Australia's Capital Gains Tax Changes (2027): What's Actually Changing

From 1 July 2027, Australia is replacing the standard 50% capital gains tax discount with a very different set of rules. Your cost base gets adjusted for inflation, and your gains are taxed at a minimum floor rate of 30%. It is already law, passed in June 2026. Anything you sell before 1 July 2027 still uses the old 50% discount, and gains that built up before that date keep it too.

So this is not a tax you pay now, and it is not retrospective. It changes how gains are taxed on the part that grows from 1 July 2027 onward, but it will mean significant changes for investors.

What's changing, and when

Two things change on 1 July 2027.

The 50% CGT discount goes. For years, an individual who held an asset more than 12 months paid tax on only half the gain. That discount is replaced by cost-base indexation, which lifts your purchase cost in line with the Consumer Price Index (CPI) so you are taxed on the real gain rather than the inflated one.

A 30% minimum tax rate comes in. Gains that accrue after 1 July 2027 are taxed at your marginal rate or 30%, whichever is higher.

This is settled law now, no longer a budget proposal. It was enacted as the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 and received royal assent on 26 June 2026. Until 1 July 2027 nothing changes, so the 50% discount applies in full for the 2025-26 and 2026-27 years.

Who it applies to: the new rules apply to individuals and trusts, but not to companies, super funds, or foreign and temporary residents, which keep their existing treatment.

Negative gearing changed in the same reform, limited to new builds for property bought after 7:30pm on 12 May 2026. That is a separate rule with a separate date, and the two are often muddled. We cover it in full in the negative gearing changes guide.

Why it's changing

The Government's case is that the 50% discount mostly flows to higher earners, and that capital should be taxed closer to the way income from work is. This comes at a time of high tensions due to rising cost of living and expensive housing. Treasury has long argued the discount fuels property speculation, widens the gap between how wages and investment gains are taxed, and costs the budget billions a year. Paired with the negative gearing change, the stated aim is to cool investor demand for existing homes, shift support toward new housing, and raise revenue. Whether it does any of that is what has drawn a lot of controversy, and we get into that below.

The deemed disposal at 1 July 2027

Here is the part almost nobody explains simply.

Every CGT asset you hold at 30 June 2027 is treated as if you sold it and bought it back at its market value on 1 July 2027. No tax is charged at that moment. It is a line in the sand, not a bill.

That line splits your eventual gain in two:

• The gain up to 1 July 2027 (the 1 July 2027 value less what you originally paid) keeps the old 50% discount, as long as you held the asset for at least 12 months.
• The gain after 1 July 2027 (your final sale price less the 1 July 2027 value) uses the new rules: cost base indexed for inflation, taxed at a minimum of 30%.

The split is set by value, not by counting days. What your asset was worth on 1 July 2027 is the marker.

That raises a question: how do you know that value for something you sell years later? You have two options, and you choose when you lodge in the year you sell. For listed shares, ETFs and managed funds, it is just the quoted price on 30 June 2027, so there is nothing to work out. For property, crypto and other unlisted assets, you either use a valuation of what it was worth on 1 July 2027 (a valuer's figure or defensible comparable sales you keep on file), or you use the ATO's apportionment formula, which splits your total gain in proportion to how long you owned the asset before versus after 1 July 2027. A valuation tends to help when most of the growth happened before the cut-off, since it banks more of the gain at the old 50% discount.

Orbit's calculator handles both: enter a 1 July 2027 value if you have one and it splits precisely, or leave it blank and it applies the time-based formula, clearly labelled as an estimate.

Am I grandfathered?

No, not in the way most people mean it. There is no permanent grandfathering.

Every asset you hold at 30 June 2027 is rebased to its 1 July 2027 value, whatever you bought it for and whenever you bought it. That includes pre-CGT assets bought before CGT existed (before 20 September 1985). Their pre-2027 growth stays untaxed, but the growth after 1 July 2027 is taxed under the new rules like everything else.

One date causes most of the confusion. The 7:30pm, 12 May 2026 cut-off you may have read about is the negative gearing date. It has nothing to do with the CGT discount. There is no CGT acquisition cut-off, no "bought before this date so you're safe" line for capital gains. If an article implies otherwise, it has mixed up the two reforms.

