The Australia Institute has today released a paper calling for a review of the capital gains tax exemption on family homes valued at more than $2 million. The exemption is expected to cost $189 billion by 2020 (compared to $46 billion in 2015-16).

High-profile company director and former Australian of the year Simon McKeon told The Australian Financial Review he supports the idea of tax profits on the sale of multimillion-dollar family homes.

"I really don't understand why we give such a free kick to those in the community that are lucky enough to own very expensive homes that they live in," said McKeon, who chairs the board of AMP. McKeon said he had always been perplexed by the "sacred cow" status of the primary residence in the tax and pension system.

Capital gains tax was introduced in 1995 and the primary home has always been exempt. It is also excluded from eligibility tests for the age pension.

"There are plenty of homes, particularly in Sydney and Melbourne and Perth, that you just say, why should they be exempt?" said McKeon.