Australia's 50% capital gains tax discount now has a firm end date. From 1 July 2027, individuals, trusts and partnerships will no longer halve capital gains that accrue from that day. Instead, the cost base will be indexed to inflation, and resident individuals will face a 30% minimum tax rate on those gains. With the start date nine months away, investors in shares, property and crypto are starting to work through the new arithmetic.

Already law, not a Budget wish list

This is not a proposal waiting on Parliament. The change sits in Schedule 1 of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which passed the Senate on 25 June 2026 and received Royal Assent the next day.

The ATO's summary says the reforms "replace the 50% CGT discount for individuals, trusts and partnerships with cost base indexation and a 30% minimum tax rate on capital gains".

Just as important, the ATO says the reforms "will only apply to gains that accrue after 1 July 2027". Growth before that date is handled by transitional rules, covered below.

Some mechanics are still being finalised. A formula for splitting gains before and after the start date depends on a legislative instrument, and a further tranche of draft legislation is yet to reach Parliament.

How cost-base indexation works

Indexation is not a new idea. According to the Budget tax explainer, it will be calculated using CPI "in a similar manner to arrangements previously in place between 1985 and 1999".

The principle is straightforward. Rather than taxing half of a nominal gain, the system taxes the real gain: the amount by which the sale price exceeds a cost base that has been lifted in line with inflation.

Under the Act, indexation uses quarterly CPI index numbers, and an asset must be held for at least 12 months. Only cost-base expenditure from 1 July 2027 is indexed, including the deemed reacquisition cost for assets already held on that date.

The government's own illustration features Zoe, who buys shares for $100 on 1 July 2027 and sells them five years later for $125. With inflation of 2.5% a year, her indexed cost base becomes about $113, cutting her taxable gain from $25 to $12.

The 30% is a minimum tax, not a discount

A common misreading is that the discount is simply shrinking from 50% to 30%. That is wrong. The 30% figure is a minimum tax rate on capital gains, and it applies to Australian-resident individuals.

It works as a floor. If a person's ordinary tax calculation leaves their net capital gain taxed at less than 30%, extra tax is added to bring it up to that level. If their marginal rate is already higher, the minimum tax has no effect.

The Budget explainer shows how this plays out for Jack, who realises a $10,000 capital gain on top of $25,000 of other income. His ordinary tax on the gain is $1,400, or 14%. Because that falls short of 30%, he pays an extra $1,600, taking the tax on the gain to $3,000.

There is an important carve-out. People receiving listed income support payments, including the Age Pension, Disability Support Pension, JobSeeker, Youth Allowance, Carer Payment and Parenting Payment, are exempt from the minimum tax if they receive a payment at any time in the financial year the gain is realised.

Hypothetical example: old maths versus new

The following is a simplified, hypothetical illustration only. It ignores the Medicare levy, transaction costs and bracket effects, and assumes inflation of 2.5% a year.

Priya, a resident on the top 45% marginal rate, buys an asset for $500,000 on 1 July 2027. She sells it 10 years later for $800,000, a nominal gain of $300,000.

Under the old rules, the 50% discount would have left $150,000 taxable. At 45%, the tax would be $67,500.

Under the new rules, her cost base indexed at 2.5% a year for 10 years rises to about $640,000. Her real gain is about $160,000, and tax at 45% comes to roughly $72,000.

The outcome swings on inflation and the holding period. Lower inflation means a smaller indexed cost base and a bigger taxable gain. Higher inflation, or weak real growth, means indexation may shelter more of the gain than the flat discount would have. For lower-income investors, the minimum tax may matter more than indexation does.

Who sits outside the new rules

Companies, superannuation funds and life insurance companies keep their existing CGT settings.

Foreign and temporary residents cannot access indexation.

The main residence exemption is unchanged. Investors in eligible new residential builds can choose between the 50% discount and indexation plus the minimum tax, and the 60% discount for qualifying affordable housing is retained. The four small business CGT concessions also survive.

Otherwise, the rules apply to CGT assets generally, including shares, units, investment property, collectibles and crypto. The Act contains no special carve-out for crypto or collectibles.

From 1 July 2027 there will also be no such thing as a pre-CGT asset. For assets bought before 20 September 1985, growth up to that date is disregarded, but gains accruing afterwards will be taxed.

Transition rules and what to watch

Assets held on 1 July 2027 are deemed to be sold and reacquired at market value just before that date. The resulting gain is deferred until an actual sale, and the pre-2027 portion keeps the 50% discount.

Taxpayers can rely on a valuation or on an apportioning method to be set by legislative instrument.

Key items to watch include the Tax Reform No. 3 Bill, which the NTAA expects before the end of 2026, the final apportionment formula, and ATO guidance on valuations. The NTAA has also flagged a design issue in how certain rental losses interact with the minimum tax. Because outcomes depend on individual circumstances, a registered tax agent or adviser may help investors understand how the rules apply to them.