What is capital gains tax?
When you sell something for more than you paid, the profit is added to your income and taxed.
For gains after 1 July 2027, the 50% discount is replaced by a discount for inflation and a 30% minimum tax.
The rule
- A sale before 1 July 2027 stays under today's rule. A resident individual who has owned an asset for at least 12 months takes 50% off the gain.
- From 1 July 2027, for a resident individual, the cost of an asset is raised by inflation (the CPI) for the time it is held from that date, and that replaces the 50% discount. Indexation can shrink a gain but cannot create a loss (Act No. 49, Schedule 1).
- An asset held across 1 July 2027 is split at that date. The gain up to then keeps the 50% discount. The gain after it is cut by indexation. The value on 1 July 2027 is the market value just before that day, or the result of an apportioning method.
- The apportioning method is a draft. The Minister may set it by legislative instrument, and the instrument is not final.
- Division 119: a resident individual pays extra tax so that the gain made from 1 July 2027 is taxed at no less than 30%, before offsets. The Act works it as 30% of that gain, less the tax the gain actually adds to the bill.
- The 30% minimum does not apply in a year when the person gets a listed payment, such as the age pension or JobSeeker (s 119-15).
- A new residential home can use either the 50% discount, or indexation with the minimum tax, when it is sold.
- What counts as a new build is not final. The meaning, including a 24 month occupancy test, is in the Tax Reform No. 3 Bill, introduced on 14 October 2026, which has not passed.
- The main residence stays exempt. The four small business CGT concessions are unchanged. The 60% discount for qualifying affordable housing is kept.
- Treasury's cases: $500,000 bought on 1 July 2027, held 10 years, 2.5% inflation, $100,000 of other income. At 5% a year the taxable gain is $174,405 instead of $157,224, which is $8,075 more tax. At 2.5% there is no taxable gain instead of $70,021, which is $24,858 less tax. At 7.5% it is $390,474 instead of $265,258, which is $58,851 more tax.
What people ask
How much capital gains tax do I pay on $500,000?
It depends on the gain, not on the sale price, and on your other income. Treasury's example: an asset bought for $500,000 on 1 July 2027 and held 10 years, with $100,000 of other income and 2.5% inflation. If it grows 5% a year, the taxable gain is $174,405 and the tax is $8,075 more than under the old rule.
How does the CGT discount removal work?
For gains made from 1 July 2027 the 50% discount is replaced by indexation: the cost is raised by inflation and only the gain above that is taxed. An asset held across the date is split at 1 July 2027, and the part before keeps the 50% discount.
Does the 50% CGT discount end on 1 July 2027?
Not for the gain up to that date. For an asset held across it, that part keeps the discount. For the gain after it, indexation applies instead. A new home can choose either.
Can slow gains pay less than before?
Yes. In Treasury's cases a 2.5% return, level with inflation, pays $24,858 less, and a 5% return pays $8,075 more. Indexation takes off the inflation part, whatever the size of the gain.
Who pays the 30% minimum?
A resident individual whose gain from 1 July 2027 is taxed below 30%, unless they get a listed payment such as the age pension in that year. Someone already taxed at 30% or more on the gain pays nothing extra.