Parliament enacted significant CGT reforms with Royal Assent on 26 June 2026. From 1 July 2027, the 50% CGT discount for individuals, trusts and partnerships is replaced with CPI cost base indexation plus a 30% minimum tax on net capital gains from assets held more than 12 months. Assets acquired before 7:30pm AEST 12 May 2026 keep the 50% discount for gains accrued up to 30 June 2027; assets acquired after that date do not get the discount at all from 1 July 2027. Superannuation funds, companies, and the main residence exemption are unaffected. This calculator models a 2025–26 disposal and flags where the new rules will affect your position from 2027 onward. Contact CMH Lawyers about timing and structuring before 1 July 2027.
Capital gains tax, usually shortened to CGT, is not a separate tax in Australia but a component of your income tax that applies when you dispose of an asset for more than it cost you. Property, shares, managed funds, and business assets are the most common triggers, and the amount of tax you actually pay depends heavily on how long you held the asset, what kind of entity owns it, and which concessions or exemptions apply to your situation.
Working out the basic gain
The starting point is simple. You take the amount you received for the asset, or its market value if the disposal was not at arm's length, and subtract the cost base, which is generally what you paid for the asset plus incidental costs such as stamp duty, legal fees, agent commissions, and the cost of any improvements. The result is your capital gain before any discount or concession is applied. If the cost base is higher than what you received, you have a capital loss instead, which can be carried forward to offset future gains rather than resulting in any tax.
The 50 per cent discount and law reform
For many years, individuals, trusts, and complying superannuation funds have been entitled to a discount on gains from assets held for more than twelve months, 50 per cent for individuals and trusts and one third for super funds. Significant reform enacted in mid 2026 changes this position from 1 July 2027 onward, replacing the 50 per cent discount with cost base indexation for inflation plus a minimum tax rate on the net gain, for assets acquired after budget night in May 2026. Assets acquired before that date generally keep access to the existing discount for gains that accrued before 1 July 2027, with apportionment required for anything after. This is a genuinely significant change in how CGT works in Australia, and if timing your disposal around these dates could make a material difference, it is worth discussing with a lawyer well in advance rather than close to a settlement date.
Your main residence
The exemption for your main residence remains unaffected by the 2026 reforms. If a property has been your home for your entire period of ownership and has never been used to produce income, the gain on sale is generally fully exempt from CGT. Where a property was only partly your main residence, whether because part of it was rented out or because you did not live in it for the whole ownership period, a partial exemption applies instead, calculated proportionally.
Business and inherited assets
Small business owners have access to a further set of concessions on top of the general discount, including a further 50 per cent active asset reduction, a retirement exemption of up to half a million dollars over a lifetime, and rollover relief that defers the gain into a replacement asset. Assets inherited from a deceased estate carry their own rules, generally exempt if the deceased died before September 1985, with a further exemption window if the property was the deceased's main residence and is sold within two years of death.
Frequently Asked Questions
Do I pay CGT on my family home?
Generally no, provided it has been your main residence for the whole time you owned it and was never used to produce income. Special rules apply if part of the home was rented out or used as a home office.
Does the new 2026 law affect assets I already own?
It depends on when you acquired the asset and when you eventually dispose of it. Gains that accrue before 1 July 2027 generally remain eligible for the existing discount even on older assets, but gains after that date are treated differently, and assets bought after budget night in May 2026 face the new rules in full from 1 July 2027. Given how significant this change is, specific advice on timing is strongly recommended.
What happens if I make a capital loss?
A capital loss cannot be deducted against your ordinary income. Instead it is carried forward and used to offset capital gains in a later year, for as long as it takes to use it up.