Guide · updated 2026-10-22
The 2027 capital gains tax changes, worked through
From 1 July 2027 the 50% CGT discount is replaced by CPI indexation and a 30% minimum tax for individuals, trusts and partnerships. How the split at 1 July 2027 works, who wins and who pays more.
Salary take-home examples use 2026-27 full-year resident employment, the standard work deduction and no additional deductions. Tables explicitly labelled taxable or repayment income start with that amount instead. Methodology and sources.
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026. The ATO confirms that from 1 July 2027 it replaces the 50% CGT discount for individuals, trusts and partnerships with cost base indexation and a 30% minimum tax, and that it "will only apply to gains that accrue after 1 July 2027". Every figure below is computed by the same engine as our CGT calculator, and each one matches the worked examples in the Budget 2026-27 tax explainer.
What replaces the discount
- CPI indexation. Your cost base is increased by inflation, as it was between 1985 and 1999, so only the real gain is taxed. The asset must be held for at least 12 months. The ATO will publish the CPI factors.
- A 30% minimum tax on the real gain. The gain is treated as the last slice of your income. If the ordinary tax on it is less than 30%, you pay the difference. If you receive a means-tested income support payment, such as the Age Pension or JobSeeker, in the year you sell, the minimum tax does not apply.
- Unchanged: the main residence exemption, the four small business concessions, the 60% discount for affordable housing, the one-third discount for complying super funds, and companies (no discount).
- New builds: an investor who buys an eligible new build can choose either the 50% discount or indexation when they sell. Later buyers of the same dwelling cannot.
An asset you already own is split at 1 July 2027
Nothing is switched wholesale. The 50% discount applies to the growth up to the asset's value on 1 July 2027. Indexation and the minimum tax apply only to growth after that date, using the 1 July 2027 value as the new cost base. You set the value when you sell, in one of two ways. You can get a valuation, which for listed shares is simply the quoted price. Or you can use an apportionment formula based on the asset's growth rate over the whole time you held it.
Treasury's example is Jane, who buys an asset for $800,000 on 1 July 2022 and sells it for $1,600,000 on 1 July 2032. At a constant growth rate it was worth $1,131,371 on 1 July 2027. The first $331,371 of gain is discounted to $165,685. The remaining $468,629 is indexed down to $319,958. Her taxable gain is $485,643, compared with $400,000 if the discount had applied throughout.
Get a valuation if your asset grew unevenly
The apportionment formula assumes steady growth. If most of the growth came before 1 July 2027, for example a property in a suburb that boomed early, a valuation at that date keeps more of the gain under the 50% discount. For shares and managed funds, the quoted price on 1 July 2027 is the obvious choice. The Minister will set the formal apportionment formula in a legislative instrument.
Who pays more and who pays less
It comes down to growth compared with inflation. Here is Treasury's example: a $500,000 asset bought in July 2027 and sold ten years later, with 2.5% inflation and $100,000 of other income each year.
| Growth | Sale price | Taxable gain, 50% discount | Taxable gain, indexation | Change in tax |
|---|---|---|---|---|
| 2.5% a year | $640,042 | $70,021 | $0 | -$24,858 |
| 5.0% a year | $814,447 | $157,224 | $174,405 | $8,075 |
| 7.5% a year | $1,030,516 | $265,258 | $390,474 | $58,851 |
An asset growing only at inflation has no real gain, so there is nothing to tax. Growth of about 5% or more a year, typical of long-run residential property, produces more tax than the discount did.
The minimum tax in practice
Treasury's example is Jack, who has $25,000 of other income in 2029-30 and makes a $10,000 gain on an asset bought in 2027-28. The ordinary tax on the gain is $1,400, which is 14%. He pays another $1,600 to bring it to 30%. The rule stops people waiting for a low-income year, such as early retirement or a career break, to sell at a low rate. Taxpayers already at 30% or more, which is anyone with other income above $45,000, are not affected by it.
What to do before 1 July 2027
- You do not need to sell. Gains up to 1 July 2027 keep the discount whenever you sell.
- Keep records that will support a 1 July 2027 value: a valuation, a comparable sales report, or a statement showing the quoted price.
- If you are near retirement, remember the minimum tax takes away the benefit of waiting for a low-income year to sell assets bought after the change.
Where these figures come from
Every number on this page is computed by the same engines that power our calculators, using 2026-27 rates taken from the tax office and dated on our methodology page. If a rate changes, this page changes with it. General information only, not tax or financial advice.