2026-27 Federal Budget

What the Budget means if you hold shares or other investments

This is now law, not a proposal. From 1 July 2027 the 50% CGT discount is replaced with cost base indexation and a 30% minimum tax on real gains, and pre-1985 assets are brought into the CGT net for the first time. Gains accrued up to 1 July 2027 keep the existing rules and the 50% discount — which makes evidence of what your holdings were worth on that date the single most useful thing to prepare for. Long-held portfolios with significant unrealised gains are affected most.

Current as at 9 October 2026. Tax law is changing rapidly following the 2026–27 Budget. Measures marked Before Parliament, Consultation or Announced are not law and may change or not proceed.

Pre-1 July 2027

50% discount

Existing 50% CGT discount applies on gains accruing before 1 July 2027 — preserved even when sold later.

From 1 July 2027

Indexation + 30%

Cost base indexed for CPI, with a 30% minimum tax rate on the real (inflation-adjusted) gain.

Key valuation date

1 July 2027

Every CGT asset is deemed disposed of and reacquired just before this date. No tax is payable at that point — but the value you can evidence sets the split between old and new method.

How the change works

Two parts to the same reform

Law — Tax Reform No. 1 Act 2026, assented 26 June 2026

Two related changes that work together and commence together on 1 July 2027. The 50% CGT discount goes; indexation and a 30% minimum tax replace it. The transition is split — gains that accrued before the start date keep the old rules, gains after it use the new rules.

Law Passed and assented. Plan around it.

Before Parliament Introduced, not yet passed.

Consultation Treasury paper or exposure draft only.

Announced Budget announcement. No draft, no paper.

Change 01

50% discount is being replaced

From 1 July 2027, the existing 50% discount on capital gains for assets held over 12 months will be replaced by cost base indexation. The cost base is adjusted upwards each year by the CPI — recognising inflation rather than discounting nominally.

Pre-1 July 2027 50% discount preserved. Gains accrued before the start date keep the existing treatment, even if you sell after 1 July 2027.
From 1 July 2027 Indexation applies. Cost base increases each year in line with CPI. Real (post-inflation) gain is the taxable amount.
Deemed disposal Every CGT asset you hold at 30 June 2027 is treated as sold and immediately reacquired just before 1 July 2027. No tax is payable at that point. It is the mechanism for splitting the gain, not a taxing event — a point worth making to clients who hear “deemed disposal” and assume a bill is coming.
Splitting the gain Normally based on market value at the end of 30 June 2027. For listed shares and units, that is simply the closing market price — the alternative apportionment method is not available for assets with a readily ascertainable market value. The draft method (Consultation — exposure draft 3 Aug 2026) is limited to real property and assets without a ready market value, such as shares in private companies. It assumes one steady compounding growth rate from purchase to sale — not even growth — so where growth was concentrated before 30 June 2027 a real valuation usually produces the better answer.
Practical effect For high-return long-held assets, indexation is less generous than the 50% discount. For modest-return assets, it can be similar.

Change 02

30% minimum tax on real gains

A 30% minimum tax rate applies to real capital gains accruing from 1 July 2027. If your marginal rate would otherwise be below 30%, the gain is taxed at 30% regardless.

If your MTR is ≥30% No practical effect — you’re already above the minimum. The change here is just the loss of the 50% discount.
If your MTR is <30% The minimum bites. The traditional “realise gains in a low-income year” strategy is largely ended.
Exemption Recipients of any income support payment in the year (Age Pension, JobSeeker, DSP, Carer Payment, etc.) are exempt from the 30% minimum.

A change most clients don’t realise is coming

Pre-1985 shares are no longer forever-exempt from CGT

Shares acquired before 20 September 1985 have always sat outside the CGT regime. From 1 July 2027, that ends — though the historic gain remains protected, only future appreciation gets taxed.

For long-held portfolios

What changes — and what doesn’t

Pre-CGT assets — long-held shares acquired before 20 September 1985, or inherited from someone who acquired them before that date — have always been outside CGT entirely. Under the new rules, they’re brought into the CGT net from 1 July 2027. This affects clients with intergenerational share portfolios that have been treated as forever-exempt.

