The 30% minimum tax is the least understood part of the 2027 CGT changes. People assume it's a tax on the wealthy. It isn't. Someone on the top marginal rate already pays more than 30% on their gains and won't notice it. The people it reaches are the ones selling in a year when their income is low: self-funded retirees, people between jobs, people on a career break, students.
This guide explains who pays it, who's exempt, how it's calculated, how gifts to charity reduce it, and how to plan a sale around it. Status is as at 18 October 2026.
What is the 30% minimum tax on capital gains?
It's a floor on the tax rate that applies to the part of an individual's net capital gain that accrues from 1 July 2027. It's in a new Division 119 of the Income Tax Assessment Act 1997, inserted by the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June 2026. It is law.
It sits on top of the other CGT change. From 1 July 2027, the 50% discount no longer applies to new growth; your cost base is indexed for inflation instead. The minimum tax then makes sure that the indexed, post-2027 gain is taxed at no less than 30%. See the CGT discount changes for how indexation and the deemed sale at 1 July 2027 work.
The Government's stated rationale: 30% is in line with the rate most workers pay on their wages, and the floor reduces the benefit of putting off a sale until a year when your income is low.
Who does the 30% minimum tax affect?
Only resident individuals whose post-2027 capital gains would otherwise be taxed below 30%.
For 2026–27, the 30% rate starts at taxable income of $45,001. Below that, the rates are 0% and 15%, and the 15% rate drops to 14% from 1 July 2027 under earlier legislation. So the minimum tax mainly reaches people whose taxable income, including the gain, keeps some or all of the gain below roughly $45,000.
| Your situation in the year of sale | Does the minimum tax change your bill? |
|---|---|
| Salary or business income above $45,000 and the gain sits in the 30%+ brackets | No |
| On the top tax rate | No |
| Self-funded retiree with modest income from outside super | Often yes |
| Taking a career break, between jobs, studying | Often yes |
| Receiving the Age Pension, JobSeeker or another listed payment at any time that year | No, exempt |
| Selling an eligible new build and choosing to keep the 50% discount | No, the minimum tax doesn't apply to that gain |
| Selling an asset you owned before 1 July 2027 | Only on the post-2027 part of the gain |
Not affected at all: companies, complying super funds (including SMSFs), and the deferred pre-2027 gain on assets you already own.
Capital gains that reach you through a family trust or partnership form part of your own net capital gain. Plan on the minimum tax applying to the post-2027 part of those too; we expect ATO guidance to confirm the detail. The proposed separate minimum tax on discretionary trusts from 2028 is a different measure and is still a Bill. See discretionary trust tax changes.
How is the minimum tax worked out?
Broadly: the tax your post-2027 gain actually attracts at your ordinary rates is compared with 30% of that gain. If it's less, you pay the difference.
The Budget's own example (2029–30 year): Jack has taxable income of $25,000 before any gains. He makes a $10,000 capital gain and receives no income support payment. The gain falls in the 14% bracket, so his ordinary tax on it is $1,400. Thirty per cent of $10,000 is $3,000, so Jack pays an extra $1,600, subject to any tax offsets he has.
Worked example: a self-funded retiree
Hypothetical. Uses the 2027–28 rates (14% from $18,201 to $45,000, 30% from $45,001). Ignores the Medicare levy and offsets.
Margaret is 68 and doesn't receive the Age Pension. She has $30,000 of taxable income from term deposits, dividends and a small rental property. In July 2027 she bought a parcel of shares, and in 2029 she sells it. After indexation, her gain is $40,000. Because she bought after 1 July 2027, there's no pre-2027 portion.
| Amount | |
|---|---|
| Ordinary tax on the gain: $15,000 at 14% (up to $45,000 of income) plus $25,000 at 30% | $9,600 |
| 30% of the $40,000 gain | $12,000 |
| Minimum tax top-up | $2,400 |
If Margaret received even a part Age Pension at any time that year, the top-up would be nil. Had she owned the shares before 1 July 2027, the growth up to that date would have been calculated under the old rules with the 50% discount, and only the later growth would be tested against the floor.