Shares, crypto, or just property?

All of it. The new rules apply the same way to shares, ETFs, managed funds, crypto and investment property. The rebasing at 1 July 2027 and the indexation-plus-30% treatment don't care which asset class you hold. The reform was pitched around property speculation, but it landed on every asset class under the guise of not creating more distortions, which is a big part of the controversies we talk about below.

A handful of carve-outs are worth knowing:

• New residential builds. For a new dwelling, an investor can choose the old 50% discount or the new method, whichever gives the lower result. A higher discount of up to 60% is kept for qualifying affordable housing.
• Your family home. The main residence exemption still applies, so selling the home you live in stays CGT-free under the usual rules.
• Small business assets. The four small business CGT concessions are a separate regime from the general 50% discount and were kept, not abolished. The Government lifted the turnover threshold for the 50% active-asset reduction from $2m to $10m, but that increase applies to that one concession only. The other three still require turnover under $2m, or the alternative net-asset test of $6m. So a mid-sized business can qualify for the 50% reduction yet remain shut out of the bigger exemptions. Worth a tax agent if it is your situation.
• Pre-CGT assets. If you have held an asset since before CGT existed (before 20 September 1985), it is rebased to its 1 July 2027 value, its gain up to that date stays exempt, and only the growth after is taxed under the new rules.
• Welfare recipients. People receiving certain payments (the Age Pension, JobSeeker, the Disability Support Pension and others listed in the law) are exempt from the 30% minimum rate, though their gains still lose the discount and use CPI indexation.
• Start-up shares. Early-stage investments are the live question. After a backlash the Government proposed a narrow Innovative Business CGT Concession, but the startup sector has called it weak and unsettled, so treat it as a moving target and get advice if it affects you. More on this in the controversy section.

What you'll pay: a $100,000 and a $500,000 gain

People search these exact figures, so here is the money question, on a $90,000 salary.

Before 1 July 2027 (old rule, held over 12 months):

Current law, includes the 2% Medicare levy. Held under 12 months there is no discount, so the full gain is added to your income and the tax is roughly double.

After 1 July 2027 there is no single figure, and this is the part most coverage gets wrong. What you pay depends on how your return compares to inflation:

• Beat inflation by a lot, and you pay more than the old discount would have given you.
• Only just beat inflation, and you can pay less, because indexation lifts your cost base and shrinks the taxable gain.

Treasury's own modelling shows both edges. A high-return investor ends up paying more than under the old 50% discount. A low-return investor can actually pay less, because inflation eats most of the gain and there is little real profit left to tax. Your own number turns on your income, your hold period and inflation, which is exactly what the calculator works out across the 1 July 2027 line.

Should you sell before 1 July 2027?

For most people, holding past 1 July 2027 does not cost you the discount you have already earned. The rebasing banks your pre-2027 gain at the 50% discount automatically. So the real question is narrower than it feels: it is only about the future slice, the growth from 1 July 2027 to whenever you actually sell.

That makes it a trade-off, not a deadline. Selling early crystallises the gain now under the old rules but also ends the investment. Holding keeps the asset working and only exposes the post-2027 growth to the new treatment. Which wins depends on your marginal rate, how long you would otherwise hold, and what you expect inflation to do. There is no single answer, and tax should rarely be the only reason to sell a good asset. Model both before you decide, and talk to a registered tax agent if the amounts are meaningful.

How Australia compares on taxing capital

This is what has many investors rattled, because it flips Australia's position competitively when it comes to building wealth.

Under the old 50% discount, Australia was on the lenient end. A high earner holding over a year paid an effective rate of about 23.5% (the 47% top rate on half the gain), comfortably below most comparable countries. After 1 July 2027, with the discount gone and gains taxed at your marginal rate with a 30% floor, that effective rate climbs toward 47% for high earners, putting Australia among the higher-taxing countries on capital.

