Capital gains tax (CGT) isn't a separate tax in Australia — it's part of your income tax, applied to the profit you make when you sell an asset like an investment property, shares, or a crypto holding. How much of that profit is taxed depends heavily on how long you held the asset, and that's about to change significantly.
How CGT currently works
When you sell a CGT asset for more than its cost base (broadly, what you paid plus certain costs), the difference is a capital gain, added to your assessable income and taxed at your marginal rate. If you held the asset for more than 12 months before selling, individuals and trust beneficiaries can apply the 50% CGT discount — only half the gain is taxable. Companies don't get this discount at all, which is one reason many investors hold growth assets personally or in trusts rather than through a company.
Worked example under current rules
| Item | Amount |
|---|---|
| Sale price | $500,000 |
| Cost base | $350,000 |
| Capital gain | $150,000 |
| 50% CGT discount applied (held >12 months) | − $75,000 |
| Taxable capital gain | $75,000 |
That $75,000 is then added to the seller's other income for the year and taxed at their marginal rate — it isn't a separate flat rate.
The family home is generally exempt
Your main residence is usually exempt from CGT entirely under the principal place of residence exemption — one of the few CGT concessions untouched by the upcoming reform.
Calculate CGT under the current rules.
Use the Capital Gains Tax Calculator →What changes from 1 July 2027
Legislation passed in June 2026 (the Treasury Laws Amendment (Tax Reform No. 1) Act 2026) replaces the 50% CGT discount with a return to a system Australia used before 1999: cost-base indexation, combined with a new 30% minimum tax rate on capital gains for individuals, trusts, and partnerships.
- Under the new system, an asset's cost base is adjusted upward for inflation between purchase and sale, rather than simply discounting the raw gain by half.
- A minimum tax rate of 30% then applies to the resulting (indexed) gain — regardless of the seller's personal marginal tax rate.
- The change applies to shares, trust units, and property alike, not just real estate.
Gains are split into a pre- and post-2027 portion
The reform isn't retroactive. Gains that accrued before 1 July 2027 keep the old 50% discount treatment; only gains accruing from 1 July 2027 onward fall under the new indexation-and-minimum-tax framework. In practice, this means splitting a single capital gain into two portions based on a formal valuation (or an elected apportioning method) at the 1 July 2027 changeover date — which will require careful record-keeping for anyone holding assets through the transition.
New residential property gets a choice
To keep incentivizing new housing supply, individuals and trusts selling new residential dwellings (or affordable housing) on or after 1 July 2027 can elect to use either the old 50% discount or the new indexation-plus-minimum-tax regime — whichever works out better for their situation.
Why this matters right now, in 2026
If you're planning to sell an investment property or a substantial shareholding, the timing of that sale relative to 1 July 2027 now genuinely affects your tax outcome — realizing a gain before the changeover locks in the old 50% discount treatment for the gain accrued up to that point. This is exactly the kind of decision worth modelling with an accountant well before the date arrives, not after.
The 2027 reform is now legislated, but transitional detail (valuation methods, apportionment mechanics, small business CGT interactions) is still being finalized through ATO guidance. This is general information, not financial advice — consult a tax professional before making decisions based on the upcoming changes.