How the new CGT rules work

Capital gains tax in Australia has run on the same logic since September 1999: hold an asset for more than twelve months, sell it, and only half of the realised gain is added to your assessable income. The May 2026 federal budget replaces that 50% discount with indexation of the cost base for gains arising on or after 1 July 2027, and adds a 30% minimum tax on the net (indexed) gain.

What's changing

From 1 July 2027, the 50% CGT discount is gone. The cost base is instead lifted by CPI from the acquisition date to the disposal date, and only the realgain - what's left after accounting for inflation - is taxed. The catch: it's taxed at your full marginal rate, with a minimum effective rate of 30% on the net gain.

For most assets, that's a tax increase. Inflation rarely runs at more than half the cumulative growth of a productive asset, so the indexed cost base doesn't rise far enough to offset losing the discount. The mathematics is laid out in detail in our indexation vs discount piece.

The full package

• 50% discount removed for gains arising on or after 1 July 2027. Sales before that date keep the discount.
• Cost base indexed by CPI for the period the asset was held - so only the real gain is in the tax base.
• 30% minimum tax on the net (indexed) gain. If your marginal rate stack lands lower than 30%, you pay 30%.
• Applies to all CGT assets - including pre-1985 assets - held by individuals, trusts and partnerships. SMSFs continue under the 15% accumulation / 33⅓% pension-phase treatment.
• 12-month holding requirement retained - same as today.

Carve-outs that matter

Three exemptions and elections are worth knowing - they're in the budget paper but rarely get covered in the press.

New residential builds - election between regimes

Investors in new residential property can elect either the 50% discount or indexation + 30% floor - whichever gives a lower tax bill. The choice is per-asset. This is the only place the old discount survives for post-1 July 2027 sales.

Income-support recipients exempt from the 30% floor

Age Pension and other income-support recipients are exempt from the 30% minimum tax. They still use indexation, but the floor doesn't bind. That removes the cliff between the marginal stack and the minimum for low-income retirees.

Negative gearing is a separate reform

From 1 July 2027, losses on established residential property acquired after 7:30pm AEST on 12 May 2026 can only be deducted against rental income or residential capital gains. Properties acquired before that time are grandfathered. New builds, build-to-rent, widely-held trusts and super funds are exempt. None of this changes CGT regime selection - it only changes whether operating losses can offset wages.

Who it actually affects

The new regime is worse for almost any investment that beats inflation by more than a small margin. A simple rule of thumb: if your total return over the hold period is more than twice the cumulative inflation over the same period, the old 50% discount produces less tax than the new indexation regime. Most equities and most well-located property clear that bar comfortably.

Indexation does become more competitive at low real returns: an asset that just keeps pace with CPI generates no taxable gain at all under the new rules. The calculator will show that case clearly.

What to consider doing

Two windows are worth thinking about. The first is between now and 30 June 2027 - any disposal in that window uses the existing 50% discount, regardless of when the asset was acquired. The second is the deeper question of whether to hold or sell at all, which the new mathematics changes. Long-duration holders with substantial unrealised gains lose the most from the change, because their gain compounds faster than CPI ever has.

Run your asset through the calculator. The numbers move the decision more than the framing does.