Changes to capital gains tax concessions

If you own investments, such as property, shares or other assets that may qualify for the CGT discount, the way future capital gains are taxed changes from 1 July 2027. The impact will vary depending on how long the asset is held, how much it grows and inflation over that period.

Existing investments retain the current treatment for gains that arose before 1 July 2027.

From 1 July 2027, a 30% minimum tax rate will apply to capital gains. People receiving income support payments, including the Age Pension, will not be subject to that minimum tax.

There are also changes to the way that CGT is calculated. This applies to all assets, not just property. The 50% CGT discount for assets held longer than 12 months will no longer apply. Taxable gains related to the period that the asset is owned from 1 July 2027 will be worked out using the indexation approach.

Where you owned the property from prior to 2026 Budget Day you may now need two calculations. One will calculate the 50% discount up to the value as at 30 June 2027. The other will add the indexation allowance thereafter.

Under the indexation approach, the original purchase price is adjusted for inflation before tax is calculated. This means tax generally applies to the gain above inflation, rather than simply applying a flat 50% discount to the whole gain.

These rules apply to investments held by individuals, trusts and partnerships. However, investors in eligible new residential properties can still choose between the 50% CGT discount and the alternative method using indexation subject to the minimum tax of 30%.

There is no change to the CGT main residence exemption or to the existing small business CGT concessions.

If you have any questions regarding CGT and how it may impact you please contact me paul@congdonfuzi.com.au