Understanding the Change
In the 2026-27 Federal Budget, Australia introduced a sweeping reform to capital gains tax (CGT) rules effective 1 July 2027. Key changes include:
- A new minimum tax rate of 30% on "real capital gains" that accrue from 1 July 2027; gains held before that date will use the current rules for amounts earned before the change. (community.ato.gov.au)
- Loss of the CGT discount (which currently allows a 50% discount on gains for individuals, trusts, etc.) on gains accruing from that first day. (community.ato.gov.au)
These changes are still not yet law, so final legislation and official guidance will be released between now and mid-2027. (community.ato.gov.au)
Who’s Affected
If any of the following apply to you, it’s time to review your investments:
- You own investment property, shares, or other capital assets anticipated to produce gains over the long term.
- You plan to sell an asset soon after 1 July 2027 but its gain started accumulating before then. Gains split across pre- and post-change periods will be taxed differently. (community.ato.gov.au)
- You are a retiree relying on capital gains, or manage a portfolio with planned disposals.
Practical Examples
| Scenario | Left under old rules | New rules starting 1 July 2027 |
|---|---|---|
| Owning shares since 2016, sell in 2028 | All net gain taxed under marginal rates with 50% discount | Gains up to 1 July 2027 treated background, gains after taxed at minimum 30% with no discount |
| Buying a property in mid-2027, sell in 2029 | Old rules until ownership unless you acquire before 1 July | All gain accrues post-1 July so fully subject to new minimum 30%, no discount |
Actionable Steps Before 1 July 2027
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Review all capital assets and projected gains. If assets already held could generate large gains, consider selling before 1 July 2027 to get grandfathering under current rules.
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Document acquisition dates and costs meticulously, so you can reliably attribute gains to pre- and post-July periods.
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Reassess timing of planned disposals. Think ahead whether a small delay might push more of the gain into new regime.
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Seek professional advice, especially if multiple assets, trusts, or mixed ownership are involved.
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Stay updated. Bills introducing these reforms still pending. Final wording could impact thresholds or definitions.
Key Definitions to Watch
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Real capital gains: Gains after inflation indexation for assets held over time. The exact inflation adjustment method will be clarified in legislation. (community.ato.gov.au)
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Assets held prior to 1 July 2027 sold after: you’ll separate the gain into the portion that accrued before 1 July, taxed under current rules (including 50% discount), and the portion accrued thereafter, taxed under the new regime. (community.ato.gov.au)
Risks if You Don’t Plan Now
- Losing grandfathering benefits resulting in significantly higher tax payable.
- Poor record-keeping complicating split gains across regimes.
- Cashflow surprises when disposing assets under new minimum rate.
- Trusts, partnerships or businesses may face unexpected liability exposure.
Bottom line: 1 July 2027 is a major turning point for CGT. If you expect large gains, begin assessing your position now. Taking action before the change helps you retain lower tax treatments.