The same gain, three different sellers
Same assumptions: a $40,000 post-2027 gain after indexation, 2027–28 rates, ignoring the Medicare levy and offsets.
| Seller | Other taxable income | Ordinary tax on the gain | Minimum tax top-up |
|---|---|---|---|
| Employee on a high salary | $200,000 | Taxed at the top rate | Nil |
| Professional in the 30% bracket | $80,000 | $12,000 | Nil |
| Margaret, self-funded retiree | $30,000 | $9,600 | $2,400 |
| Margaret, on a part Age Pension | $30,000 | $9,600 | Nil, exempt |
| Student with a part-time job | $10,000 | About $5,250 ($8,200 tax-free, $26,800 at 14%, $5,000 at 30%) | About $6,750 |
The pattern is clear. The lower your other income, the bigger the top-up, and the exemption list does most of the work in deciding who actually pays it.
How the gains are ordered within your income for this purpose will be set out in ATO guidance; our figures show the shape, not a return-ready calculation.
Who is exempt from the 30% minimum tax?
Anyone who receives a listed government payment at any time in the income year the gain is made. The list is written into the Act itself (section 119-15), so it can only change if Parliament amends it.
Payments on the list include:
- Age Pension
- JobSeeker Payment
- Disability Support Pension
- Carer Payment
- Parenting Payment
- Family Tax Benefit
- Youth Allowance and Austudy
- specified veterans' payments
Check the current list before relying on it; we confirm it for every client sale. Two points catch people:
- It's the payment that counts, not the card. A concession card on its own is not a payment.
- The exemption removes the floor only. You still lose the 50% discount on post-2027 growth, and the gain is still taxed at your ordinary rates.
Watch out: A large sale can change your Centrelink entitlements. Sale proceeds become an asset for the assets test. Model the pension effect before you rely on the pension to switch off the minimum tax. Our Centrelink entitlements agent estimates the change, and your accountant checks it against the tax side.
Do donations reduce the 30% minimum tax?
Yes. Gifts to deductible gift recipients (Division 30) and conservation covenant deductions (Division 31) reduce the gain the minimum tax is measured against, dollar for dollar.
Example (hypothetical): in Margaret's case, a $10,000 gift to a registered charity with deductible gift recipient status in the same year reduces the post-2027 gain for minimum tax purposes from $40,000 to $30,000, so the 30% floor drops from $12,000 to $9,000. The gift is also a normal tax deduction.
For people who give regularly, timing matters. A gift made in the year of a large sale is worth more than the same gift spread over other years. For larger philanthropy, a private or public ancillary fund may suit; that's a legal and structuring decision we'd make with your solicitor.
How can I plan around the minimum tax?
Most of these work only if you plan before you sign the contract.
- Maximise the pre-2027 portion. Every dollar of growth you can prove happened before 1 July 2027 is outside the minimum tax. Get a valuation or closing price evidence for that date.
- Choose the year of sale. If you'll start receiving a listed payment in a later year, selling in that year removes the floor. If you'll return to work, selling in a higher-income year may cost no more.
- Bundle giving into the sale year. Deductible gifts reduce the minimum tax base dollar for dollar.
- Consider new builds. If you're buying residential property, an eligible new build lets you choose the 50% discount on the whole gain and avoid the minimum tax on it. See the negative gearing changes.
- Look at who owns what. Holding growth assets in the name of a lower-income spouse no longer saves as much on future gains. For new investments, the right owner may now be different. Our guide to company vs trust vs sole trader sets out the trade-offs.
- Think about super. Super funds aren't subject to the minimum tax. Whether you should contribute more to super is a financial product decision for a licensed financial adviser, and the contribution caps limit what you can do. We work alongside your adviser on the tax numbers. See our SMSF guide.
