Key Compliance Changes to Anticipate
- From 1 July 2027, the 50% discount for CGT assets held over 12 months ends; replaced with cost base inflation indexing, and a 30% minimum tax rate for real gains. (treasury.gov.au)
- Negative gearing of residential property becomes restricted: only new builds acquired after Budget night (12 May 2026, 7:30 pm AEST) will qualify for full deductions against non-property income. Losses from established property will be ring-fenced. (treasury.gov.au)
- From 1 July 2028, discretionary trusts will face a minimum tax rate of 30%, with exceptions (fixed trusts, super funds, certain special trusts). Preparation time is essential. (treasury.gov.au)
What Individuals & Tax Agents Should Do Now
- Review client portfolios with CGT exposure. Assets with large paper gains might be worth disposing or assessing valuation as of 30 June 2027.
- Document current cost bases, improvements, holding costs, and ensure records are in good order for indexing calculations.
- Check whether clients are income support recipients (Age Pension, Job Seeker etc.) — these individuals are exempt from the 30% minimum on CGT gains. Ensure eligibility criteria are met. (budget.gov.au)
Trusts & Entity Structure Compliance
- Trust deeds and entity structure may need review if reclassifying or migrating from discretionary trust to other form by 1 July 2028 to avoid minimum tax. Consider rollover relief opportunities offered between 1 July 2027 to 30 June 2030. (treasury.gov.au)
- Financial reporting for trusts will need enhanced disclosures, especially when dealing with capital gains, to ensure actual vs minimum tax rates are tracked.
Reporting & Lodgment & Potential Penalties
- Watch for draft bills passing through Senate; once passed, becomes law — late recognition or misunderstanding could lead to incorrect lodgments. Bills are expected to report by 19 June 2026. (kpmg.com)
- PAYG withholding tables also updated for 2026-27 to reflect tax cuts; ensure payroll and software systems are updated with new rates from 1 July 2026. (softwaredevelopers.ato.gov.au)
Examples to Guide Proper Compliance
- Sally buys shares in 2023, still holds them into 2028. On sale, she must split gain into pre-1 July 2027 (old 50%) and post--July 2027 (inflation indexed and possibly subject to minimum 30%) portions.
- Tom, an Age Pension earner, realizes a capital gain. Even if nominally taxed under new rules, the minimum tax does not apply because he receives means-tested income support in the year.
Tools & Resources
- Use ATO calculators and fact sheets: Treasury’s CGT explainer, negative gearing guidelines, and trust changes.
- Software updates: ensure accounting or tax prep tools handle valuation at boundary date and split livestock gains accordingly.
- Seek ongoing education: attend webinars, track ATO updates and legislation progress during Senate review.
Compliance under these reforms will require early planning and accurate record-keeping. Acting now helps avoid rushed decisions when new laws come into force.