Australia’s CGT rules have been largely unchanged since 1999. From 1 July 2027, that changes. The 50% discount is gone, negative gearing is restricted, and discretionary trusts face a minimum tax.
Here is what the reforms actually mean for you.
Why the Government Changed CGT in the First Place
The government’s stated reason centres on housing affordability and redirecting investment to more productive uses. It acknowledged that the 50% CGT discount, combined with negative gearing, had encouraged highly leveraged investment in existing properties and pushed capital away from new housing supply and income-producing assets.
The stated aim is to tax gains rather than nominal ones and to level the playing field somewhat for younger Australians who have been locked out of ownership while investors enjoyed generous concessions.
The Old System vs. the New One
Under the rules that have applied since 20 September 1999, if you held a CGT asset for more than 12 months, you only paid tax on 50% of the gain. On a $300,000 capital gain, an individual on the top marginal rate of 47% paid around $70,500 in CGT.
From 1 July 2027, the 50% discount is replaced by two things working together.
Cost base indexation. The purchase price of your asset is adjusted for inflation using the Consumer Price Index. You only pay tax on the gain above that inflation-adjusted cost base.
30% minimum tax. After indexation, a minimum tax of 30% applies to the net capital gain. This prevents high earners from using deductions or structural arrangements to reduce their effective CGT rate below 30%.
Together, these two measures replace the blunt 50% discount with a system that targets gains and sets a floor on the tax paid.
What Changes, What Stays the Same
People are either assuming everything changes, or assuming nothing that affects them personally will change. Both assumptions are wrong.
- Assets sold before 1 July 2027. If you buy and sell before that date, the current 50% discount applies in full. Nothing changes.
- Assets you already own, sold after 1 July 2027. You get split treatment. The gain accrued up to 30 June 2027 is still eligible for the 50% discount. Only gains arising on or after 1 July 2027 fall under the new indexation and minimum tax rules. The longer you hold past that date, the larger the portion of your eventual gain that falls under the new system.
- Main residence exemption. Your home is not affected.
- Superannuation funds. The CGT discount for super funds is not changing.
- Pre-CGT assets. This one catches many long-term investors off guard. Assets acquired before 19 September 1985 that were previously fully exempt from CGT will lose that exemption for gains accruing after 1 July 2027. A deemed cost base equal to the asset’s market value at 1 July 2027 will apply. If you hold rural property, family business interests, or other long-standing pre-CGT assets, this needs attention well before July next year.
- Income support recipients. Recipients of means-tested income support payments, including the Age Pension and JobSeeker, are exempt from the minimum tax in any year they receive such a payment.
The Property Investor Split: New Builds vs. Established Properties
The government has deliberately treated new residential builds differently from established properties to incentivise housing supply. This creates two very different tax outcomes depending on what you buy.
Established Residential Properties
If you purchased an established property after 7.30 pm AEST on 12 May 2026 (Budget night), the new CGT rules apply when you sell. You get cost base indexation and the 30% minimum tax, but no option to use the 50% discount.
And here is the second hit. From 1 July 2027, negative gearing on those established properties is restricted. You can still deduct your rental losses, but only against residential rental income and capital gains from residential property.
Losses cannot be offset against wages, salary, or other business income. Any excess losses are carried forward and may be used only against future residential property income or capital gains.
From 1 July 2027, rental losses on that property can only be offset against residential property income and capital gains. Until that date, losses can still be claimed against wages if the property was purchased after Budget night and before 1 July 2027.
New Residential Builds
Investors who purchase newly constructed dwellings from 1 July 2027 receive a choice at the time of sale. They can elect either the existing 50% CGT discount or the new cost base indexation plus 30% minimum tax arrangement, whichever produces a better outcome.
This election-at-disposal flexibility means you run the numbers at the time of sale and pick the better treatment based on your circumstances, then, including your marginal rate and how much inflation has been built into the indexed cost base.
Investors in new builds also retain the ability to negatively gear losses against all income, not just rental income.
This election is available only to the first investor purchaser of the new build. Subsequent buyers of the same property cannot access the 50% CGT discount or negative gearing.
What This Looks Like in Practice
Your Situation | CGT Treatment | Negative Gearing |
Assets bought and sold before 1 July 2027 | 50% discount in full | No change |
Property owned before Budget night, sold after 1 July 2027 | Split: 50% discount on pre-2027 gain; indexation + 30% minimum on post-2027 gain | Grandfathered, no change |
Established property bought after Budget night | Indexation + 30% minimum tax | Ring-fenced to residential property income from 1 July 2027 |
New residential build from 1 July 2027 | Choice at disposal: 50% discount OR indexation + 30% minimum | Full negative gearing retained |
Note: All information in this article reflects the 2026-27 Federal Budget announcements as published in the official budget overview and the ATO’s published measure summaries. The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 was introduced into Parliament on 28 May 2026 but has not yet passed the Senate. Final legislative detail may differ from the Budget announcement.
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