Capital Gains Tax Changes: Indexation and the 30% Minimum Tax Explained
Status at 5 September 2026: The core framework is enacted through the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 and companion rates legislation. A second tranche of technical amendments (the draft Tax Reform No. 3 Bill) was consulted on until 21 August 2026 and was not yet law at this date. Effective date: The new treatment applies to eligible capital gains accruing from 1 July 2027, when those gains are later realised. In one sentence: It is not a flat 30% tax on your sale proceeds, and the change is not retrospective across your entire existing gain.
For many assets held at least 12 months, the familiar 50% CGT discount will give way to cost-base indexation and a minimum 30% tax on the resulting real gain. The aim is to separate inflation from genuine growth, but the calculations and transition rules will be more involved.
What is changing from 1 July 2027?
Under the current general rule, an eligible individual or trust holding a CGT asset for at least 12 months can usually reduce the gain by 50%, without measuring the inflation component.
For eligible gains accruing from 1 July 2027, the reform instead uses cost-base indexation. Broadly, the cost base is increased using Consumer Price Index movements, reducing the nominal gain to a real, inflation-adjusted gain.
The reform broadly covers eligible property and shares held at least 12 months by individuals, partnerships and trusts. Other entities can differ.
How does the 30% minimum tax work?
The minimum-tax top-up applies to an Australian-resident individual, including certain trust gains attributed to an individual under the trust CGT rules. It is not a blanket 30% minimum imposed directly on every trust, partnership or company.
The 30% figure is often misreported. It is neither 30% of the selling price nor automatically 30% of the nominal gain. It applies to the real capital gain after relevant adjustments. If the ordinary tax attributable to that gain is already at least 30%, the minimum adds nothing; if it is lower, a top-up may apply.
Government guidance says a person receiving a means-tested income-support payment, such as the Age Pension or JobSeeker, in the financial year of realisation will be exempt from the minimum tax. Eligibility and calculation details should be checked at the time of sale.
What happens to assets you already own?
The reform is designed to split the gain around 1 July 2027.
For an eligible asset owned before that date and sold later, the pre-1 July 2027 gain keeps existing treatment, including the 50% discount where available. The later portion moves to indexation and the minimum-tax framework.
The Government’s published design allows the 1 July 2027 value to be established using an appropriate valuation or a specified apportionment method, with ATO tools intended to assist. The detailed second tranche was still in exposure-draft form at 5 September 2026, so the final technical requirements should be confirmed before a transaction or valuation is locked in.
Important concessions remain
The main-residence exemption and the four small business CGT concessions remain, subject to their tests. The 60% discount for qualifying affordable housing is also retained. For a qualifying new residential build, an investor can choose the existing 50% discount or the new method when selling.
The reforms also expand access to the 50% small-business active-asset reduction from the income year that includes 1 July 2027. Broadly, eligible small-business entities can use the ordinary less-than-$10-million turnover test rather than the old special $2 million CGT turnover threshold for this concession. This change applies to the active-asset reduction only; it does not move every Division 152 concession to a $10 million turnover threshold.
A simple indexation example
Suppose Priya buys an eligible parcel of shares for $100,000 on 1 July 2027 and sells it five years later for $125,000. Assume, purely for illustration, that cumulative CPI indexation increases the cost base to $113,000.
The nominal gain is $25,000, but the indexed real gain is $12,000 before costs, losses and other adjustments. If Priya’s calculated tax on it is already $3,600 or more, the minimum adds nothing. If it is lower and no exemption applies, a top-up may be required.
The new rules will not always produce more tax. Results depend on inflation, the return, the holding period, losses, your tax rate and any concessions.
What investors should do before 1 July 2027
There is no need for a rushed sale simply because the rules change. Instead:
preserve acquisition, settlement, improvement and ownership records;
consider whether a defensible 1 July 2027 valuation will help;
model sale years, losses and income-support implications; and
check main-residence, small-business, affordable-housing and new-build rules.
Frequently asked questions
Is the 50% CGT discount abolished on 1 July 2027?
Not across the board. Eligible gains accrued before 1 July 2027 retain transitional treatment, and qualifying new residential builds can have a choice. Other concessions and exemptions also remain.
Do I pay tax on 1 July 2027 even if I do not sell?
No. The date changes the calculation; it does not itself tax an unrealised gain. A relevant CGT event is still required.
Should I order a valuation now?
Not automatically. Check the final technical rules and ATO guidance first; listed-share prices may make valuation simpler.
Plan your capital gain with Regans Accountants
Before selling property, shares or a business asset, ask Regans Accountants to model the old and new components, available losses and any concessions. We can also help you identify the records and valuation evidence worth putting in place before 1 July 2027.
General information only, current at 5 September 2026. The second technical tranche was not law at that date and details may change. Speak with us about your own circumstances.
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