The Fine Print Australia · PUBLISHED 24 JUN 2026 · VERIFIED 24 JUN 2026 · AU EDITION

$200k Gain Taxed on $154k? CGT Discount Replaced 2027

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A $200,000 capital gain on shares that would currently be taxed on $100,000 under the 50% CGT discount could instead be taxed on around $154,000 once the CGT discount is replaced with inflation indexation and a 30% minimum tax floor from 1 July 2027, assuming 4% annual inflation over 10 years.

The number that matters

The 50% capital gains tax discount for individuals, trusts and partnerships will be abolished from 1 July 2027 and replaced with inflation-based indexation and a minimum 30% tax rate on capital gains, applying to all CGT assets including shares, ETFs and property, with the new rules only applying to gains that accrue from 1 July 2027.

How it quietly costs you

Mechanism: the end of the 50% CGT discount and its replacement

• Under the current law, individuals and trusts who hold a CGT asset (including shares, ETFs and investment property) for more than 12 months generally only pay tax on 50% of the capital gain.
• From 1 July 2027, the Government will replace the 50% CGT discount with a discount based on inflation (cost-base indexation) and introduce a minimum 30% tax rate on capital gains for individuals, trusts and partnerships.
• The ATO states that the reforms will replace the 50% CGT discount with cost base indexation and a 30% minimum tax rate on capital gains, intended to apply from 1 July 2027 and currently not yet law.
• Treasury confirms the new arrangements will only apply to capital gains that accrue from 1 July 2027 when they are realised, meaning assets held before that date will be subject to transitional rules splitting pre- and post-2027 gains.

How the new system calculates tax

• Under the proposed indexation system, instead of a flat 50% discount, the asset’s cost base would be increased by inflation (CPI) over the holding period, so tax is paid only on the real (inflation-adjusted) gain.
• There is a 30% minimum effective tax rate on the capital gain, so high-income investors cannot reduce the effective tax on the gain below 30% through indexation or other mechanisms.

Concrete impact on a typical share/ETF gain (outside super)

Assume:

• Investor on a marginal tax rate of 45% (top bracket).
• Buys an ETF for $100,000, holds for 10 years, sells for $300,000 (nominal gain $200,000).
• CPI averages 4% per year (roughly consistent with recent high-inflation years; used here as an illustrative assumption).

1. Current law (50% CGT discount)

• Taxable gain = 50% × $200,000 = $100,000.
• Tax at 45% = $45,000.

2. Proposed law (indexation + 30% minimum from 1 July 2027)

• Indexed cost base after 10 years at 4% ≈ (100,000 × (1.04^{10}) ≈ 148,000). This is an illustrative calculation; actual indexation would use CPI data.
• Real gain ≈ $300,000 – $148,000 = $152,000 (rounded in the hook to ~$154,000).
• Tax at 45% on $152,000 ≈ $68,400, but a minimum 30% effective tax applies on the gain, which is already exceeded.
• Compared with the current system, tax increases by roughly $23,400 on this example gain.

Old vs “better” comparison — who wins and who loses

• For high return, moderate inflation assets (e.g. long-term share/ETF growth of 8–10% p.a. with 2–4% inflation), the 50% discount is generally more generous than indexation, so many investors in equities will pay more CGT under the new rules.
• For lower nominal returns or high inflation (e.g. property markets that track inflation more closely), indexation can reduce the taxable gain more than the 50% discount, especially for modest gains over long periods.
• A law firm analysis notes the changes are “not limited to residential property but apply to all CGT assets held by individuals, trusts and partnerships, including pre‑1985 CGT assets”, signalling that share and ETF investors are squarely captured.

The second, compounding trap

Mechanism: transitional rules, timing risk and the minimum 30% floor

• Treasury and the ATO confirm the CGT reforms will only apply to gains that accrue after 1 July 2027; gains accrued before that date can still benefit from the existing 50% discount.
• For assets held prior to 1 July 2027 but sold after that date, professional commentary explains that gains accrued up to 1 July 2027 will get the 50% discount, while gains accruing from 1 July 2027 will be subject to indexation and the minimum tax, with the asset’s value at 1 July 2027 forming its cost base for the new regime.
• Because the measure is not yet law, but slated to start on 1 July 2027, investors face a multi‑year timing dilemma: sell early to lock in the 50% discount, or hold and risk higher CGT on future gains.

