This is a two-part series. In this blog (part 1), we address the Capital Gains Tax changes and transition date, how this could affect you and the steps that we recommend you take to prepare for the most significant changes to the CGT system since the ‘90s.
In part 2, we demonstrate the impact of these changes with case study examples. Most importantly, we address the preparation process to ensure you are positioned to make informed decisions when the changes take effect.
What are the changes?
The Capital Gains Tax (“CGT”) changes announced at the 2026-27 Federal Budget are now law and represent the most significant changes to the CGT system since the introduction of the 50% CGT discount in 1999.
In summary, from 1 July 2027:
- The cost base indexation method will replace the existing 50% CGT discount for individuals and trusts.
- A minimum 30% tax rate will apply on the capital gains.
- These changes will apply to capital gains accruing after 1 July 2027 and include gains on pre-CGT assets held at 30 June 2027.
Companies and superannuation funds have not been impacted and will continue to apply the existing CGT rules on disposals. The main residence exemption also remains unchanged.
The 50% general discount will continue to be available on CGT events that relate to new residential dwellings acquired after 1 July 2027. However, you will have the option to choose between the 50% discount and the indexation method when working out your capital gain.
When do these changes apply?
The new CGT rules will apply from 1 July 2027.
The key transition date is 30 June 2027, as the value of the CGT assets at this date will be critical in determining how future capital gains are calculated under the new regime.
For this reason, if you intend to retain CGT assets beyond 30 June 2027, a professional valuation of those assets is required as close as possible to the transition date – read more about this in part 2.
How will this affect you?
These changes may have a significant impact on property investors, business owners, and shareholders who hold assets that may be subject to CGT in the future.
Tip: If you own assets that may be subject to CGT in the future, it is crucial to obtain a valuation of the assets as at 30 June 2027 to establish the market value of the assets at the transition date. Obtaining valuations years later may prove difficult, expensive and potentially open to challenge, which is why it is important to secure reliable evidence of market value at or around 30 June 2027 and retain it with your tax records.
What do we need to do and when?
For most investors, at a minimum we would recommend the following actions plan:
- Identify assets likely to be retained beyond 30 June 2027.
- Review ownership structures to determine whether any planning opportunities exist.
- Consider future sale plans and how the timing of disposals may be affected by the reforms.
- Seek advice before undertaking any restructuring or asset transfers.
As always, every taxpayer’s circumstances are different. If you would like to understand how these reforms may affect your investment portfolio, business assets or family trust structure, please get in touch with your TAG Representative or contact us.
For practical examples on how the new Capital Gains Tax is calculated and the taxation impacts of the changes see part 2; The Impact of the Capital Gains Tax Changes.
A message from our team
If you have questions or would like to discuss how the changes might affect future plans, please feel free to contact us. We’re always here to help.
Call 03 9886 0800 or email team@tagfinancial.com.au
Note: Whilst AI may have been used to assist in the research of this document, the content has been written and reviewed by a representative of TAG Financial Services Pty Ltd.
Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2026. Please do not reproduce without the expressed written consent of the author.