For context:

• New Zealand has no general capital gains tax at all.
• Singapore, Hong Kong and the UAE tax most gains at zero, which matters because that is exactly where mobile capital and founders tend to relocate.
• The United States taxes long-term gains at 0, 15 or 20%, plus a 3.8% investment surcharge, well under Australia's new top.
• The United Kingdom caps CGT at 24%; Canada taxes half the gain, much like Australia's old discount.

Two points cut the other way. Indexing for inflation is not unusual internationally and is arguably fairer, since it taxes only the real gain. And Australia's income tax rates are high across the board. But the specific mix here, no discount, full marginal rate, and a 30% floor, is a distinctive combination, and it moves Australia from a light touch on capital to a heavy one.

The controversy

This is where the reform gets tricky, because the pushback has come from nearly every direction, and not all of it is partisan. Generally it is argued that changes needed to happen on property and there is no way of making everyone happy, but critics claim this was rolled out a bit like a budget tax hike.

"Fix property, not everything." The original pitch was about property speculation, but the law lands on every asset class: shares, ETFs, managed funds, crypto and property alike. Plenty of people who back tougher property rules are frustrated a share portfolio now carries the same treatment. The Government says taxing all assets the same stops people gaming the system by shifting between them; critics see scope creep well beyond the housing problem it was sold to fix. This also means the younger generation has access to less opportunity for wealth generation than older investors.

Startups got a carve-out, and the sector rejected it. After a founder backlash, the Government proposed an Innovative Business CGT Concession. The startup sector called it one that "falls significantly short." To qualify, an investor has to clear around nine conditions, including a five-year hold, a subjective innovation test and a $10 million lifetime cap, and it only covers unlisted, independent companies, so a startup that lists on the ASX is out. Industry groups say it is so complex firms may not be able to comply, and warn it pushes founders offshore. And because startups often have little or no cost base, indexation shelters almost nothing. This risks damaging Australia's startup industry at a time when productivity is at an all-time low and more innovation and industry is needed, not less.

Small business pushed back too, and got a partial win. Worth separating two things here: abolishing the general 50% discount is different from the four small business CGT concessions, which are kept. After lobbying, the Government lifted the turnover threshold for the 50% active-asset reduction from $2 million to $10 million, though the other three concessions stayed at $2 million. So a genuine small business selling active assets is largely protected, even as the record-keeping load grows.

The cost of complying. CPA Australia estimates the changes could add $295 million to $542 million a year in ongoing compliance costs, plus up to $825 million to transition, largely because every investor now has to establish and defend a 1 July 2027 value.

Young investors in the firing line. The 30% floor lands awkwardly on younger people building wealth through shares or rent-vesting rather than a family home, the exact group told for years to invest early.

Our take. Generally, changes to property are welcome if the impact is reducing property flipping and speculation, but we believe applying this rule change broadly to capital is a damaging move that puts Australia among the top-taxing nations for capital growth and is likely to drive investors and talent overseas. Its impact on startups, if not handled carefully, will drive new companies to other more welcoming countries at a time when Australia desperately needs more productivity and job growth. We believe the Government should have focused on property, rather than pointing at capital being taxed lower than labour, because capital is a lot more mobile.

What you can do about it

A shortlist. Not advice, just the sensible admin.

• Know your position before 1 July 2027, especially for assets you have held a long time.
• Keep a record of what your assets are worth around 1 July 2027. That value becomes the new cost base, and a defensible figure now saves an argument later.
• If you invest in property, the new-build election is worth understanding before you buy.
• Remember that long-held assets now have a split calculation: the pre-2027 slice keeps the discount, the post-2027 slice uses the new rules.
• Get advice for anything material. Start-up shares, trusts, and pre-CGT assets all have edges worth a professional eye.

Model your own situation

The maths turns on your income, your hold period, and your 1 July 2027 value, so a general rule only gets you so far. Put your own numbers in.

Model your gain in the Orbit CGT calculator →

It runs both the current 50% discount and the 2027 rules, splits your gain across the 1 July 2027 line, and shows what you keep after tax.

Frequently asked questions

General information only, current as of 30 July 2026. It is not personal tax advice. Verify your situation with the ATO or a registered tax agent.