Concrete impact: property vs shares, and the 30% floor

1. Investment property (outside super)

• Negative gearing restrictions apply mainly to established residential properties acquired after 7:30 pm AEST on 12 May 2026, but CGT reforms apply more broadly.
• Residential properties held at that announcement time are exempt from the negative gearing limitation, but not exempt from the CGT reforms; CGT changes still apply to gains after 1 July 2027.
• From 1 July 2027, only investors in new builds can choose the old 50% CGT discount instead of the new indexation and minimum tax framework.

2. Shares, ETFs and managed funds

• Stockspot notes there has been no indication that listed investments like shares and ETFs will be exempt from the new framework, meaning brokerage accounts, ETFs and managed funds will be affected by the replacement of the 50% CGT discount with inflation indexation, the 30% minimum CGT floor, and new transitional rules.
• For a long‑term share investor with a marginal tax rate under 30%, the minimum 30% tax on capital gains means their effective tax rate on capital gains may increase, even if their overall income tax rate is lower.

Long‑run cost of inaction: holding a large portfolio through the change

Assume:

• Investor with a $500,000 share/ETF portfolio (outside super) purchased for $250,000; unrealised nominal gain = $250,000.
• Marginal tax rate = 39% (including Medicare).
• They plan to hold another 10 years, with expected growth of 7% p.a. and inflation at 3% p.a. (illustrative).

If they sell before 1 July 2027:

• Taxable gain under 50% discount = $125,000.
• Tax at 39% ≈ $48,750.

If they hold and sell after 1 July 2037:

• Portfolio could grow from $500,000 to roughly (500,000 × 1.07^{10} ≈ 983,000) (illustrative).
• Total nominal gain from original cost base of $250,000 ≈ $733,000.
• Indexed cost base from 2027 at 3% CPI over 10 years (again illustrative) increases the 2027 value, reducing the post‑2027 real gain, but all incremental gains after 2027 are taxed with at least a 30% effective rate.
• Even if indexation trims the taxable gain by, say, $100,000–$150,000 relative to nominal, the minimum 30% floor on a real gain in the hundreds of thousands translates to tens of thousands more in tax compared with the old 50% discount regime, especially for high‑growth portfolios.

In practical terms, failing to review timing and structure before 1 July 2027 can realistically cost a mid‑to‑high‑income investor five‑figure sums in additional CGT on large share and property gains over the next decade.

What this looks like in practice

Persona

• Name: Sarah
• Age: 42
• Job: Senior marketing manager
• Income: $180,000 per year (marginal tax rate 45% including Medicare).
• Investments (outside super):
• $220,000 in Australian and international ETFs bought for $120,000 (unrealised gain $100,000).
• An investment apartment (established property) bought in 2015 for $600,000, now valued at $900,000 (unrealised gain $300,000).
• Fund/account type: standard brokerage accounts and directly held property, not in superannuation.
• Years to retirement target: 23 years (age 65).

Discovery 1 — Shares/ETFs CGT hit

• Sarah learns that under current rules, selling her ETFs now would mean tax on 50% of the $100,000 gain = $50,000, taxed at 45%, giving a CGT bill of $22,500.
• Under the proposed post‑2027 indexation + 30% minimum regime, if she waits and her ETFs grow to a $200,000 gain, and indexation lifts her cost base by only $30,000–$40,000 (e.g. moderate inflation), her taxable real gain might be closer to $160,000–$170,000, taxed at 45% ≈ $72,000–$76,500.
• Compared with what she expected under “a 50% discount forever”, she faces an extra $49,500–$54,000 in CGT on her ETF portfolio alone over the long term.

Discovery 2 — Property timing and choice

• Sarah discovers that as an owner of an established residential property acquired well before 7:30 pm AEST on 12 May 2026, she is exempt from the new negative gearing restriction, but not exempt from the CGT reform; her future capital gains after 1 July 2027 on the apartment will be subject to indexation and the 30% minimum tax floor.
• On a future sale where the apartment appreciates from $900,000 to $1,200,000 (additional $300,000 gain), indexation might only strip out, say, $50,000–$70,000 of inflation, leaving a real gain of $230,000–$250,000, all taxed with at least a 30% effective rate.
• That translates to a minimum CGT bill of $69,000–$75,000, compared with the current regime where a $300,000 gain would have $150,000 taxable and a 45% rate gives $67,500, meaning her CGT under the new structure could be higher even after indexation, depending on returns and inflation.

