At a glance
- •Current system: half of any capital gain (held >12 months) is added to taxable income
- •From 1 July 2027: cost base indexed by CPI, then taxed at marginal rate with a 30% floor
- •Only applies to gains accruing after 1 July 2027 — earlier accrual uses the old 50% discount
- •New-build investors can choose between new and old systems
- •Main residence exemption unchanged
Old system vs new system
Until 30 June 2027
From 1 July 2027
Worked examples
The new system can produce a higher or lower tax bill depending on how much of the gain is inflation versus real, and your marginal rate. Below assumes a 10-year hold, $500,000 purchase, $800,000 sale, and 3%/year CPI.
Key insight: Whether the new rules cost you more depends on inflation and your marginal rate. High inflation and long holds favour the new system (indexation outpaces the lost 50% discount). Lower-marginal-rate investors are most likely to see the 30% floor activate on their real gain.
Who's affected most?
Likely worse off
- •Short to medium holds (under 10 years) where indexation can't outpace the lost 50% discount
- •Lower-marginal-rate investors where the 30% floor lifts effective tax above their actual rate
- •Established residential property held outside grandfathering
Likely better off (or neutral)
- •Long holds (20+ years) with high CPI accumulation — indexation can outpace the old 50% discount
- •High-marginal-rate investors holding long-dated assets through inflationary periods
- •New-build investors who can choose between systems
- •Anyone with a main residence (unchanged)
Frequently Asked Questions
When does the new CGT regime start?
From 1 July 2027. Only capital gains that accrue after that date are affected. Gains accrued before 1 July 2027 (even if realised later) continue under the existing 50% discount rules.
Are my existing investments grandfathered?
Assets acquired before 7:30pm AEST on 12 May 2026 retain the existing arrangements for gains accrued up to 30 June 2027. From 1 July 2027 onward, the new indexation + minimum-tax rules apply to future accrual.
What is cost base indexation?
Your purchase price (cost base) is adjusted upward for inflation (CPI) between purchase and sale. Only the increase above inflation is taxed. This is similar to the system Australia used before 1999, but with a 30% minimum tax floor on net realised gains.
Does the change apply to my main home?
No. The main residence exemption is unchanged. You still pay no CGT when you sell your home (subject to the existing rules around income-producing use and absences).
Does it apply to shares as well as property?
Yes — to all CGT assets held more than 12 months. The Government has signalled exemptions for new builds, where investors can choose between the new and old systems.
Is this change legislated yet?
Not yet. It was announced in the 2026-27 Federal Budget on 12 May 2026 and requires legislation. Final rules may differ from the announcement.
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This is general information only and not financial or tax advice. Final rules subject to legislation. Consult a tax professional for advice on your specific assets.
Last updated: 25 May 2026