If you own shares, an investment property, managed funds or other assets, the way your capital gains are taxed is set to change from 1 July 2027. The changes are significant – but they don’t start for a while, so there is a genuine window to understand them and plan ahead.
This article walks through what is changing, what is staying the same, how gains will be calculated under the new rules, and a full worked example. It is general information only – your own position will depend on your circumstances, so please talk to us before making any decisions.
What is changing
Today, individuals who hold an asset for more than 12 months generally receive a 50% CGT discount – meaning only half of the capital gain is taxed. From 1 July 2027, for the portion of a gain that accrues on or after that date, two things change:
- The 50% discount is replaced by an ‘indexation’ method. Instead of halving the gain, your cost base is increased in line with inflation (the Consumer Price Index, or CPI). You are then taxed on the ‘real’ gain – the growth above inflation – rather than on half of the total gain.
- A minimum 30% tax applies to those post-1 July 2027 gains (with limited exceptions). This sets a floor on the tax payable on the gain, regardless of your marginal tax rate.
The changes apply broadly – to residential property, commercial property, shares, managed funds, and even pre-CGT (pre-1985) assets – and they reach individuals, partnerships, and capital gains that flow through from trusts.
The table below summarises the shift for an asset held for more than 12 months:
| Now (to 30 June 2027) | From 1 July 2027 | |
|---|---|---|
| How the gain is reduced | 50% CGT discount | Cost base indexed for inflation (CPI) |
| Tax on the gain | At your marginal rate | At your marginal rate, minimum 30% |
| Assets affected | Most CGT assets | Same, plus pre-CGT (pre-1985) assets |
| Your home | Exempt | Still exempt |
Just as important: what is NOT changing
The reforms are narrower than the headlines suggest. Several important protections continue unchanged:
Unchanged
- Your home stays exempt – the main residence exemption is not changing.
- Gains built up before 1 July 2027 keep today’s rules – the 50% discount is ‘grandfathered’ for that earlier period.
- Companies and super funds (including SMSFs) are not affected – super funds keep their one-third discount on assets held more than 12 months.
- The small business CGT concessions are not changing.
- Income-support recipients are exempt from the 30% minimum tax – including those on the Age Pension, JobSeeker, Carer Payment and certain DVA payments (if received at any time in the year the gain is realised).
How gains will be worked out – a split over two periods
Because today’s rules are kept for the period up to 1 July 2027 and the new rules apply after, the sale of an asset you already own will be split into two parts:
- The gain up to 1 July 2027 – taxed under today’s rules, so the 50% discount can still apply.
- The gain from 1 July 2027 onwards – taxed under the new indexation method, with the minimum 30% tax.
To split the gain, assets held before 1 July 2027 will need a value as at 1 July 2027. You will be able to use a professional valuation, or an ATO apportionment formula that estimates the value based on the asset’s growth over the time you have held it. The ATO tools to support this are still to come.
A worked example
This example is drawn from the Government’s Budget fact sheet. Jane buys an asset on 1 July 2022 for $800,000. Its value at 1 July 2027 is $1,131,371, and she sells it on 1 July 2032 for $1,600,000. Her gain is split across the two periods as follows:
| Step | Amount |
|---|---|
| Value at 1 July 2027 less purchase price ($1,131,371 – $800,000) | $331,371 |
| Gain to 1 July 2027, taxable after the 50% discount (old rules) | $165,685.50 |
| Gain from 1 July 2027 (sale $1,600,000 less indexed cost base $1,280,042) | $319,958.00 |
| Total capital gain added to Jane’s assessable income | $485,643.50 |
The later part of the gain receives no 50% discount and is subject to the minimum 30% tax – which is why gains that accrue after 1 July 2027 will generally be taxed more heavily than the same gain is today.
The minimum 30% tax – what it means
For gains accruing after 1 July 2027, the tax on that gain is set at a minimum of 30%. If your marginal rate is higher, you pay your marginal rate; if it is lower, the 30% floor can still apply – so some people on modest incomes could pay more on a gain than they would today.
There is an important exception for many of our clients: if you receive a means-tested income-support payment (such as the Age Pension) at any time during the year you realise the gain, you are exempt from the 30% minimum, and the gain is simply taxed at your marginal rate.
What to consider before 1 July 2027
- Review your assets now. The lead time lets you think about assets with large unrealised gains and whether your current timing still suits your plan.
- Consider whether a valuation will help. For assets like property, a value at around 1 July 2027 may be worth getting so the split can be worked out accurately later.
- Factor it into your retirement and estate planning. The income-support exemption, and the treatment of trusts and the family home, can all matter – and they interact.
- Talk to us before you act. This is a major change with detail still being finalised; a conversation now can save tax and stress later.