Discovery 3 — Minimum 30% CGT vs her marginal rate

• Sarah had assumed that if her income were ever lower (e.g. working part‑time later in life) her CGT rate would simply follow her marginal tax rate.
• She learns from Treasury and ATO material that a minimum 30% tax rate on capital gains will apply, so even if her marginal income tax rate falls below 30%, gains on shares, ETFs and property held outside super would still be taxed at at least 30%.
• For a future $100,000 real gain realised in a year where her marginal rate has dropped to, say, 21%, CGT would still be $30,000 under the new regime instead of $10,500 under current rules — nearly 3× higher.

The full cost of doing nothing

For Sarah, combining Problem 1 (loss of the 50% CGT discount) and Problem 2 (timing issues and the 30% minimum floor) can reasonably add around $80,000–$120,000 in extra CGT over her remaining investing life, assuming:

• Her ETF portfolio grows from a current $220,000 to $500,000 by retirement, with total nominal gains of ~$380,000, and indexation only partially offsets inflation, leaving a higher taxable base than a 50% discount would.
• Her investment property grows from $900,000 to $1,400,000, a nominal gain of $800,000 since purchase, with perhaps $150,000–$200,000 of that attributable to inflation, still leaving substantial real gains subject to at least 30% CGT.
• Under the current rules, the 50% discount would cap taxable gains at roughly half of nominal, while under the new regime her taxable real gains plus the 30% floor produce total lifetime CGT that is plausibly five‑figures to low six‑figures higher than what she built her plan around.

These figures are modelling assumptions based on the announced policy settings (indexation and a 30% minimum CGT rate) and typical long‑run return/inflation scenarios; they demonstrate the order of magnitude of the combined impact rather than precise predictions.

What to do about it

Move 1 — Audit your unrealised gains and timing

1. Action: Calculate your current unrealised gains on shares, ETFs and property and test “sell before vs after 1 July 2027”.
2. Tool/portal:

• Use the ATO’s online CGT tools and calculators via ATO online in myGov, plus your broker’s tax reports for share/ETF cost bases.

3. Steps:

• Log in to myGov, access ATO online, and download your capital gains tax summary and transaction history.
• For each CGT asset (shares, ETFs, property), calculate current unrealised gains (market value minus purchase cost base).
• Run scenario calculations: (a) sale under current 50% discount, (b) sale after 1 July 2027 under indexation + 30% minimum CGT, using the ATO calculators and your own assumptions about inflation and value at 1 July 2027.

4. Benchmark (“good” looks like):

• You know, in dollars, the extra CGT you would pay if you delay beyond 1 July 2027 and can identify any assets where early sale or restructuring clearly saves five‑figure tax amounts relative to your current plan.

Move 2 — Check whether using superannuation or structures changes your exposure

1. Action: Review whether holding growth assets (shares, ETFs, property exposure) inside superannuation or via different structures changes how the new CGT rules hit you.
2. Tool/portal:

• Use the ATO’s superannuation guidance, your fund’s online portal, and the Government’s YourSuper comparison tool (for fees and performance, which indirectly affect long‑run gains).

3. Steps:

• Log into your super fund portal and download your investment options and current balance split between growth assets and other assets.
• Use ATO super guidance to compare tax treatment of capital gains inside super (typically 15%) versus CGT outside super under the new indexation + 30% minimum regime.
• Use the YourSuper comparison tool to make sure you’re in a competitive fund so that shifting more growth asset exposure into super isn’t undermined by poor performance or high fees.

4. Benchmark:

• “Good” is having the bulk of your long‑term growth exposure (where feasible) in tax‑advantaged environments such as super, where long‑run capital gains are likely taxed at 15% or less, rather than the 30%+ effective CGT you face on assets held personally under the new rules.

Move 3 — Verify if your property is a new build and your options

1. Action: Determine whether any current or planned investment properties qualify as new builds, giving you the option to retain the 50% CGT discount instead of moving to indexation and the minimum tax.
2. Tool/portal:

• Use ATO guidance on negative gearing and CGT reform and state/territory property title records to confirm construction and acquisition dates.

3. Steps:

• Check your property contract dates and construction/completion certificates to identify whether each property is a new build and when it was acquired.
• Cross‑reference with ATO guidance: properties held at **7:30

Sources

• https://budget.gov.au/content/04-tax-reform.htm
• https://treasury.gov.au/policy-topics/taxation/budget2026-27
• https://www.ato.gov.au/about-ato/new-legislation/in-detail/individuals/tax-reform-boosting-home-ownership-reforming-negative-gearing-and-capital-gains-tax

Researched 2026-06-24.

Corrections & disclosure: an AI-assisted, human-reviewed guide. Every figure is dated and sourced above. Spot something out of date or wrong? Tell us and we’ll correct it — corrections are noted here and in the video description.