CGT Changes

CGT reforms and minimum tax on capital gains

From 1 July 2027, enacted tax changes will replace the 50% CGT discount with cost base indexation for capital gains made by Australian resident individuals and trusts.

A minimum tax rate of 30% will also apply to the real component of relevant capital gains realised by Australian resident individuals from CGT events occurring on or after 1 July 2027, but only to the portion of the gain accruing after that date. It applies to all CGT assets, including capital gains distributed from trusts.

These changes do not directly apply to companies (which do not currently benefit from the 50% CGT discount) or superannuation funds, including SMSFs, which will continue to benefit from the one third CGT discount.

While some of the technical details are still being resolved and further amendments are likely to be made, they will not alter the substantive changes already legislated. These changes may make 30 June 2027 asset valuations appropriate in some circumstances, although it is too early to commission those valuations.

Pre-CGT assets

From 1 July 2027, all assets acquired before 20 September 1985 (pre-CGT assets) will be brought into the CGT regime. This change applies to all entities, including individuals, companies and trusts.

Pre-CGT assets held at 30 June 2027 will be treated as if they were sold and reacquired on 1 July 2027 at market value (or an approved apportioning value). Any capital gain or loss from this deemed disposal will be disregarded, preserving the historical CGT exemption. However, the deemed reacquisition will establish a new cost base, and from that point onward, any capital gain arising on a later sale will be subject to CGT.

Taxpayers may generally choose between market value or an apportioning method (details of which are still being finalised) to set the new cost base, and indexation may apply on or after 1 July 2027.

Timeline of changes

What should you do?

These are the most significant changes to the taxation of capital gains since the CGT regime was introduced in 1985. Please speak with your usual PVW Partners adviser about how these changes may affect you.