The key relief: only gains accruing after 1 July 2027 will be taxed. The historic appreciation — often the bulk of the gain on a 40-year-old portfolio — remains CGT-free. The cost base resets to market value at the end of 30 June 2027.

For clients with material pre-CGT holdings, establishing a defensible 30 June 2027 valuation matters enormously. For listed shares this is straightforward (generally the closing price on 30 June 2027). For unlisted or harder-to-value assets it may need professional assistance.

Worked example

A long-held single-stock holding sold in 2029–30

A typical client with a parcel of CBA shares bought at IPO in 1991. Showing how the split treatment works for an investor selling several years after the new rules begin.

David — investor on a 39% marginal rate

2,000 CBA shares bought 1991 at $5.40 ($10,800), sold 2029–30 for $360,000

David bought 2,000 CBA shares in the September 1991 IPO at $5.40. He’s held them for 38 years. CBA closed at $170 on 30 June 2027, making his parcel worth $340,000 at that date. He sells in late 2029-30 at $180 per share, receiving $360,000.

Pre-1 July 2027 portion Old method

Original cost (1991)	$10,800
Market value at 30 June 2027 ($170 × 2,000)	$340,000
Pre-1 July 2027 gain	$329,200
Less 50% CGT discount	− $164,600
Taxable amount	$164,600
Tax at 39% (Medicare incl.)	$64,194

Post-1 July 2027 portion New method

Cost base (1 July 2027)	$340,000
Indexed cost base (2.5% CPI × 2yr)	$357,213
Sale price (2029–30)	$360,000
Real (indexed) gain	$2,787
Tax at 39% (above 30% minimum)	$1,087
Total tax on this portion	$1,087

David’s total CGT: $65,281. Under the old 50% discount applied to the full $349,200 gain on the same sale, the tax would have been around $68,094 — so David pays about $2,800 less. Almost all of his gain accrued before the transition and keeps the discount, and the growth after it was mostly inflation, which indexation shelters. For long-held shares the historic gain is protected; the new rules cost more only where there is strong real growth after 1 July 2027. (Dividends, brokerage and DRP parcels are ignored to keep the example simple.)

The story changes for shares bought after the transition

The example above shows a long-held position where most of the gain was already “banked” under the old rules. For shares purchased after 1 July 2027, the entire gain is under the new method — indexation rather than the 50% discount. For high-return stocks held for a long time, this is materially worse than the current treatment.

As a rough indicator: if your real (post-inflation) return averages over about 5% per year, you’re generally worse off under indexation than under the 50% discount when you eventually sell.

What this doesn’t change

Important carve-outs and exemptions

Several common situations are unaffected by the change. Worth knowing what these reforms don’t apply to.

Unaffected

Shares held in your SMSF

A Treasury official confirmed in the Budget Lockup that complying super funds, including SMSFs, will continue to receive the 33⅓% CGT discount. The effective rate on discounted gains stays at 10% in accumulation phase, 0% in pension phase.

Unaffected

Short-term gains (held under 12 months)

Capital gains on assets held for less than 12 months never qualified for the 50% discount in the first place. They’re still taxed at full marginal rates, with no indexation. No change.

Unaffected

Recipients of income support payments

If you receive any income support payment (Age Pension, JobSeeker, DSP, Carer Payment, etc.) in the year you realise a gain — even a part-pension — you’re exempt from the 30% minimum tax.

Proposed

Start-up and early-stage investors

Consultation

A separate 50% CGT discount for early-stage investors, founders and employee share scheme participants in innovative start-ups is proposed. Treasury released exposure draft legislation (Treasury Laws Amendment (Tax Reform No. 5) Bill 2026: Innovative business CGT concession) in September 2026; consultation closed 28 September 2026. There is no bill yet. If you hold or are considering an early-stage investment, this is worth watching — but not yet worth relying on.

Unaffected

Capital losses

Capital losses can still be offset against capital gains in the usual way. Carry-forward losses retain their character. Losses don’t get indexed under the new method — they remain at face value.

What about foreign shares and global ETFs?

International shares (US-listed, foreign-listed) and ETFs holding global equities are treated the same way as Australian shares for CGT purposes. The cost base and sale proceeds are converted to AUD at the exchange rates on the respective transaction dates. The new indexation and 30% minimum tax rules apply identically.

