What's Changing with CGT from 1 July 2027
Australia’s Federal Budget 2026-27 introduces important structural changes for capital gains tax (CGT):
- The current 50% discount for individuals, trusts and partnerships on capital gains will be replaced by cost-base indexation. (treasury.gov.au)
- A 30% minimum tax rate will apply to “real” capital gains (i.e. gains above inflation) from 1 July 2027. If your marginal rate is already above 30%, no additional tax is payable. (budget.gov.au)
- Assets held before 7:30pm AEST on 12 May 2026 will be grandfathered such that gains accrued before that date may continue to benefit from the old discount in proportion. (treasury.gov.au)
Who Is Exempt or Less Affected
- Individuals or trusts whose gains are already taxed at or above 30% on their other taxable income won’t be affected by the additional minimum tax. (budget.gov.au)
- Income support recipients (including age pensioners) will be exempt from the minimum tax if they receive any qualifying support payment in the year the gain is realized. (budget.gov.au)
- Investors in new residential builds can choose either the old 50% discount or the new indexation plus minimum tax regime. (dlapiper.com)
Actionable Planning Insights
Review your asset portfolio now
Look at your holdings—shares, property, businesses—and estimate gains. If assets are expected to be realised after July 2027, the new rules will likely lead to higher tax. Considering realising gains before 1 July 2027 may lock in the 50% discount for the portion of gain accrued up to that date. (dlapiper.com)
Use date of acquisition as part of strategy
- Assets acquired long ago with large unseen gains will benefit more under indexation, since more inflation offset will be included.
- For property investors: holdings before 12 May 2026 get grandfathered for negative gearing and CGT discount rules. After that, established properties lose access to negative gearing except against residential income. (treasury.gov.au)
Factor minimum tax into your marginal rate exposure
If your marginal tax bracket often falls below 30%, capital gains could suddenly face a higher effective rate. For trusts and lower-earning individuals especially, plan with cash flow and timing in mind. Consider spreading sales over years or holdings duration to smooth tax impact.
Examples
| Scenario | Marginal Rate | Gain Nominal | CPI Inflation During Hold | Old Effective CGT Rate | New Effective Rate + Minimum Tax |
|---|---|---|---|---|---|
| Mid-income earner (30%) | 30% | $100,000 | 4% pa over 5 years | 50% discount → pay tax on $50,000 = Effective ~15% | Cost base indexed → real gain smaller; minimum tax ensures overall rate ≥30% |
| Low-earner in retirement (say 19%) | 19% | same | same | ~9.5% | Minimum 30% kicks in on real gain — substantial increase |
What to Do Now
- Estimate future capital gains under new rules to assess tax burden.
- Talk to financial or tax professional about restructuring where possible—e.g. moving assets into entities with higher tax rates or timely sales.
- Keep excellent records of acquisition dates, purchase costs, expenses, and CPI info; new indexation requires accurate inputs.
- Consider deferring real estate purchases until after budget announcement has adjusted market expectations.
Key takeaway: These reforms mark a major overhaul of CGT in Australia. Effective planning now—especially before 1 July 2027—can help mitigate tax costs and avoid surprises.