The short version
From 1 July 2027, the 50% CGT discount that individuals, trusts and partnerships have relied on since 1999 is gone. In its place: your cost base is adjusted for inflation (CPI indexation) so you’re only taxed on the real gain — but a 30% minimum tax applies to that gain, so it can no longer be realised at a very low marginal rate.
Who it hits: anyone holding shares, ETFs, crypto or investment property outside super. Who it doesn’t touch: your family home, your super fund, companies, affordable housing investors, and small businesses using the Division 152 concessions. Gains that built up before 1 July 2027 keep the old 50% discount treatment — the change is prospective, not retrospective.
This is law, not a proposal. The reform passed Parliament on 25 June 2026 and received royal assent the next day. If you hold CGT assets, the to-do list in this article starts now.
What the current rules are
Since September 1999, the deal has been simple. An individual or trust that holds a CGT asset for more than 12 months gets a 50% discount on the nominal capital gain. A $200,000 gain becomes $100,000 of assessable income, taxed at your marginal rate. Sell before the 12-month mark and you get no discount at all — the full nominal gain is taxable.
The discount was introduced as a simplification: halve the gain, skip the inflation maths. But it created two well-documented distortions. It over-rewards short holding periods — an asset held for 12 months and a day gets the same 50% cut as one held for 30 years, even though inflation has eaten far more of the long-term holder’s gain. And it taxes phantom gains — in high-inflation years, investors paid tax on “gains” that were entirely inflation, while in low-inflation years the 50% cut was far more generous than inflation justified.
It also created the most popular tax-deferral strategy in the country: hold your winners, then realise them in a low-income year — after retirement, during a career break, or by distributing trust gains to a low-income beneficiary. A large gain realised in a near-zero-income year could be taxed at single-digit effective rates after the discount. The 2027 reform is aimed squarely at that strategy.
If you need a refresher on how the existing discount works, see our 50% CGT discount guide — the rules in it still apply in full to any disposal before 1 July 2027.
Exactly what changes on 1 July 2027
The reform has three moving parts, and five different dates. Here they are in one place.
The three pillars
| Until 30 June 2027 | From 1 July 2027 | |
|---|---|---|
| Discount on nominal gain | 50% for individuals, trusts, partnerships (asset held 12+ months) | Abolished for these taxpayers |
| Indexation | Frozen since 1999 (only pre-September-1999 assets still use it) | Cost base indexed for CPI each quarter while held 12+ months — you pay tax on the real gain only |
| Minimum tax | None — a gain realised in a low-income year is taxed at whatever your marginal rate is | 30% minimum tax on the real (indexed) gain, regardless of income level |
The five dates that matter
| Date | What it means |
|---|---|
| 25 June 2026 | Reform passes Parliament (Treasury Laws Amendment (Tax Reform No. 1) Act 2026) |
| 26 June 2026 | Royal assent — the change is law |
| 30 June 2027 | Deemed disposal/reacquisition date: assets you already hold are re-valued at market value; the pre-July gain keeps the old 50% discount treatment |
| 1 July 2027 | New rules apply to disposals from this date |
| 2027–28 | Small-business 50% active-asset reduction turnover threshold rises from $2 million to $10 million |
The change is prospective, not retrospective. You are deemed to have disposed of and reacquired your assets at market value on 30 June 2027 (no tax is payable on that deemed event). The gain built up to that point is quarantined and keeps the old 50% discount treatment when you eventually sell; only the gain that accrues from 1 July 2027 falls under indexation plus the 30% floor.
How cost base indexation actually works
Indexation is the old pre-1999 system, brought back with modern plumbing. While you hold the asset for 12 months or more, its cost base is adjusted each quarter by CPI. Sell, and your taxable gain is the sale price minus the indexed cost base — the gain after inflation.
The fine print matters:
- No indexation under 12 months — sell before the 12-month mark and the full nominal gain is taxable, exactly as today.
- Indexation stops at the quarter of disposal — the final quarter’s inflation is not counted.
- Only certain cost-base elements are indexed — the purchase price and incidental costs (stamp duty, legal fees) are indexed. The third element (ownership costs like rates and insurance that were never claimed as deductions) is not indexed.
- Losses are never indexed — a capital loss stays a nominal loss.
Our CGT cost base guide covers the five cost-base elements in detail — the same elements drive the indexation calculation.
The 30% minimum tax, explained properly
The 30% floor is the design target of the whole reform. Under the old rules, the combination of the 50% discount and a low-income year could produce single-digit effective tax rates on large gains — the strategy of realising gains after retirement or distributing trust gains to a low-income beneficiary. From 1 July 2027, the real (indexed) gain is taxed at the higher of your marginal rate or 30%.
Two consequences follow. First, the old “realise it in a zero-income year” playbook dies: a $300,000 real gain now costs at least $90,000 in tax even if you earn nothing else that year. Second, at the top 45% marginal rate plus 2% Medicare levy, the new system taxes the full real gain at 47% where the old system taxed half the nominal gain — meaning fast-growing assets held by high earners can pay more under the new rules, not less.
