CGT Discount Changes From 1 July 2027: What the Law Says

Priya is 47, a senior physiotherapist in Brisbane. She bought an investment unit in 2018 for $580,000. It is now worth $900,000, an unrealised gain of $320,000. Under the 50% CGT discount, only $160,000 of that gain would be added to her taxable income if she sold. From 1 July 2027 the rules change for growth after 30 June 2027: the discount goes, the cost base is indexed for inflation instead, and the real gain is taxed in full at her marginal rate, with a 30% minimum. The gain Priya has made up to 30 June 2027 keeps the 50% discount whenever she sells. Real growth after that date is taxed at her full 39% (37% plus the Medicare levy) rather than at half of it.

Her existing gain is protected by a reset. The unit's market value on 30 June 2027 becomes the starting point for the new rules. She doesn't have to sell to keep the discount on the gain to date. The date to plan around is 30 June 2027.

What Is the 50% CGT Discount?

The CGT discount reduces the capital gain included in your taxable income. If you sell an asset you have held for more than 12 months, only 50% of the net capital gain is counted as income. You pay no tax on the other 50%.

The rule applies to Australian resident individuals, trusts and partnerships. Super funds, including SMSFs, receive a one-third discount. Companies receive no discount. The rules have been in place since 21 September 1999, when the discount replaced the earlier system of indexing the cost base for inflation.

Example: You sell shares bought in 2020 for $100,000 at $300,000 in 2026. Your capital gain is $200,000. Under the 50% discount, only $100,000 is added to your taxable income. If your marginal rate is 39%, your tax on that gain is $39,000, not $78,000. For gains made from 1 July 2027, the calculation changes.

What the Law Changes

The changes were announced in the 12 May 2026 Budget and passed into law on 26 June 2026. They have four parts:

1. The 50% discount stops for gains made from 1 July 2027. This covers Australian resident individuals, partnerships and trusts. Gains built up to 30 June 2027 keep the 50% discount, whenever you sell. Super funds keep their one-third discount, and widely held trusts are outside the change.
2. Inflation indexing replaces the flat discount. From 1 July 2027, the cost base of assets held for at least 12 months is indexed to the Consumer Price Index (CPI). Only the real, above-inflation gain is taxed. Australia used a similar system before 1999.
3. A 30% minimum tax on the real gain. After indexing, the tax on the real gain cannot fall below 30% of it. The minimum is a top-up: where the gain falls in the 30% tax bracket or higher, it changes nothing. People receiving certain income support payments are exempt.
4. New homes keep a choice. For new residential dwellings and affordable housing, you can choose the 50% discount or indexing.

The Dollar Impact on Growth After 30 June 2027

Under the new rules the cost base is indexed for CPI and the real gain is taxed in full at your marginal rate. The 30% minimum is a top-up on that real gain, so where the gain falls in the 30% bracket or higher it never changes the answer. What changes the answer is losing the discount: half your marginal rate on the nominal gain becomes your full marginal rate on the real gain. Whether that costs more depends on how far growth outran inflation.

The table uses an $800,000 purchase held five years with CPI at 2.5% a year, which indexes the cost base to $905,127, for a resident individual at a 39% marginal rate. These are gains made after 1 July 2027 or on assets bought after it. For an asset you already hold, only the growth after 30 June 2027 is taxed this way.

The crossover is growth of about double the inflation rate: below it the new rules can cost less than the discount did, above it more. In every row here 30% of the real gain is below the 39% figure, so the minimum does not bind. It binds mainly on the part of a gain that falls in the tax-free threshold or the lowest tax bracket, for example for someone with little other income in the year of sale. A top-rate taxpayer pays 47% of the real gain. For one rental run at a 2027 and a 2029 sale with the split worked line by line, see should you sell before 1 July 2027? A registered tax agent can confirm your position.

What About Negative Gearing?

The same Act limits negative gearing on established homes bought (contract signed) after 7:30pm AEST on 12 May 2026. From 1 July 2027, rental losses on those homes can only be offset against residential rental income or residential capital gains, not salary. Homes owned or under contract before then, and new builds, keep the old rules. The full explanation, with worked numbers, is in the 7:30pm contract rule.

How the 30 June 2027 Reset Works

Every CGT asset you hold on 30 June 2027 is treated as sold just before 1 July 2027 and bought back on 1 July 2027 at its market value. No tax is payable at that point. The reset draws a line:

• The gain from your original purchase up to 30 June 2027 is taxed under the 50% discount rules when you eventually sell
• Growth from 1 July 2027 onwards is taxed under the new indexing rules with the 30% minimum

For listed shares, the market price on 30 June 2027 is on record. For property and other assets without a quoted price, you can use a valuation as at that date or an apportionment formula set by the Government. Treasury released a draft of the formula in August 2026. It assumes the asset grew at a steady rate over the whole time you owned it. As at 19 October 2026 the formula had not been finalised. A registered tax agent can work through which method suits each asset.

For what the reset is worth in dollars, our worked guide to selling before 1 July 2027 runs one $800,000 rental at a 2027 and a 2029 sale and computes the split tax line by line.

What to Do Before 30 June 2027

The new rules start on 1 July 2027. These steps apply to property and share investors alike.

1. Gather your cost-base records. Purchase contracts, stamp duty, legal fees and the cost of capital improvements all add to your cost base. You need them to work out the gain up to 30 June 2027, whenever you sell. The Velofy CGT calculator shows the split once you have a 30 June 2027 value.
2. Plan how you will show the 30 June 2027 value. For property, that is a valuation as at that date or the government formula once it is final. Keep evidence such as comparable sales or an agent's appraisal from around that date.
3. Thinking about selling? The contract date decides which rules apply. Our guide to selling an investment property before 1 July 2027 compares sale dates for one rental, with selling costs and loan interest included.
4. Check how you hold your investments. Companies and super funds are outside the change. Trusts are covered, with extra rules of their own. A registered tax agent can check how the change applies to your structure.