Tax Planning
How CGT Reforms Will Reshape Investment Decisions from July 2027
Capital Gains Tax (CGT) is undergoing its most sweeping reform in decades—learn how indexation, minimum taxes, and grandfathering could impact your holdings.
By NomadicTax Research Team • 5-8 min read • May 27, 2026
## What’s Changing with CGT?
The **50% CGT discount** that many Australians rely on will be replaced from **1 July 2027** by an **inflation-adjusted indexation method** and a **minimum tax rate of 30%** on real capital gains. Gains for assets held before that date and accruing after will use the market value at 1 July 2027 as a new cost base. ([pm.gov.au](https://www.pm.gov.au/media/tax-reform-workers-businesses-and-future-generations?utm_source=openai))
### Key rules & carve-outs:
- **New builds**: For residential property, only *new-builds* will maintain both the old discount and new indexation/minimum tax options. ([pm.gov.au](https://www.pm.gov.au/media/tax-reform-workers-businesses-and-future-generations?utm_source=openai))
- **Existing investments**: Those made *before 7:30pm AEST on 12 May 2026* will be *grandfathered*, preserving the old discount under prior rules until approximately disposal. ([pm.gov.au](https://www.pm.gov.au/media/tax-reform-workers-businesses-and-future-generations?utm_source=openai))
## Who will be most affected?
- Individuals holding assets purchased prior to 2026 who expect modest gains—indexation may reduce their taxable profit substantially.
- Property investors and discretionary trust beneficiaries facing **higher effective tax rates**, especially for high-growth assets.
- Start-ups and small businesses concerned about future exit valuations and capital raising.
## Comparing Scenarios: Old vs New
| Scenario | Under 50% Discount | Under Indexation + 30% Minimum Tax |
|---|---|---|
| Sell after 5 years an asset bought at $100,000 that has nominally doubled, inflation total 20% | Capital gain = $100,000 → Discounted to $50,000 taxable, taxed at your marginal rate | Cost-base indexed to $120,000 → Real gain = $80,000 taxed at a minimum of 30% = $24,000 (versus 15%×$50,000 = $7,500 for low bracket) |
## Action Steps You Can Take Now
- **Review your asset portfolio** to see which holdings may be impacted hardest by losing the discount.
- **Consider locking in opportunities**: Selling assets before 1 July 2027 may help use the old discount. Weigh selling vs holding with an adviser.
- **Re-evaluate use of trusts**: Discretionary trusts lose discount benefits and face minimum tax (30%) from 1 July 2028. Might be better to restructure. ([pwc.com.au](https://www.pwc.com.au/federal-budget?icid=FB19-&utm_source=openai))
- **New property investment**: If you plan on investing, focus on new builds; might still benefit from discounts. Existing properties bought though may lose broader benefits.
## Practical Example
Sarah bought shares in Company X back in 2018 for $50,000. By 2027 they’ve increased to $120,000. Inflation since 2018 = 25% cumulative.
- Under old rules: gain = $70,000; discounted 50% → taxable = $35,000.
- Under new rules (post-indexation): indexed cost base = $62,500 → real gain = $57,500, taxed at 30% = $17,250.
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These reforms mark a paradigm shift: CGT is moving from nominal gains to real gains and a floor to prevent aggressive tax arbitrage. For many this means integrating inflation into real return assessments—not just chasing price appreciation.