Big Changes to Capital Gains Tax: What the 2026 CGT Reform Means for You
October 22, 2026
Tax Update · October 2026
The Big CGT Shake-Up: What the New Capital Gains Tax Rules Mean for You
Australia's biggest change to capital gains tax in over 25 years takes effect from 1 July 2027. Here's what you need to know — and do — before then.
In a Nutshell
The Federal Government has passed the biggest shake-up to Capital Gains Tax (CGT) in over 25 years. Announced in the 2026–27 Federal Budget on 12 May 2026, the first stage is now law as the Treasury Laws Amendment (Tax Reform No. 1) Act 2026. Here's the short version:
🔧 The 50% CGT discount is going. From 1 July 2027 it will be replaced with cost base indexation for individuals, trusts and partnerships.
📈 A 30% minimum tax is coming in. Certain net capital gains that accrue on or after 1 July 2027 will face a minimum 30% tax for individuals.
📁 Pre-CGT assets lose their exemption. Assets bought before 20 September 1985 will be taxed on gains accruing from 1 July 2027.
🏠 Your home is still safe. The main residence exemption, CGT events and the definition of a CGT asset are not changing.
These changes do not affect your 2025–26 tax return — the first return that could be affected is 2027–28. But if you own assets that have grown in value, there are things worth doing now (see our action points below).
So, What's Actually Changing?
From 1 July 2027, three things change for resident individuals, trusts and partnerships:
- The 50% CGT discount is replaced with cost base indexation. Instead of taxing half your gain, the ATO will adjust your purchase price for inflation (using the CPI) before calculating the gain — the idea being you're only taxed on your real gain, not the inflation component.
- A minimum 30% tax rate applies to certain net capital gains for individuals that accrue on or after 1 July 2027.
- Pre-CGT assets come into the net. Assets acquired before 20 September 1985 have historically escaped CGT entirely. From 1 July 2027, gains accruing on or after that date will be subject to CGT (gains accrued before then stay exempt).
Some exemptions will apply, and there's an election available to keep the current 50% discount arrangements for assets that are new residential dwellings or used to provide affordable housing.
How the Transition Works (The Important Bit)
If you own an asset today and hold it past 1 July 2027, the law effectively treats you as if you sold and re-bought it on that date, at its market value. Your gain gets sliced in two:
- Gains up to 30 June 2027 — taxed under the current rules, including the 50% discount (based on the difference between what you paid and the value just before 1 July 2027).
- Gains from 1 July 2027 — taxed under the new rules, with the asset's value at 1 July 2027 as the starting cost base, indexation applied, and the 30% minimum tax in play.
Any deferred gain or loss is only reported when you actually sell (or another CGT event happens). And if you'd rather not organise a market valuation, the Government is developing an apportionment method as an alternative — though ATO guidance on that is still to come.
Two Scenarios to Make It Real
Scenario 1: The Investment Property
Illustrative figures only.
Priya bought an investment apartment in March 2015 for $500,000. By mid-2027 it's worth $800,000, and she sells it in May 2029 for $950,000.
Under the new rules:
- The $300,000 gain up to 1 July 2027 keeps the 50% discount → $150,000 taxable.
- The $150,000 gain after 1 July 2027 gets cost base indexation and the 30% minimum tax treatment.
Under the old rules, the whole $450,000 gain would have attracted the 50% discount. The takeaway? The split isn't automatic — Priya needs to know what her apartment was worth on 30 June 2027, which means a professional valuation (or the apportionment method once it's finalised).
Scenario 2: The Pre-CGT Asset
Illustrative figures only.
Tom's family has held a block of land since 1982, bought for $30,000 — before CGT even existed. It's worth around $310,000 in mid-2027 and they sell in 2029 for $460,000.
Under the new rules:
- The gain accrued up to 30 June 2027 (roughly $280,000) stays exempt — pre-CGT exemptions apply to gains accrued before 1 July 2027.
- The gain from 1 July 2027 is taxable for the first time, using the 1 July 2027 value as the cost base, with indexation applied.
Under the old rules, this sale would have been completely tax-free. For anyone holding a pre-CGT asset, 1 July 2027 is now a date that matters.
Key Dates to Diarise
| Date | What happens |
|---|---|
| 12 May 2026 | CGT reform announced in the 2026–27 Federal Budget. |
| 2026 | First stage becomes law (Treasury Laws Amendment (Tax Reform No. 1) Act 2026). Further stages of legislation are still to come. |
| Before 1 July 2027 | Your last chance to establish the market value of your assets — and to consider the timing of any planned sales. |
| 1 July 2027 | New rules commence. The 50% discount is replaced by indexation; the 30% minimum tax begins; pre-CGT exemptions stop applying to new gains. |
| 2027–28 income year | First tax return that could be affected — but only if you have a CGT event during that year. |
| 1 July 2028 onwards | Earliest time deferred transitional gains will typically need to be reported (when lodging your 2027–28 return). |
Also worth knowing: separate reforms strengthening the foreign resident CGT regime commenced on 1 October 2026 — get in touch if you're a foreign resident with Australian assets.
Your Action Points
1. Dig out your records. Keep your acquisition dates, purchase prices and improvement costs on file for every CGT asset. The existing record-keeping rules haven't changed — but they matter more now.
2. Think about valuations early. For most assets held past 1 July 2027 (including real estate), you'll need to know the market value immediately before that date when you eventually sell. A professional valuation documented now is worth its weight in gold later.
3. Review pre-CGT assets. If you hold anything acquired before 20 September 1985, it's no longer a "set and forget" — gains from 1 July 2027 will be taxable.
4. Don't rush, but do plan. Nothing changes for your 2025–26 return, and no tax is triggered by the transition itself. If you're contemplating a sale, let's talk timing and the new dwelling / affordable housing elections before 1 July 2027.
Need a Valuation Before 1 July 2027?
Determining your asset's market value just before 1 July 2027 is the key to a smooth transition. Through our partners at DuoTax, we're offering clients a discounted property valuation — get your property valued by a certified practising valuer at a preferential rate.
Let's Talk
Every portfolio is different, and the right move depends on what you own, when you bought it and your plans for the future. If you'd like to work through how these changes affect you — or lock in a valuation before the deadline — give the Caliyan Associates team a call. We're always happy to chat.
Sources: ATO, "Capital gains tax reform" (published 13 October 2026) and Budget 2026–27 tax reform materials. The examples above use illustrative figures and ignore other tax considerations. This article is general information only and is not personal tax advice — please speak to us about your specific circumstances.
Related News
Under 18? Tax and Super questions answered
So you've landed your first gig before you can even rent a car — congratulations! Here's the honest (but friendly) rundown of what the tax office and your super fund expect from you: lodging a tax return, how superannuation works when you're under 18, and a point-form list of things to watch out for as a young employee.
Continue reading
No More Card Surcharges From 1 October: What It Means For Your Wallet (And Your Local Café)
The Government is banning credit card surcharges from 1 October. Honest take: the fees don't vanish — they move into prices. Here's what the 1–2% shift means for your business, your customers, and why "cash discount" signs might be making a comeback.
Continue reading
Why Business Advisory Matters
Australia's tax system is complex, its deadlines are unforgiving, and late lodgement fines are real. Here's why business advisory matters for staying ahead of all three.
Continue reading