22 May 2026

CGT discount replaced

BUDGET MEASURE: From 1 July 2027, the 50% CGT discount is replaced with cost base indexation plus a 30% minimum tax on real gains. Applies to all CGT assets including pre-1985 assets, with gains accrued before 1 July 2027 grandfathered. Investors in eligible new builds can elect either system, and income support recipients are exempt from the 30% minimum tax.

How it works in practise

IN A NUTSHELL: if you buy and sell an asset after 30 June 2027, the new rules apply (ie indexation and minimum 30% tax rate); if you buy and sell an asset before 1 July 2027, the existing 50% discount applies and there is no minimum tax rate; and if you buy an asset before 1 July 2027 but sell it after that date, then you will get the discount up to the asset’s market value on 1 July 2027 and thereafter you will only get indexation plus a minimum 30% tax rate on any gain from that date. Importantly, the new rules apply to all assets (eg shares) and not just real property.

However, for “new builds” (as defined) they will be entitled to choose either the 50% discount or indexation and the minimum 30% tax rate. But it is not clear if this only applies to new builds after 1 July 2027.

One bit of tax planning you may consider: is that if you intend to sell an asset to use a low tax rate, it may be best to try to do this by 1 July 2027 – before the minimum 30% rate kicks in.

Also note that if you own a pre-CGT asset (ie one acquired before 20 September 1985), they will no longer be excluded from CGT but will be subject to CGT after 1 July 2027 – but with a cost base equal to its market value at that date.

But the devil will be in the legislative detail – and after a year of consultations and submissions.