Australian Capital Gains Tax Overhaul - June 2026 Update

Hugh at The Henry Desk
Jun 27
2 min read

The Australian Government has now passed one of the largest tax reform bills in recent times, overhauling how capital gains tax and negative gearing is handled, calculated, and even when they will terminate certain tax advantages.

Let's cover these developments in a nutshell - they will have wide ranging ramifications and it is important to grasp them now.

The 50% CGT discount is being replaced with inflation indexation.
The legislation replaces the 50 per cent CGT discount for individuals, trusts and partnerships with cost base indexation. Simply put: instead of automatically halving your taxable gain, you'll only be taxed on the "real" gain above inflation — the purchase price gets adjusted upward by CPI before the gain is calculated.
There's a new 30% minimum tax on capital gains.
The 30% minimum tax on capital gains means there's less or no benefit in selling assets in years when your income is low, although if your marginal tax rate is above 30% you may have to pay a top-up tax. So low-income years no longer shelter big gains the way they used to.
It starts 1 July 2027, not now and only applies to gains from that date forward.
The changes to CGT apply to all capital gains accruing on and after 1 July 2027. Gains that build up before then keep the old 50% discount, so most existing assets get split into a "before" and "after" portion when eventually sold.
Long-exempt "pre-1985" assets lose their shield.
The changes to CGT apply to all capital gains accruing on and after 1 July 2027, including gains accruing on pre-CGT assets. Assets bought before 20 September 1985 — previously CGT-free forever — will now be taxed on any growth after 1 July 2027.
The family home stays exempt, new builds get a choice, and negative gearing tightens.
The main residence exemption is untouched. Investors in new builds can choose the 50% discount or the new arrangements depending on what they see as most advantageous for them, and negative gearing for residential property will be limited to new builds with properties already held at 7:30pm on 12 May 2026 grandfathered out of the negative gearing change. This should act to incentivise the growth in new-build housing stock.

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Further Reading

For those interested in getting a deeper look at the changes, check out our sources below.