But there is a flip side nobody is talking about. For slow-growing assets held a long time, indexation can beat the old 50% discount outright: if inflation erodes most of the nominal gain, you’re taxed on a much smaller real gain at 30%, which can be cheaper than half the nominal gain at 45%. Example 2 below works this out in dollars.
Worked examples: the same assets, old rules vs new rules
All examples use the 2026–27 resident marginal rates (0% to $18,200; 15% to $45,000; 30% to $135,000; 37% to $190,000; 45% above $190,000, plus 2% Medicare levy) and assume the asset was bought after 1 July 2027 so the transition rules don’t apply. Figures are rounded for readability.
Example 1: Fast-growing property at the top rate — the new rules cost more
Priya buys an investment unit for $600,000 in July 2028 and sells for $900,000 ten years later. Nominal gain: $300,000. CPI over the decade: roughly 28%, so the indexed cost base is about $768,000 and the real gain is about $132,000.
- Old rules: $300,000 × 50% = $150,000 added to income; at 45% + 2% Medicare levy, tax ≈ $70,500.
- New rules: $132,000 real gain × 47% (her marginal rate exceeds the 30% floor) = $62,040.
Wait — less? On a 50% price rise over ten years, inflation does real work: the taxable gain shrinks from $150,000 to $132,000 even at the same rate. Now change the facts: suppose the unit doubles instead — sold for $1,200,000. Nominal gain $600,000; indexed cost base $768,000; real gain $432,000. Old rules: $300,000 × 47% = $141,000. New rules: $432,000 × 47% = $203,040. The crossover point is roughly where the nominal gain is more than about 2.1 times the inflation-adjusted gain — i.e. genuinely fast growers at high marginal rates pay more. That is the policy intent: the old discount subsidised fast capital growth; the new system taxes the real return.
Example 2: Slow-growing ETF — the new rules cost less
Marco buys $100,000 of ETFs and sells fifteen years later for $160,000. Nominal gain: $60,000. CPI over fifteen years: roughly 45%, so the indexed cost base is about $145,000 and the real gain is only $15,000.
- Old rules: $60,000 × 50% = $30,000 × 47% = $14,100.
- New rules: $15,000 × 47% = $7,050.
Half the tax bill. The rule of thumb: the slower the real growth and the longer the hold, the better indexation looks versus the old discount. Long-held, modest-growth assets are the quiet winners of this reform.
Example 3: Trust distribution to a low-income beneficiary — the floor bites
The Nguyen family trust sells shares for a $200,000 real gain (already indexed) and distributes it to their university-student daughter, who earns $15,000 a year from part-time work.
- Old rules: $200,000 × 50% = $100,000 added to her income. On $115,000 total, the marginal tax on the gain works out to roughly $30,000–$33,000 — an effective rate in the low teens on the full gain.
- New rules: 30% minimum tax on $200,000 = $60,000, even though her marginal rate on the income is far lower.
This is the exact strategy the reform was built to kill. Distributing gains to low-income beneficiaries no longer washes the tax down to single digits — the floor travels with the gain.
Example 4: Property bought before 2027 — the split transition treatment
Aisha bought an investment property in 2020 for $500,000. On 30 June 2027 it is valued at $750,000; she sells in 2030 for $850,000.
- Pre-2027 gain: $250,000, keeps the old 50% discount — $125,000 added to income in the year of sale.
- Post-2027 gain: $100,000 nominal, indexed cost base from the $750,000 revaluation — only the real portion above inflation is taxed, subject to the 30% floor.
The deemed disposal at 30 June 2027 triggers no tax — it’s a valuation exercise, not a sale. You establish the 30 June 2027 market value with a formal valuation or the ATO’s apportionment formula. Get this number right: it locks in the boundary between discounted old gain and indexed new gain.
Who is NOT affected
- Your family home — the main residence exemption is completely untouched.
- Super funds — the 33.33% CGT discount for complying super funds stays as is.
- Companies — companies never had the 50% discount; nothing changes.
- Affordable housing investors — the 60% CGT discount for eligible affordable housing is unchanged.
- Pre-September-1985 assets — gains accrued before 20 September 1985 remain exempt.
- Gains realised before 1 July 2027 — sell before the date and the old 50% discount applies in full.
The small-business carve-outs (and the $10M figure, explained)
Small business gets its own deal, and this is where a popular misconception lives. The four Division 152 small-business CGT concessions — the 15-year exemption, the 50% active-asset reduction, the retirement exemption, and the rollover — are all unchanged. A qualifying small business can still reduce or eliminate CGT under rules that sit on top of the new system.
What did change: from 2027–28, the turnover threshold for the 50% active-asset reduction rises from $2 million to $10 million, pulling far more businesses into the concession. That $10 million is a small-business turnover threshold — it is not a general CGT threshold, and there is no $10 million cap or carve-out for individuals’ gains in the new law. If you’ve seen “$10M CGT threshold” in search results or social posts, it refers to this small-business change, not your personal CGT.
See our small business CGT concessions guide for the four concessions in full.
