Australia's 50% CGT Discount Ends 30 June 2027
The 2026-27 Australian Federal Budget announced the most significant change to capital gains tax since the 50% CGT discount was introduced in 1999. From 1 July 2027, the flat 50% discount on capital gains for individuals, trusts and partnerships will be replaced by cost base indexation and a 30% minimum tax on real capital gains.
What is changing?
Currently, if you hold a CGT asset for more than 12 months, you receive a 50% discount on the capital gain — meaning only half the gain is added to your taxable income. From 1 July 2027, this discount is replaced by cost base indexation, which adjusts your purchase price for inflation so only the real gain (above CPI) is taxed. A 30% minimum tax will also apply to real capital gains, preventing investors from timing asset sales for low-income years to minimise tax.
Who does this affect?
The changes apply to all CGT assets held by individuals, trusts and partnerships — including shares, investment properties, crypto, business equity and other capital assets. Superannuation funds and companies are not affected (they already have different CGT rules). The main residence CGT exemption remains unchanged — your family home is still tax-free.
Transitional arrangements
The changes are not retrospective. For assets held before 1 July 2027 but sold after, the gain is split: the portion accrued before 1 July 2027 still receives the 50% discount, while the portion after is taxed under the new indexation and minimum tax rules. Pre-1985 assets (currently CGT-exempt) will also be brought into the regime, but only for gains accruing after 1 July 2027.
Impact on startups and business owners
For founders and shareholders in high-growth businesses, the change from a flat 50% discount to inflation indexation can significantly increase the tax on an exit. If a business grows from $1 to $100 per share over five years, almost none of that growth is inflation — so indexation provides minimal relief compared to the old 50% discount. The Government has flagged consultation on the treatment of early-stage and startup businesses given the unique features of the tech and startup sector. The existing small business CGT concessions under Division 152 remain unchanged.
What should you do before 30 June 2027?
If you hold assets with significant unrealised capital gains, you may want to consider crystallising those gains before 1 July 2027 to lock in the 50% CGT discount on the accrued portion. This could include shares, investment properties, crypto holdings, or business equity. Speak with your tax adviser about whether a CGT event before the deadline makes sense for your situation.
Frequently Asked Questions
What is the 50% CGT discount and why is it ending?
The 50% CGT discount was introduced in 1999 to replace the previous cost base indexation method. It halves the capital gain on assets held longer than 12 months before adding it to your taxable income. The 2026-27 Budget replaces this with cost base indexation (adjusting purchase price for CPI inflation) and a 30% minimum tax on real gains, effective 1 July 2027. The Government argues the flat discount overcompensates property investors relative to inflation and distorts investment toward existing housing.
Does the 30 June 2027 deadline apply to my home?
No. The main residence CGT exemption is completely unchanged. Your family home remains fully exempt from capital gains tax regardless of when you sell it. The changes only apply to investment assets — shares, investment properties, crypto, business equity and other CGT assets.
What happens if I already hold assets before 1 July 2027?
The gain is split at 1 July 2027. The portion of your capital gain that accrued before that date still qualifies for the 50% discount. Only the gain accruing after 1 July 2027 will be taxed under the new indexation and minimum tax rules. You can establish the value at 1 July 2027 through a formal valuation or an ATO-provided apportionment formula.
What is the 30% minimum tax on capital gains?
After cost base indexation strips out inflation, the remaining real capital gain is taxed at your marginal rate — but never less than 30%. This prevents investors from timing asset sales for years when they have low or no other income to get capital gains taxed at the 0% or 19% bracket. Income support recipients including Age Pensioners are exempt from the minimum tax.
How does this affect shares and crypto?
Shares and crypto are CGT assets and are subject to the new rules from 1 July 2027. For high-growth assets where the gain significantly exceeds inflation, cost base indexation provides much less relief than the flat 50% discount. For example, if you bought shares at $10 and they're worth $100, very little of that $90 gain is attributable to inflation — under the old rules you'd only pay tax on $45, but under indexation you'd pay tax on close to the full $90.
Are small business CGT concessions affected?
No. The Budget explicitly confirms that the existing small business CGT concessions under Division 152 will continue unchanged. This includes the 15-year exemption, 50% active asset reduction, retirement exemption and rollover. If your business qualifies (net asset value under $6 million or turnover under $2 million), these concessions still apply on top of the new rules.
What about startup founders and employee share schemes?
The Government has flagged that it will consult with stakeholders on the treatment of early-stage and startup businesses, given the unique features of the tech and startup sector. The final rules for startup equity are not locked in yet. Additionally, the Budget introduces loss refundability for startups (from 1 July 2028) and expanded venture capital tax incentives (from 1 July 2027) to support the startup ecosystem.
What about discretionary trusts?
From 1 July 2028, a separate 30% minimum tax will apply to the taxable income of discretionary trusts. This means distributing capital gains or income to low-bracket family members will no longer reduce the tax rate below 30%. Rollover relief is available for three years from 1 July 2027 to restructure out of a discretionary trust into a company or fixed trust without triggering CGT.
Should I sell assets before 30 June 2027?
Not necessarily. The transitional rules mean gains accrued before 1 July 2027 still receive the 50% discount even if you sell later. However, crystallising gains before that date locks in the discount on the full gain to date. Whether this makes sense depends on your specific circumstances, marginal tax rate, the asset's growth rate relative to inflation, and your investment horizon. This is a decision to make with your tax adviser, not a general recommendation.