CGT changes 1 July 2027: what changes and why 30 June 2027 matters

What changes on 1 July 2027?

Capital gains tax (CGT), the income tax on a capital gain, changes for individuals and trusts: the 50% CGT discount stops applying to the part of a gain that builds up from 1 July 2027 (ITAA 1997 s 115-100; ATO). A capital gain is broadly the sale price less the cost base: what the asset cost plus certain other costs (ss 104-10, 110-25).

Why does 30 June 2027 matter?

30 June 2027 is where the old-rules part of a gain ends, because the law generally treats assets still held by individuals and trusts as sold just before 1 July 2027 and bought back straight away (ss 112-155, 112-165).

• This deemed sale happens on paper only, at the asset's market value (broadly, what a willing buyer would pay a willing seller at arm's length: ATO guide), unless an apportioning method, once made, is chosen (s 112-155(3)).
• No tax is payable on the day: the gain or loss waits until the year you sell or another CGT event happens (s 112-160). The ATO says that, generally, you don't need to know that market value for your 2026-27 return (ATO).
• A made-up example, before costs and indexation: bought for $400,000, worth $700,000 on 30 June 2027, sold for $800,000. Broadly, the first $300,000 is the old-rules part; the last $100,000 falls under the new rules.

Key dates

Who is affected?

Mainly Australian resident individuals, and trusts, that acquired assets before 1 July 2027 and still hold them at the end of 30 June 2027 (ss 112-155, 112-165).

• Individuals with investment property, shares, business assets such as goodwill, or other CGT assets. Foreign and temporary residents have separate rules (s 112-155(1)(d)).
• Trusts, including family trusts, generally, with exceptions: a condition about beneficiaries, and new dwellings and affordable housing (s 112-165(1)(d), (e)).
• Shareholders: private company shares held by an individual or family trust are covered (ss 108-5, 112-155, 112-165).
• Partners in a partnership, as individuals (ATO).
• Companies never had the discount, and the main deemed sale, indexation and minimum tax do not apply to their own assets, apart from pre-CGT assets (ss 115-10, 110-36(1A), 119-10, 112-175).

Assets bought and sold before 1 July 2027 are not affected (s 112-155(1); ATO).

What is excluded or treated differently?

New residential dwellings, affordable housing, pre-CGT assets and your home each work differently.

• New residential dwellings that meet the law's tests keep a 50% discount and sit outside the deemed sale and the minimum tax (ss 112-155(1)(e), 115-102, 119-5(2)). The law leaves the test for "new" to the Minister to set (s 26-160). It had not been set at 24 October 2026, and the Tax Reform No. 3 Bill would put it in the Act (Treasurer).
• Affordable housing also keeps a discount and sits outside the deemed sale (ss 115-125, 112-155(1)(e)).
• Pre-CGT assets (acquired before 20 September 1985) are not excluded: they have their own deemed sale (s 112-175), which can reach companies too (s 4-5).
• Your home is generally exempt from CGT for the period it is your main residence (ss 118-110, 118-185).

What is not changing?

The four small business CGT concessions stay, and one becomes easier to reach (Treasury).

• The 15-year exemption, the 50% active asset reduction (halving the gain on an asset used in a business), the retirement exemption and the roll-over remain (s 152-1).
• From the income year that includes 1 July 2027, the active asset reduction uses a $10 million turnover test instead of $2 million; the other three keep the $2 million test, and the $6 million net asset test stays an alternative (ss 152-10, 152-15, 152-205(2)).
• They can apply to both parts of a gain (s 112-160(3)(d), (6)).
• The ATO says the main residence exemption is not changing (ATO).

A valuation or the formula?

When you sell, the 30 June 2027 figure is the asset's market value or, if you choose it, a formula called the apportioning method, which the Minister may make (ss 112-155(3), 112-185).

• The ATO says that for most assets, including real estate, the market value just before 1 July 2027 will need to be established when you later sell, unless the apportioning method can be used (ATO).
• You choose by the time you lodge the return for the year you sell (s 112-155(4)).
• The formula had not been made at 24 October 2026. Treasury's August 2026 draft would assume steady compounding growth over the whole time the asset was held, and would cover only real property and assets without a readily ascertainable market value, so not listed shares (Treasury draft). A draft is not law and may change.
• A valuation may be useful where value did not grow evenly or a sale is likely; your accountant decides. See a valuation or the formula.

What can you do now?

Plan now; the 30 June 2027 value itself is prepared after that date.

1. 1

   Ask your accountant whether the change reaches you.

2. 2

   List what you or your trust will hold on 30 June 2027.

3. 3

   Gather cost base records, such as contracts, settlement statements and invoices. The law generally requires CGT records to be kept until five years after the asset is sold (ss 121-20, 121-25).

4. 4

   If a value may be useful, a planning valuation as at today shows where you stand.

Questions people ask

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