Tax Reform (No. 1) 2026 · Capital Gains Tax
It's now law. From 1 July 2027 the 50% capital gains tax discount is replaced by an inflation-based indexation method, with a minimum 30% tax on capital gains. Here's what it means for property, share and trust investors — with worked examples and real-world scenarios — and what you can do before 30 June 2027.
At a glance
Timeline
A separate proposed measure — a 30% minimum tax on discretionary trust distributions — would start 1 July 2028 (not yet law).
The detail
Instead of automatically halving your gain, the cost base of an asset held longer than 12 months will be increased for inflation. You are then taxed on the real gain — the growth above inflation.
Key limit: indexation can reduce a gain, but it cannot create or increase a capital loss. This matters for highly geared assets where borrowing costs are high.
A minimum effective tax rate of 30% will apply to net capital gains, regardless of your marginal tax rate. If your marginal rate is already 30% or higher, this changes nothing; if it's lower, a top-up applies.
Exemption: people receiving means-tested income support (for example, the Age Pension) are excluded from the minimum tax and continue to be taxed at their marginal rate.
If you bought before 1 July 2027 and sell after, your gain is divided in two using the asset's market value at 1 July 2027:
To split the gain, you'll need the asset's value at 1 July 2027. You can either:
Tip: keeping good records now — purchase contracts, improvement costs, valuations — will make this far easier later.
Worked example
An illustrative example for a property investor who holds an asset across the transition date. Figures are rounded and for illustration only — indexation depends on actual inflation, and your result depends on your circumstances.
Pre-transition portion
| Value at 1 Jul 2027 | $900,000 |
| Less original cost | −$600,000 |
| Gain to 1 Jul 2027 | $300,000 |
| Less 50% discount | −$150,000 |
| Taxable (old rules) | $150,000 |
Post-transition portion
| Sale price | $1,050,000 |
| Less value at 1 Jul 2027 | −$900,000 |
| Nominal gain | $150,000 |
| Less indexation (illustrative) | −$20,000 |
| Real gain — min 30% tax | $130,000 |
Old rules vs the new split — illustrative. Both bars total the same $450,000 gain; the difference is how much is taxed and how.
The taxed portion of the gain rises from $225k to $280k, and $130k of it now faces a 30% floor — even in a low-income year. Actual indexation depends on inflation over the holding period.
Case studies
Illustrative examples based on common client situations across our Gold Coast and Brisbane practice. They are not actual clients and are general information, not personal advice — but they show how the reform plays out in real life.
Owns an investment unit bought in 2016, negatively geared, and plans to keep it well past 2027.
Runs a trading business through a discretionary trust, turnover under $10M, planning to sell and retire in a few years.
A holiday house in the family since the late 1970s, part of it inherited years ago — historically CGT-free on the original owner's share.
A trust realises a share-portfolio gain and distributes it to adult children at university who are on low incomes.
A client newly migrating (or returning from overseas) becomes an Australian tax resident while holding overseas shares and an Australian unit.
An asset is transferred between spouses (or out of a family trust) as part of a marriage-breakdown settlement.
Family & discretionary trusts
This is the question we're getting most from trust clients. There are actually two separate measures, at two different start dates, and only one of them is law today.
Now law · from 1 Jul 2027
Part of the reform that passed in June 2026. It reaches capital gains made through a trust: when a trust makes a capital gain and it flows to a beneficiary who is entitled to it, that gain is subject to the 30% minimum tax.
What this ends: streaming a discounted capital gain to a low-income family member no longer escapes the 30% floor — the gain is effectively taxed at a minimum of 30% whoever receives it.
Proposed · from 1 Jul 2028 · not yet law
A separate proposal to tax all taxable income distributed by a discretionary trust at a minimum 30% at the trustee level. Individual beneficiaries would get a non-refundable credit; those below 30% lose the excess, and corporate beneficiaries would get no credit.
Status: this did not pass with the June 2026 law. It's still being designed — draft legislation and key details are yet to come. Proposed carve-outs include primary production income, fixed trusts, super funds and charitable trusts.
Reassurance & good news
Also on the radar
Running alongside the discount reform, the Government is strengthening the foreign resident CGT rules. This is a distinct measure, relevant if you're a non-resident (or advising one) disposing of Australian assets:
These measures take effect from the first quarter (1 Oct / 1 Jan / 1 Apr / 1 Jul) after they receive Royal Assent.
Action
If you were already planning to sell an asset, the timing — before or after 1 July 2027 — may change your tax outcome. Model both before deciding. Selling purely to beat a deadline can backfire; the right answer depends on your income, holding period and goals.
Because gains will be split at 1 July 2027, purchase contracts, capital improvement costs and any valuations become valuable. Start gathering documentation now so a 1 July 2027 value can be established cleanly.
For key assets — especially property and pre-1985 assets — a market valuation dated at 1 July 2027 can lock in the split fairly. We can help you decide whether a valuation or the ATO formula serves you better.
The 30% minimum tax removes the benefit of realising gains in low-income years or streaming them to low-income beneficiaries. With a further trust measure proposed for 2028, trust strategies and estate plans warrant a fresh look.
Questions
TRAK Accountants · Gold Coast
Not sure how the 1 July 2027 changes apply to your property, shares, business or family trust? Rather than searching for answers, send your question straight to us — submit it below and one of our advisers will come back to you with an answer for your situation. No appointment needed.