Department secretary Jenny Wilkinson presented fresh analysis of the controversial tax package, which includes changes to negative gearing and capital gains tax concessions and a $250-a-year tax rebate for workers, during a post-budget address on Thursday.
While some younger people would not benefit from the tax changes, trade-offs were unavoidable in system-wide reform, Ms Wilkinson said.
The reforms, if implemented in the past 25 years, would have provided a cumulative benefit to about 90 per cent of young people, she said.
"These are the most significant reforms to the tax system in a quarter of a century," she told the Australian Business Economists lunch in Sydney.
"Overall, our assessment is that these reforms will contribute to arresting the decline in home ownership rates, improve the efficiency of the taxation of capital, and support a modest reduction in the tax burden on labour income."
The analysis found the top one per cent of income earners would have received $400,000 less per person in lifetime tax benefits if the new arrangements had been in place since 2000.
The message dovetailed with an argument Treasurer Jim Chalmers was simultaneously prosecuting in Canberra.
As he introduced the legislation to parliament, the treasurer said he was proud to make the tax system fairer for the next generation.
"It will help ensure that aspiration and opportunity are the birthright of every Australian and not just some," he told the House of Representatives.
Labor's bill was automatically referred to a Senate committee for scrutiny under rules that laws starting on July 1 are subject to an inquiry before they take effect.
The committee will need to report back by June 22.
Business Council of Australia chief executive Bran Black said the deadline was "manifestly too short" for changes the government has described as the most significant in 25 years.
The Greens will use the inquiry to push Labor to make the tax changes apply to existing investors.Â
But the government also faces calls from a growing coalition of critics demanding the 50 per cent capital gains discount be quarantined to housing and not applied to businesses.
The business council, the Australian Chamber of Commerce and Industry, the Minerals Council of Australia and Commonwealth Bank boss Matt Comyn were joined by West Australian Premier Roger Cook in warning higher capital gains taxes on businesses could hit investment.
The capital gains shift could deter foreign firms from spending money on fledgling mining projects, the WA Labor premier said.
The government argues the changes will help young people who have been locked out of the housing market by a system that taxes income earned from labour at a higher rate than income derived from investments, including property purchases.
The government has flagged a likely carve-out for startups, which have a low initial capital base but the potential for rapid growth, and is consulting with industry groups on other changes.
Capital gains exemptions exist for small businesses with a turnover of less than $2 million.
But it would still in effect punish successful businesses that go from paying little or no capital gains tax to a relatively high tax rate because of rapid growth, UNSW professor of economics Richard Holden said.
Opposition frontbencher James Paterson said Labor had the process "completely backwards".
"Even they admit their own legislation is so flawed that they will have to fix it in the future, but they're saying 'just trust us, we'll rush it through now, and then we'll negotiate with you afterwards to repair the mistakes we've made'," he told Sky News.