- Use capital losses wisely. From 1 July 2027 losses are applied to deferred pre-2027 gains first. Selling in a different year from your loss-making assets can protect the value of those losses.
What evidence will you need when you sell?
The minimum tax adds a few questions to every sale from 1 July 2027. Have the answers ready before your return is prepared.
- Purchase records: contract or broker note, date, cost and costs of buying, so we can index the cost base correctly.
- The 1 July 2027 value for any asset you owned before then: a closing price statement for listed shares, a valuation for property and private interests.
- Proof of any listed payment you received in the year of sale: a Centrelink or DVA income statement showing at least one payment in that income year.
- Receipts for deductible gifts made in the year, with the recipient's deductible gift recipient status.
- Capital loss schedules from earlier years, so they're applied in the right order.
- For new builds: evidence the property is an eligible new residential dwelling if you want to keep the 50% discount. The detailed definition of a new residential dwelling is still being finalised.
- Trust distribution statements showing any capital gains streamed to you.
None of this needs to be in your 2026–27 return. The ATO has confirmed the first return that can be affected is 2027–28, and only if you sell or have another CGT event that year. But the 1 July 2027 value is evidence you can only gather cheaply at the time.
Mistakes we expect to see
- Assuming you're exempt because you're retired. The test is receiving a listed payment that year, not your age.
- Distributing trust gains to the lowest-income family member by habit. For post-2027 gains, a low-income beneficiary may now pay 30% anyway.
- Selling in June instead of July. If you'll qualify for a payment in the next income year, a few weeks' difference in the contract date can matter. The contract date usually sets the year of the gain.
- Ignoring the pre-2027 valuation. It's the biggest single lever, and it can't be recreated cheaply later.
Our capital gains tax advice team models sales before they happen. For the full set of 2027 changes, see our guide to the 30 June 2027 tax changes.
Frequently asked questions
Does the 30% minimum tax apply to my whole capital gain?
No. It applies to the part of your gain that accrues from 1 July 2027, after indexation. Growth on assets you held before then is calculated under the old rules with the 50% discount, and that deferred gain isn't subject to the minimum tax.
Do I have to be on the full Age Pension to be exempt?
No. The exemption turns on receiving a listed payment at any time in the income year of the sale, and a part pension is still a payment. Holding a concession card on its own is a different thing from receiving a payment, so check what you actually receive before relying on the exemption.
Does the minimum tax apply to companies or super funds?
No. It applies only to individuals. Companies pay their normal company rate on capital gains, and complying super funds keep their one-third discount and their own tax rates. Moving assets into super has its own costs and limits, and advice on it must come from a licensed financial adviser.
Does the minimum tax apply if I'm a foreign resident?
The minimum tax is aimed at Australian residents. Foreign residents already lost the 50% discount for gains accruing after 8 May 2012, and how the new indexation rules apply to them needs checking case by case. If you're moving overseas or coming back, the timing of your residency change and any sale needs careful planning.
Can I avoid the minimum tax by selling a bit each year?
Not really. Spreading a sale across years can keep more of the gain in lower tax brackets, but the minimum tax lifts the tax on the post-2027 gain to 30% whatever bracket it falls in. Spreading sales helps people in the 30% bracket or above avoid jumping into the 37% or 45% brackets, which is a different benefit.
Do I need to do anything before 1 July 2027?
Yes, if you hold assets you'll sell later. Get evidence of their value at 1 July 2027, because the bigger the pre-2027 portion, the smaller the gain the minimum tax can touch. And if you're near retirement, think about which year you'll sell in relation to when any pension starts.
Official sources
General information only, current as at 18 October 2026. It is not personal tax, legal or financial product advice and doesn't take your circumstances into account. Talk to us before you act. Where a recommendation needs a licensed financial adviser or a solicitor, we work alongside them.