Key Highlights

  • Federal Parliament returns on Monday 12 October with part of the capital gains tax overhaul still at exposure-draft stage.
  • These changes are already law.
  • The minimum tax is a floor.
  • Gains that build up before 1 July 2027 keep the 50% discount.

Federal Parliament returns on Monday 12 October with part of the capital gains tax overhaul still at exposure-draft stage. For now, the government's own worked examples are the clearest guide to who comes out ahead and who pays more. In the Budget tax explainer, the hypothetical investors range from one paying $24,858 less tax to another paying $58,851 more. The main thing separating them is how fast each asset grows compared with inflation.

What the law says from 1 July 2027

These changes are already law. The Tax Reform No. 1 Act 2026 replaces the 50% CGT discount for individuals with indexation of the cost base from 1 July 2027. It also adds a 30% minimum tax on gains that accrue from that date.

The minimum tax is a floor. It is not a flat rate or a new discount. It only adds tax where a person's rate on the gain is below 30%, and it only applies to real, indexed gains that accrue after 30 June 2027.

Gains that build up before 1 July 2027 keep the 50% discount. This works through a deemed sale at market value on that date, and no tax is due on it until the asset is actually sold.

Three investors, one asset, three outcomes

The explainer's main comparison uses three people. Each holds a $500,000 asset for 10 years, and inflation is assumed to run at 2.5% a year. The only difference between them is the asset's annual return.

David earns 5% a year and pays $8,075 more tax than he would under the old discount. Kate earns 7.5% a year and pays $58,851 more. Ben earns 2.5% a year, which only keeps pace with inflation. He pays $24,858 less, because once his cost base is indexed he has no real gain left to tax.

The pattern follows from how the reform works. Indexation only shelters the part of a gain that reflects inflation, whereas the old discount halved the whole gain. The faster an asset outpaces inflation, the more the switch costs. Where growth barely beats inflation, indexation can be more generous than the discount.

Existing owners: what happens to Jane and Michael

Most people affected already own assets rather than buying after July 2027. The explainer's "Jane" bought a property for $800,000 in 2022. It is worth $1,131,371 on 1 July 2027, and she sells it for $1.6 million in 2032.

Her pre-2027 gain of $331,371 is halved to $165,685.50. Her post-2027 gain is $319,958, measured against an indexed cost base of $1,280,042. Her total taxable gain is about $485,643, compared with $400,000 under the old rules.

At 47%, Jane's tax is $228,252 instead of $188,000. That is about $40,252 more.