.

“That’s why people should vote for the Greens, because we’ve got the guts to do the proper job,” she told media.

Mr Albanese told an economic conference the Coalition wanted to repeat the mistakes of decades past that have led to growing frustration from Australians who feel they can’t get ahead.

“Consensus does not mean beginning with 100 per cent agreement — or arriving at it. It means listening, negotiating, and moving forward to an outcome,” he said.

“Yet as with last year’s reforms to the EPBC Act, where it was obvious the system was not working for anyone the Opposition have chosen irrelevance; they have dealt themselves out of the process.”

The protections for grandfathering in such cases will be included in further legislation to come before Parliament in August at the earliest, along with carve-outs for start-ups that are yet to be settled.

A new minimum 30 per cent tax rate on discretionary trusts will also be legislated later this year.

However, Dr Chalmers put a second tranche of the Budget’s tax plans up on Thursday morning, instituting a two-year loss carry-back and a permanent $20,000 instant asset write-off — measures aimed at encouraging small businesses to take risks and invest.

Earlier, Mr Albanese told the CEDA State of the Nation conference that Australian companies and researchers needed to get better at commercialising innovations if the country was to thrive in the future.

“There’s not a solar panel in the world that does not have IP produced at . . . UNSW and ANU. But what we did, as I said in the speech, we thought there was someone else somewhere else will do it for us, and that’s okay,” he said.

“Well, it’s bullshit. We’ve got to stop it. We’ve got to make things here. We should have been a mass manufacturer of solar panels here in Australia. We’re not.”

Opposition Leader Angus Taylor used a question and answer appearance at the same conference to say the CGT changes sent a “terrible signal” to businesses, particularly start-ups, about investing here.

“No one knows better than where to make a good investment than a business that has an interest in doing that, or in another organisation that has an interest in doing it. Let them get on with it and get out of the way,” he said.

“When I talk about tax reform, I mean lower taxes. Other people talk about tax reform as high taxes.”