Capital gains tax is changing from 1 July 2027. If you own an investment property, shares, a holiday house or business assets, here’s what the new rules mean for you and what to think about now.
In the Federal Budget 2026-27 on 12 May 2026, the Government announced a major overhaul of capital gains tax (CGT). The first stage of the new law, the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, has now passed, and the ATO has released guidance on how the changes will work.
The good news is that nothing changes for your 2025-26 tax return, and generally you don’t need to do anything different in your 2026-27 return either. But the decisions you make now could affect how much tax you pay down the track, so it’s worth understanding the basics.
When Do the Changes Start?
The new rules apply from 1 July 2027. The 2027-28 tax return is the first one that could be affected, and only if you sell an asset (or another CGT event happens to it) during that year. If you don’t sell anything, nothing changes on your return.
What’s Changing?
1. The 50% Discount Is Being Replaced With Indexation
For resident individuals, trusts and partnerships, the 50% CGT discount won’t apply to growth from 1 July 2027. Instead, cost base indexation will apply. Indexation increases what you paid for an asset in line with inflation (CPI), so you’re only taxed on the gain above inflation.
2. A Minimum 30% Tax on Certain Gains
Individuals will pay at least 30% tax on certain net capital gains that build up from 1 July 2027. The finer details are still to come.
3. Pre CGT Assets Lose Part of Their Exemption
Assets bought before 20 September 1985 have always been exempt from CGT. That exemption will still cover growth up to 1 July 2027, but growth from that date will be taxable.
Example: discount versus indexation
Mia buys shares for $100,000 after 1 July 2027 and sells them a few years later for $150,000. Over that time, inflation adds up to 10%.
If the old rules still applied: her gain would be $50,000. The 50% discount would halve it, so she’d be taxed on $25,000.
Under the new rules: her $100,000 cost is increased by 10% to $110,000. Her gain is $40,000 and she’s taxed on the full $40,000, with the minimum 30% tax potentially applying.
These figures are simplified and ignore costs like brokerage, but they show why indexation will often mean a bigger taxable gain, especially when inflation is low.
What’s not changing?
There’s no change to what counts as a CGT asset, how CGT events work, or the main residence exemption. If you sell the home you live in, it’s generally still exempt, just as it is today.
What if I already own assets?
This is where most people will feel the change. If you bought an asset before 1 July 2027 and sell it after that date, your gain is split in two:
- the growth up to 1 July 2027 still gets the 50% discount
- the growth from 1 July 2027 is taxed under the new rules, with indexation and the minimum tax.
To make this work, the law treats you as if you sold the asset just before 1 July 2027 and bought it back on 1 July 2027. You don’t actually sell anything and there’s no tax to pay on that date. The gain is simply held over until you eventually sell.
Example: Sarah’s investment property
Sarah bought an investment property in 2015 for $500,000. Just before 1 July 2027 it’s worth $800,000. She sells it in the 2031-32 year for $950,000.
First $300,000 of growth ($500,000 to $800,000): the 50% discount applies, so $150,000 is taxable.
Next $150,000 of growth ($800,000 to $950,000): her $800,000 starting value is increased for inflation first, so the taxable amount will be less than $150,000, but there’s no 50% discount.
Here’s how it works depending on when you bought the asset:
| When you bought the asset | Growth up to 1 July 2027 | Growth from 1 July 2027 |
|---|---|---|
| Before 20 September 1985 | Still exempt from CGT | Taxable. Indexation may be used |
| 20 September 1985 to 21 September 1999 | 50% CGT discount | Taxable. Indexation may be used |
| 21 September 1999 to 30 June 2027 | 50% CGT discount if held at least 12 months | Taxable. Indexation if you meet the 12 month rule |
| On or after 1 July 2027 | Not applicable | Fully under the new rules. Indexation if held more than 12 months |
The 12-month rule still applies
You still need to own an asset for at least 12 months to get the discount or indexation. If you buy something less than 12 months before 1 July 2027, but hold it for at least 12 months in total, you can use the discount on the growth before 1 July 2027 and indexation on the growth after.
Example
Tom buys shares on 1 February 2027 and sells them on 1 March 2028. He’s owned them for more than 12 months, so he can apply the discount to the growth up to 1 July 2027 and indexation to the growth after that.
Exceptions for new homes and affordable housing
You can choose to keep the current rules, including the 50% discount, for assets that are new residential dwellings or used to provide affordable housing. This applies whether you own them on 1 July 2027 or buy them later.
Valuing your assets
Because your gain is split at 1 July 2027, you’ll generally need to know what each asset was worth just before that date. For listed shares this is fairly simple. For property, a business or private company shares, you may need a professional valuation.
There will also be an alternative called the ‘apportionment method’, which lets you work out the value without a market valuation. The Government is still developing it, and the ATO will release guidance once it becomes law. The ATO has also said it will publish guidance on valuations before 1 July 2027.
Keep your records
Keep the same records you always have: when you bought the asset, what you paid, its value when you got it, and any changes in ownership or use. From here on, also keep any valuation you get as at 1 July 2027.
What should you do now?
- Don’t rush to sell. Nothing changes until 1 July 2027, and selling has its own costs and tax. Get advice first.
- List your assets. Investment properties, shares, crypto, holiday homes and business assets are all affected.
- Think about valuations. Especially for property, businesses and anything that’s hard to value.
- Talk to us. This is particularly important if you hold assets through a trust or partnership, or own pre-CGT assets.
More legislation is still to come, and we’ll keep you updated as the details are confirmed. In the meantime, you can read more on the ATO’s capital gains tax page, or contact the team at 360 ONE Group Pty Ltd to talk through how the changes affect you.
This article is general information only and is based on ATO guidance published 13 October 2026. It doesn’t take your personal circumstances into account and isn’t tax advice. Please speak with us before acting on it.