Since the 2026- 27 Federal Budget, one concern has run through almost every CGT conversation we have had with clients: what the proposed reforms mean for gains they have already built up.
From 1 July 2027, if the measures pass as drafted, the 50 per cent CGT discount will be replaced by a regime built on cost base indexation and a 30 per cent minimum tax on real gains. It is the most material change to Australia’s CGT settings since the discount was introduced in 1999, and for the first time it draws pre-CGT assets into the net for gains accruing from that date.
Below, we answer the questions Andersen clients are raising most often, and outline what to think about while the legislation is still in draft.
What Clients Are Asking
What are the CGT changes proposed?
The 2026 Federal Budget proposes a comprehensive reform of the capital gains tax system. The most notable change is the replacement of the longstanding 50% CGT discount for individuals, trusts, and partnerships with a new regime based on cost base indexation. Under this system, the cost base of an asset will be adjusted for inflation, and a minimum tax rate of 30% will apply to capital gains.
The reforms are designed to address concerns about fairness and housing affordability, and are expected to take effect from 01 July 2027, subject to the passage of legislation which may be as soon as the coming weeks.
See more details on this measure in our Budget Report HERE.
What assets are covered under the proposed changes?
If enacted as outlined in the Budget 2026 papers, the new CGT rules will apply broadly to most capital gains tax assets, including not just properties, but to shares, and units in trusts. The government has clarified that the changes will primarily affect assets acquired after the announcement date (12 May 2026), but transitional rules will apply to existing holdings as a form of grandfathering.
This means that if you already own assets, only the portion of the gain that accrues after 01 July 2027 will be subject to the new rules, while gains accrued before that date may still benefit from the current 50% discount regime.
Are pre-CGT assets included in the proposed changes – what does that mean?
A particularly significant aspect of the Budget announcement made by the Treasurer is that the proposed new regime extends to pre-CGT assets. Assets acquired before 20 September 1985 have always been outside the CGT net, but the changes will bring them into consideration for gains relevant for the ownership period from 1 July 2027, which marks a fundamental change for clients holding long-standing assets, intergenerational property holdings or pre-1985 share parcels.
Gains on pre-CGT assets accrued prior to 1 July 2027 will continue to remain exempt. But after that date, gains on those pre-CGT assets will be assessable. It is important to seek advice if you are holding pre-CGT assets.
What is indexation?
Indexation is a method of adjusting the cost base of an asset to account for inflation over the period it is held. This means that when you sell an asset, the capital gain is calculated on the inflation-adjusted cost, so only the real (inflation-adjusted) gain is taxed. This approach was previously used in Australia before the introduction of the 50% CGT discount in 1999 by the Howard Government. The reintroduction of indexation is intended to ensure that taxpayers are not penalised for inflationary increases in asset values.
What is the new minimum tax being proposed?
A key feature of the proposed CGT reforms is the introduction of a 30% minimum tax rate on capital gains for individuals, trusts, and partnerships. This means that, after applying indexation to the cost base, any capital gain will be subject to at least a 30% tax rate, regardless of the taxpayer’s marginal rate.
See more details on this measure in our Budget Report HERE.
Is the 50% CGT discount grandfathered?
Yes, the 50% CGT discount will be grandfathered for gains that have accrued up to 30 June 2027.
For assets held before the announcement, only gains accruing after 1 July 2027 will be subject to the new rules. This means you may need to apportion gains between the old and new regimes, with the pre-1 July 2027 portion eligible for the 50% discount and the post-1 July 2027 portion subject to indexation and the minimum tax rate. Detailed record-keeping will be essential to ensure correct tax treatment.
See more details on this measure in our Budget Report HERE.
What are the proposed CGT rules for a newly purchased asset?
For assets purchased after the announcement date (12 May 2026), the new rules will apply in full. This means that the 50% discount will not be available; instead, the cost base will be indexed for inflation, and any capital gain realised after 1 July 2027 will be subject to the minimum 30% tax rate.
Do these proposed CGT changes impact the main residence exemption?
No, the main residence exemption remains in place under the proposed reforms. This means that gains on the sale of your primary home will continue to be tax-free, provided the usual conditions are met. The government has confirmed that the exemption is not being altered as part of the 2026 Budget changes, so owner-occupiers can continue to rely on this important concession.
Who is excluded from these new CGT changes?
The new CGT rules primarily target individuals, trusts, and partnerships. Companies are not affected by the changes to the CGT discount and indexation rules, as they already pay tax on capital gains at the company tax rate. In addition, there are specific carve outs for some. Recipients of means-tested income support payments, such as the Age Pension or JobSeeker, will be exempted from the minimum tax if they receive any payment in the financial year in which they realise the capital gain.
It is important to review the final legislation and seek advice if you are unsure about your status.
What This Means for You
If you hold investment assets, especially property or shares, you should review your portfolio and consider the timing of any planned sales. Transitional rules may allow you to benefit from the current CGT discount for gains accrued before 1 July 2027. For new investments, factor in the impact of indexation and the minimum tax rate on your after-tax returns. Those will pre-CGT assets should also review their portfolio to assess the impact going forward. Seek professional advice to model the impact on your specific situation.
Next Steps
The 2026 Federal Budget marks a significant shift in Australia’s tax landscape. Andersen Australia will continue to provide updates and practical guidance as the legislation progresses. For tailored advice on how these changes may affect your investments or tax position, contact your Andersen adviser or visit our Budget Hub for more detail.
Visit Our Budget Hub
For ongoing analysis visit the Andersen Budget 2026–27 hub.
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