The only complication is that foreign currency movements can amplify or offset the underlying investment return — but that’s no different from today’s rules.

What you should do

Practical steps over the next 18 months

Different actions depending on your portfolio mix and time horizon. For most clients, the first step is documenting what you hold and what it’s worth approaching the transition.

Start now on how you will evidence market value at 30 June 2027

This is the practical action point for almost every client. Listed shares are straightforward — generally the closing price on 30 June 2027. Unlisted holdings, private company shares, units in unlisted trusts and anything without a market price are not, and those are the ones where the split between old and new treatment is worth real money. Alongside that, get cost-base records in order now: buy contracts, dividend reinvestment plans, corporate action adjustments and inherited holdings, while the data is still findable.

If you hold pre-1985 shares — get a 30 June 2027 valuation plan ready

Listed shares are easy (generally the 30 June 2027 closing price). For unlisted, inherited, or hard-to-value assets, plan now for how you’ll establish the 30 June 2027 value. Pre-CGT gains stay exempt, but only if you can prove the value at the transition date.

If you were planning to realise positions anyway — consider the timing

If you were already going to sell shares between now and 2028 — for rebalancing, simplification, or to fund spending — bringing the sale forward to before 1 July 2027 keeps the 50% discount on the full gain. Don’t accelerate decisions that don’t make investment sense, but if the timing was already flexible, this is a meaningful factor.

If you’re a part-pensioner — the income-support exemption applies to you

Receiving any Age Pension (even a small part-pension) in the year you realise a gain exempts you from the 30% minimum tax. For clients close to but not over the pension cut-off, this interaction is worth modelling carefully.

If you split investments with a low-income spouse — the strategy weakens

The traditional approach of holding shares in the lower-earning spouse’s name to access lower marginal rates on disposal is significantly reduced — both the 50% discount goes and the 30% minimum kicks in. Worth reviewing whether the structure still suits.

Check how this interacts with your other Budget exposures

If you also have investment property, run a discretionary trust, or have an SMSF, the CGT changes interact with several other Budget measures. The full picture often produces different planning outcomes than any single measure would suggest.

The reform is law. Some of the detail still isn’t.

The CGT changes on this page are law — Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Royal Assent 26 June 2026, commencing 1 July 2027. This is no longer a Budget announcement and planning should assume it will happen.

What is still being settled is the second tranche of detail — the mechanics of the apportionment election and the definition of a “new build” for the property carve-out. Treasury released an exposure draft in early August 2026 and consultation closed on 21 August 2026; no bill has been introduced as at 9 October 2026. Documentation and valuation preparation make sense now. Selling purely for tax reasons rarely does — run the numbers with us first.

Other Budget changes that might apply to you

Share investors usually fit more than one of these

Most clients with share portfolios also hold property, have an SMSF, or run a business. The full picture matters — planning gets done across all of it, not just one slice.

If this applies

I own (or am buying) an investment property

Now law. Losses quarantined from 1 July 2027 — but property held at 12 May 2026 is grandfathered.

Read about property changes If this applies

I have a Self-Managed Super Fund

Division 296 has commenced. From 10 August 2026 new SMSF borrowing arrangements cannot be used to buy real property other than business real property.

Read about SMSF changes If this applies

I run a business through a trust

A proposed 30% minimum tax on discretionary trusts from 1 July 2028. Exposure draft released 3 September 2026 — no bill.

Read about trust changes If this applies

I run a small business

Permanent $20,000 write-off and loss carry-back are law (Royal Assent 26 August 2026). PAYG changes announced only.

Read about small business changes If this applies

I’m a PAYG employee

All law: the rate cut on the $18,201–$45,000 bracket, the $1,000 instant deduction and the $250 offset.

Read about employee changes If this applies

I’m retired or close to it

The private health rebate cut for over-65s is a bill before Parliament, not law. CGT changes and Division 296 are law.

Read about retirement changes

See the real after-tax cost of your portfolio — not just the headline.

The CGT changes affect different portfolios very differently — long-held vs recent, Australian vs international, individual vs spouse-held, in-super vs out-of-super. We help clients model their specific position and plan accordingly.

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