How the CGT discount works today
If you're an individual or a trust and you've held a CGT asset (shares, an investment property, a business interest) for at least 12 months before the CGT event that triggers the gain, you can discount the taxable gain by 50% before it's added to your assessable income. There's no discount for assets held under 12 months, or for gains made by companies.
If you acquired the asset before 21 September 1999, you have a second option instead of the 50% discount: the indexation method, which adjusts the asset's cost base for inflation up to September 1999 (indexation was frozen at that date) and taxes the full indexed gain at your marginal rate, with no 50% discount on top. You use whichever method produces the lower tax bill — you can't combine indexation and the 50% discount on the same gain.
The 2027 reform: what actually changes
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 replaces the 50% CGT discount with two mechanisms, for gains that accrue from 1 July 2027 onward:
- Cost base indexation — the asset's original cost is adjusted for inflation over the time you held it, similar in spirit to the old pre-1999 indexation method, but applied going forward rather than frozen at 1999.
- A 30% minimum tax rate on the indexed gain, regardless of your marginal tax rate.
This applies to individuals, trusts and partnerships across CGT asset types generally, not only residential property — shares and business interests are covered as well. A related but separate change in the same reform limits negative gearing deductions specifically for residential property investments; that part doesn't apply to shares or business assets.
Transition rule: what happens to gains you've already built up
The reform doesn't retroactively tax gains you've already accrued. If you still hold a CGT asset on 30 June 2027, it's treated as sold at market value immediately before that date and reacquired on 1 July 2027 — but any gain or loss on that notional sale is deferred rather than taxed straight away.
When you eventually sell the asset for real, two components are combined:
- The pre-1 July 2027 component, calculated under today's rules — including the existing 50% discount, if the asset had been held over 12 months.
- The post-1 July 2027 component, calculated under the new cost base indexation approach with the 30% minimum rate.
In practice: gains you've already built up keep the old treatment, and only the growth from 1 July 2027 onward is taxed under the new rules.
Worked example
Say you bought shares for $40,000 in 2018, and by 30 June 2027 they're worth $70,000 — a $30,000 unrealised gain, all of it under the old rules for now. You keep holding, and sell in 2031 for $100,000.
- Pre-2027 component: $30,000 gain, discounted 50% under today's rules → $15,000 included in assessable income at your marginal rate.
- Post-2027 component: $30,000 growth from $70,000 to $100,000, cost-base-indexed for inflation, taxed at a minimum 30% rate.
This is a simplified illustration to show how the two components stack, not a precise indexation calculation — the actual indexation factor depends on the inflation measure the legislation specifies over your actual holding period.
Questions people actually ask
Is the 50% CGT discount going away in Australia?+
Yes, for gains that accrue from 1 July 2027. It's replaced by cost base indexation plus a 30% minimum tax rate, for individuals, trusts and partnerships. Gains accrued before that date keep the existing rules.
Does this apply only to property, or to shares too?+
It applies to CGT assets generally — shares and business interests included, not just residential property. The separate negative gearing changes in the same reform are specific to residential property investments.
What happens to gains I've already built up before 1 July 2027?+
An asset you still hold on 30 June 2027 is treated as notionally sold and reacquired at that date, with the gain or loss deferred. When you actually sell later, the pre-2027 component (under today's rules) and the post-2027 component (under indexation) are both counted.
What's the current CGT discount for assets held over 12 months?+
50%, for individuals and trusts, on assets held at least 12 months — until the 2027 reform takes effect.
General information only, based on ATO and Treasury guidance current as of September 2026 — not personal tax advice. The 1 July 2027 reform is legislated but its detailed application to your specific assets may involve technical rules not covered here; confirm current details at ato.gov.au and speak with a registered tax agent before acting.