The 2026 capital gains tax changes are a significant shake-up to Australia’s investment tax rules in over 25 years. If you hold shares, property, or business assets, these reforms affect how much tax you’ll pay when you sell.
Here at Australian Business Magazine, we’ve tracked Australian tax reform closely for years. From that experience, here’s what we’ll cover in this article:
- How new CGT calculations work
- Who the 30% minimum tax applies to
- What it means for share and property investors
Let’s find out how business owners and pre-CGT asset holders are affected by the tax reform.
CGT Reform 2026: What Is the Government Changing?
The Treasury Laws Amendment Bill was introduced into parliament on 28 May 2026. This proposed legislation marks one of the most noteworthy changes to Australia’s capital gains tax (CGT) system since 1999.
These are the five core changes under this tax reform:
- The 50% CGT Discount is Abolished: The 50% CGT discount has been available to individuals, trusts, and partnerships for more than 25 years. However, from 1 July 2027, this discount will no longer apply. In its place, a cost base indexation system taxes only real gains above inflation.
- Cost Base Indexation Returns: Your cost base is adjusted upward using the consumer price index before any gains tax is calculated. This way, the inflation portion of your return isn’t taxed. Assets must be held for at least 12 months to qualify, though. What’s more, the costs of ownership are excluded from indexation.
- A 30% Minimum Tax on Capital Gains: Investors who previously timed asset sales to land in low-income years could reduce tax on their capital gains. But now, they won’t be able to rely on that strategy any further, as a minimum of 30% tax rate applies to capital gains accruing from 1 July 2027.
- Pre-CGT Assets Enter the Tax System: A deemed disposal at market value applies to all entities, including companies, on that date. Previously, assets acquired before 20 September 1985 have sat entirely outside the CGT regime for over 40 years. But the new rules bring pre-CGT assets into scope for gains accruing.
- Negative Gearing on Residential Dwellings Is Restricted: Net rental losses on established residential dwellings purchased after 12 May 2026 are quarantined from 1 July 2027. Those losses are deductible only against residential property income or capital gains from residential dwellings.
Australia’s tax system hasn’t seen changes of this scale in decades, and they cut across nearly every major asset class. The base framework is clear enough to act on now, even though some technical details in the proposed legislation may still shift before it passes.
How Do CGT Calculations Change Under the New Rules?
As we mentioned earlier, CGT calculations have now shifted to a cost base indexation method that adjusts your purchase price for inflation first. That means only the real gain above CPI (Consumer Price Index) movement becomes your taxable capital gain.
The table below shows what that difference looks like on a typical asset sale:
| Under 50% CGT Discount | Under New Indexation + 30% Minimum Tax | |
| Purchase price | $400,000 | $400,000 |
| Sale price | $700,000 | $700,000 |
| Total nominal gain | $300,000 | $300,000 |
| CPI inflation adjustment (approx. 2.5% p.a. over 10 yrs) | N/A | ~$112,000 |
| Taxable gain | $150,000 (50% of $300k) | ~$188,000 (real gain after indexation) |
| Tax at 30% minimum rate | ~$45,000 | ~$56,400 |
Note: The figures here are illustrative. Actual outcomes depend on your CPI indexation period, capital proceeds, and individual tax circumstances.
The numbers tell the story better than any explanation. Take an example of an asset purchased for $400,000 and sold for $700,000 after ten years. Under the new rules, a larger share of the $300,000 capital gain becomes taxable, which results in a higher tax bill than under the previous system.
In the new framework, even if your marginal tax rate is below the 30% rate, the minimum effective tax rate still applies to your net capital gain. That means someone who earns $40,000 a year and sells an investment property could end up paying more income tax on that gain than their normal rate would suggest.
On the flip side, high-income investors with a marginal tax rate well above 30% can simply pay their marginal rate as usual (with cost base indexation doing the only discounting work).
Does the 30% Minimum Tax Apply to Every Investor?
The minimum tax applies to all capital gains made by Australian resident individuals from 1 July 2027. It doesn’t care if your marginal tax rate sits above or below that 30% line.
Here is who falls inside the rules and who sits outside them:
Who the 30% Minimum CGT Rate Covers
The minimum tax covers every CGT asset an Australian resident individual holds personally, including shares, investment property, and business interests. It also flows through to trusts and partnerships.
The lower-income scenario is slightly different, though. For instance, if your taxable income sits under a threshold, your marginal tax rate is below 30%, but the minimum tax on capital gains will still apply. .
So, in practice, that single asset sale can push your effective income tax rate on that gain well above what you’d normally pay on other income.
Who Is Exempt From the Minimum Tax Rules
Not everyone falls under the new framework. Particularly, superannuation funds, including SMSFs and other complying superannuation entities, retain their existing concessional CGT treatment entirely. Life insurance companies and temporary residents are also fully exempt, as their CGT settings stay unchanged.