What to do before 1 July 2027 — the action checklist
- Inventory every CGT asset held outside super: shares, ETFs, managed funds, crypto, investment property, collectables. You need a 30 June 2027 value for each.
- Get valuations sorted early — formal valuations for property; for listed assets, the 30 June 2027 closing price is your evidence. The ATO’s apportionment formula is the fallback.
- Check your cost-base records — stamp duty, legal fees, and unclaimed ownership costs feed the indexation calculation. Our cost base guide lists the five elements.
- Model sell-before vs sell-after — for assets you’d sell anyway in the next few years, run the old-rules number (sell before 1 July 2027) against the new-rules number. Fast growers at high marginal rates usually favour selling before; slow growers favour waiting.
- Review trust distribution strategies — the low-income-beneficiary playbook expires. Talk to your accountant about deed flexibility before the 2026–27 distribution minutes are done.
- New residential builds get a choice — investors in new builds can elect to keep the 50% discount or use indexation plus the minimum tax. Model both.
- Don’t panic-sell quality assets — the old discount rewards realising gains; the new system rewards real gains. For genuinely long-held, slow-growth assets, waiting is often cheaper.
Contract-date boundary traps
For property, the disposal date is the contract date, not settlement. Sign a sale contract on 30 June 2027 and the old rules apply; sign on 1 July 2027 and the new ones do — even if settlement is months later. For shares and crypto, it’s the trade date. If you’re planning a pre-deadline sale, leave a buffer: a delayed contract can push you into the new regime.
Common mistakes that cost real money
- Assuming the family home is affected — it isn’t. The main residence exemption is untouched.
- Skipping the 30 June 2027 valuation — without it, you can’t split the pre-2027 discounted gain from the post-2027 indexed gain, and the whole gain may be treated under the new rules.
- Indexing the wrong cost-base elements — third-element ownership costs are never indexed; losses are never indexed.
- Forgetting the 12-month rule still exists — indexation only starts after 12 months of ownership; sell earlier and the full nominal gain is taxable.
- Confusing the $10M small-business threshold with a personal CGT threshold — there is no $10M carve-out for individuals.
- Ignoring state taxes in the “sell before” decision — stamp duty and land tax don’t change, but they affect the net benefit of an early sale.
Tips for the transition
- Run your own numbers on our CGT calculator — model the sale under current rules first, then adjust for indexation manually.
- If you hold shares and ETFs, your broker’s 30 June 2027 statements are your valuation evidence — download and keep them.
- Crypto holders: export complete transaction histories now — see our crypto tax guide for record-keeping rules.
- Super remains the most CGT-efficient vehicle: the 15% earnings tax environment is untouched by this reform — our super withdrawal tax guide covers the exit side.
- Property investors should re-read the negative gearing rules — the reform changes the CGT side of the property equation, not the rental-loss side.
FAQ
Is my family home affected by the CGT reform?
No. The main residence exemption is completely unchanged — sell your home and the gain is still fully exempt (subject to the usual 6-year rule and partial-exemption provisions). The reform only touches assets that were already subject to CGT.
Do gains that built up before 1 July 2027 get grandfathered?
Effectively yes, but mechanically it’s a split, not a grandfathering. You’re deemed to dispose of and reacquire each asset at market value on 30 June 2027 (no tax payable). The pre-2027 gain keeps the old 50% discount when you eventually sell; the post-2027 gain uses indexation plus the 30% floor.
Does it apply to shares and crypto, or just property?
All CGT assets held by individuals, trusts and partnerships: shares, ETFs, managed funds, crypto, investment property, collectables, and business assets outside the Division 152 concessions. Companies and super funds are unaffected.
Do I actually need a valuation of everything I own at 1 July 2027?
You need a defensible 30 June 2027 market value for each asset you hold — that’s the line between old-rule gain and new-rule gain. For listed shares and ETFs, the closing price on 30 June 2027 suffices. For property and unlisted assets, get a formal valuation or use the ATO’s apportionment formula.
Will the 30% minimum tax hit me if I’m on a low income?
Yes — that’s the point. The 30% floor applies to the real gain regardless of your other income. A $200,000 real gain costs at least $60,000 in tax even in a zero-income year. The old strategy of realising gains in low-income years no longer works.
Should I rush to sell before 1 July 2027?
Not automatically. Selling before the deadline locks in the 50% discount on the whole gain — but you pay tax now, lose future growth, and may trigger stamp duty and selling costs on a replacement asset. For fast-growing assets at high marginal rates, selling before usually wins; for slow-growing, long-held assets, indexation under the new rules is often cheaper. Model both before deciding.
Wrapping up
The 2027 CGT reform is the biggest change to capital gains tax in a generation: the 50% discount ends, inflation-adjusted gains replace nominal ones, and a 30% floor ends the low-income-year playbook. The winners are patient holders of slow-growing assets; the losers are fast-growth realisers who relied on the discount plus low marginal rates. Your move before 1 July 2027 is unglamorous but valuable: value everything, fix your cost-base records, and model the sell-before versus sell-after numbers. The maths, not the headlines, decides.
