The 2026–27 Budget represents a structural shift in how wealth and investments are taxed in Australia. The traditional Capital Gains Tax (CGT) discount is being overhauled, which will require a complete rethink of traditional tax planning for those accumulating assets.
- The 50% CGT Discount Replaced by Indexation
For decades, the 50% discount has been a cornerstone of property and share investing.
– The News: From 1 July 2027, the current 50% CGT discount will be replaced with inflation-adjusted indexation for all assets held for more than 12 months.
– What it means: Instead of simply halving your gain, your “cost base” will be adjusted for inflation, and you will pay tax on the remaining “real” gain.
– The EMspire Tip: This change is prospective. Gains accrued on existing investments before 1 July 2027 will still retain the 50% discount, providing a window for us to review your current portfolio before the new rules apply.
- Proposed 30% Minimum Tax on Realised Gains
The government is introducing a new floor for tax paid on investment profits.
– The News: The changes include a new minimum tax rate of 30% on realised capital gains.
– The Objective: This is designed to reduce the incentive for investors to hold onto assets solely for tax advantages and to ensure a “fair amount” of tax is paid in line with lifetime incomes.
– The EMspire Tip: This minimum rate will be applied after indexation has been accounted for.
- Broadening the CGT Net to Pre-1985 Assets
One of the most significant changes is the removal of the long-standing “grandfathered” status for very old assets.
– The News: For disposals occurring from 1 July 2027, the CGT net will be broadened to include pre-1985 assets.
– The Impact: Capital gains on these assets arising before 1 July 2027 will remain exempt, but any growth in value after that date will now be subject to the new CGT rules.
A Heads-Up for Home Builders To maintain incentives for housing construction, investors in new residential properties will have a choice: they can either use the new indexation and minimum tax rules OR stick with the traditional 50% CGT discount.
The team at EMspire Advisory are trusted, qualified Chartered Accountants, tax agents, and small business accountants. We work closely with our clients to achieve the best possible outcomes. To find out more, please contact us!
Please note that this information is not specific and is general in nature and cannot be relied on as advice. Please contact us for advice specific to you and your circumstances.