On top of that, income support recipients, including Age Pension and JobSeeker recipients, are carved out from the minimum tax. Certain capital gains they make are taxed at their marginal rate instead. Sadly, this protects the most vulnerable low-income earners from a disproportionate hit.
What Do These CGT Changes Mean for Share Investors?
The new CGT rules in Australia apply to shares, ETFs (Exchange-Traded Funds), and managed funds held personally outside of superannuation. Most coverage has focused on investment property, but the changes are just as real for everyday share investors.
The new framework has implications across these areas that can directly influence your portfolio:
How Shares, ETFs, and Managed Funds Are Affected
Any CGT asset held personally, including shares, ETFs, and managed funds, falls under the new rules. But it’s worth knowing that the negative gearing changes are limited to established residential dwellings. Non-residential capital gains from shares and margin loans are unaffected by those restrictions entirely.
Capital gains distributed through managed investment trusts also follow the new individual rules. Because of that, unit holders can’t sidestep the minimum tax simply by investing through a trust structure rather than directly.
Why Long-Held Low-Cost-Base Positions Are Most Exposed
Long-held ASX positions, such as shares in blue-chip companies acquired decades ago, often have very low cost bases relative to their current market value. While indexation can offset the inflation component of a capital gain, its benefit becomes much smaller when an asset has delivered strong real growth over many years.
The impact is not limited to large portfolios, though. The Financial Services Council modelled a scenario in which a 25-year-old on a median income invested $10,000 in shares and held them for 20 years. Under the proposed framework, that investor would pay an additional $7,552 in tax compared with the current system.
Capital losses can still be used to reduce taxable gains, but they are unlikely to offset the broader effect of the changes for investors with substantial long-term growth.
The Transitional Split for Assets Held Across 1 July 2027
Assets acquired before 1 July 2027 and sold after that date aren’t fully caught by the new rules. For this reason, the market value of the CGT asset on 1 July 2027 becomes the anchor point, which splits the total gain into two portions.
For investors, this creates an additional record-keeping requirement. Accurate valuations and documentation from that date will become important. They determine how much of a future gain is taxed under the old system and how much falls under the new framework.
What Do the CGT Changes Mean for Investment Property?
Net rental losses on new, established property purchases are quarantined. That single change, combined with the removal of the 50% CGT discount, impacts the after-tax economics of residential property investment significantly.
Here’s how the negative gearing changes and CGT reform play out across three different situations property investors are in right now.
How the Negative Gearing Restriction Works
Reforming negative gearing on established residential dwellings is the other major piece of this package alongside the CGT discount changes. For investment property purchased after budget night on 12 May 2026, rental income that falls short of expenses creates a net rental loss, and that loss is quarantined from 1 July 2027.
Those deferred residential capital gains rules mean losses can’t reduce your assessable income from wages or other sources. Instead, they can only be deducted against residential property income or capital gains from residential property investments when the asset is sold. Any unused amount is carried forward to future years.
What Grandfathering Covers for Existing Landlords
Property investors who settled their purchase before 7:30 pm AEST on 12 May 2026 are fully grandfathered. Their existing arrangements stay exactly as they are, so they can still deduct rental losses against other income in the usual way.
On top of that, capital gains accrued before 1 July 2027 on those properties remain fully eligible for the 50% CGT discount. The limit on negative gearing simply doesn’t apply to them, and it won’t until they sell.
Affordable Housing and the 60% CGT Discount
New residential dwellings and affordable housing sit outside the restriction altogether. Investors who remain eligible under those categories can choose between the capital gains tax discount and the new indexation method at the point of sale, whichever produces the better tax outcome.
That choice makes new builds and affordable housing the more tax-advantaged path for property investment going forward (which is very much the intended policy effect of this reform).
How Do These CGT Changes Affect Business Owners?
Small business CGT concessions, including the 15-year exemption, stay intact under the proposed legislation. That’s a relief for many owners, but the rest of the reform still cuts through business structures in ways that aren’t always obvious.
Let’s see what the new tax rules mean for five situations business owners commonly find themselves in.
- Small Business CGT Concessions Remain: The 15-year exemption and retirement exemption are confirmed unchanged under the Income Tax Assessment Act. However, eligibility thresholds are becoming harder to meet as asset values rise. So it’s worth verifying your position before assuming you qualify.
- Family Trusts Face Two Separate Changes: Trust capital gains will have to follow the new individual CGT rules. On top of that, a separate 30% minimum tax on discretionary trust income adds another layer from 1 July 2028. This reduces the income-splitting advantages many business families have relied on.
- Startup Founders Are Directly Exposed: Where business assets carry a near-zero cost base, indexation provides almost no tax relief at all. The federal government has flagged consultation on startup-specific treatment, but nothing is confirmed yet. Unfortunately, it creates compliance costs for founders planning exits.
- Business Exit Timing Is Now Critical: Settling a business sale before 1 July 2027 preserves full access to the 50% CGT discount on capital gains. Missing that window means paying tax on the full real gain under the new framework.
- Company Structures Are Unaffected Directly: Companies sit outside both the old CGT discount and the new indexation rules entirely. That said, business owners operating through trusts should model whether a tax consolidation into a company structure makes sense given the 2028 trust income changes.
The Senate Economics Legislation Committee was due to report on the Bill by 22 June 2026. Attribution managed investment trusts follow separate treatment under the Working Australians Tax Offset legislation. That’s why anyone reviewing their structure should get advice before acting, given how much is still being finalised.
Major Dates and Steps to Take Before 1 July 2027
The CGT rules and negative gearing changes don’t all land on the same day. For your convenience, the table below maps every important CGT reform date from May 2026 through July 2028:
| Date | What It Means for You |
| 12 May 2026 | Budget night announcement, negative gearing grandfathering cut-off for newly established residential dwellings |
| 22 June 2026 | Senate Economics Legislation Committee report due, final Bill shape may still shift |
| 1 July 2026 | Division 296 commences, additional 15% tax on super balances above $3 million (already law) |
| 1 July 2027 | New CGT rules start, 50% CGT discount removed, cost base indexation and 30% minimum tax begins |
| 1 July 2027 | Pre-CGT assets deemed disposed and reacquired at market value, all entities affected |
| 1 July 2027 | Negative gearing quarantine takes effect for established residential dwellings acquired after 12 May 2026 |
| 1 July 2028 | 30% minimum tax on discretionary trust income commences, three-year rollover relief available |
Each date carries a different action to fulfil, and missing any one of them could mean paying significantly more tax than necessary.
With that timeline in view, here’s where to focus your energy.
Timing Asset Sales and Reviewing Your Structure
Any exit settled before 1 July 2027 still gets full access to the 50% CGT discount on capital gains. Assets held personally are also worth reviewing against other structures. Particularly superannuation funds and complying superannuation entities, which retain their concessional CGT treatment entirely.
If a restructure makes sense, the three-year rollover relief window opening from 1 July 2027 will provide some room to move without immediately triggering a CGT event.
Worth Noting: Non-residential capital gains from business assets are worth modelling separately, given the different treatment they receive under the new framework.
When to Talk to a Tax Adviser About These Changes
Capital gains tax reform interacts with trust reform, Division 296, and the negative gearing changes all at once. Because these reforms overlap, the right response depends heavily on your specific asset mix, marginal tax rate, and structure. Average tax rate assumptions won’t capture your actual exposure.
Tax obligations under the new system are more complex to calculate as well, which will increase compliance costs for many investors and business owners. The proposed legislation is still moving through parliament, so we suggest getting personalised advice before the final rules are locked in.
Time to Get Your Investments in Order
The proposed capital gains tax changes could affect when you sell assets, how you manage long-held investments, and the structures you use to hold them. The greatest risk is assuming the old rules will keep working in the same way. After all, your situation will determine what the right move looks like.
So don’t leave it until the legislation is fully passed. Talk to a qualified tax adviser now and get a clear picture of where you stand. As the rules continue to evolve, staying informed will put you in a stronger position to plan ahead and respond with confidence.
For more coverage on Australian tax reform and what it means for investors and business owners, head to Australian Business Magazine. We regularly analyse policy changes and explain what they mean in practical terms.
Frequently Asked Questions About the 2026 CGT Changes
Some questions come up most often about the 2026 capital gains tax reform. Here are some direct answers to the most common ones. They cover areas the main article touches on but couldn’t go deeper on.
Does the Working Australians Tax Offset Affect CGT?
The working Australians tax offset applies to income from work, rather than capital gains. However, it won’t reduce your gains tax liability under the new framework. Your net capital gain is calculated separately and sits alongside your regular income tax assessment, so the two don’t interact directly.
Do Capital Losses Still Work Under Cost Base Indexation?
Yes, capital losses still apply under the new cost base indexation framework. You can offset capital losses against capital gains in the usual way before the 30% minimum tax calculation kicks in. The CGT rules on loss offsetting haven’t changed as part of this reform.
Are Managed Funds Treated Differently From Direct Shares?
Managed funds aren’t treated differently in terms of the CGT discount removal. Capital gains distributed through managed funds flow through to unit holders under the same individual rules that apply to direct shares.
The main difference is that fund managers handle the indexation calculations, instead of investors directly.
Does CGT Reform Change How Capital Proceeds Are Calculated on a Business Sale?
The capital proceeds calculation itself stays the same under the reform. What changes is how the taxable gain is determined after proceeds are established.
This means cost base indexation replaces the 50% CGT discount in that step, which can materially increase the taxable portion of the gain on a business sale. That’s why timing and structure are so important when a capital gain arises on exit.
