CGT discount changes 2027: how indexation replaces the 50% discount

Since 1999, an individual or trust that sold an asset held for at least 12 months has paid tax on half the gain. From 1 July 2027 that stops for new growth. The replacement is indexation: your cost base is increased for inflation, and you're taxed on the real gain in full.

This guide explains how the split works for assets you already own, how the 1 July 2027 value is set, when market value beats apportionment, how capital losses are now ordered, and what the numbers look like on a real sale. Status is as at 18 October 2026.

What is changing with the CGT discount in 2027?

Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which is law:

• For CGT events from 1 July 2027, resident individuals, trusts and partnerships no longer get the 50% discount on gains accruing from that date.
• Instead, the cost base is indexed to the consumer price index (CPI) for assets held at least 12 months, so you're only taxed on growth above inflation.
• Individuals pay at least 30% on those post-2027 gains, unless they receive a qualifying government payment in the year of sale. See the 30% minimum tax on capital gains.
• Gains up to 1 July 2027 keep the 50% discount, through a deemed sale and reacquisition at that date.

What doesn't change: what counts as a CGT asset, the CGT events, the main residence exemption, the four small business CGT concessions, and the one-third discount for complying super funds. Companies never had the discount, so nothing changes for them on this point.

Who keeps a choice of the 50% discount?

Two groups can choose to stay on the old rules for the whole gain:

• owners of eligible new residential dwellings; and
• owners of property used to provide qualifying affordable housing, which keeps its existing discount of up to 60%.

If you make that choice, the minimum tax doesn't apply to that gain. The detailed definition of a new residential dwelling is still being finalised. Our guide to the negative gearing changes explains the new-build rules.

How does the 30 June 2027 valuation snapshot work?

Every CGT asset held by a resident individual or a trust just before 1 July 2027 is treated as sold at that moment and bought back on 1 July 2027. Three things follow.

1. The gain to that date is calculated under the old rules, including the 50% discount if you've held the asset at least 12 months by the time you eventually sell.
2. That gain is deferred. You don't pay anything in 2027. It's reported when you actually sell or another CGT event happens.
3. The 1 July 2027 value becomes the starting cost base for the new rules. Indexation runs from there.

The ATO's summary of the transitional rules:

Pre-CGT assets have their own rules. See pre-CGT assets and the 2027 changes.

Key point: The deemed sale doesn't create a tax bill. It creates a number you'll need later. Get the evidence now, while it's easy.

Market value or apportionment: which gives a better result?

To split your eventual gain into "before" and "after", you need the asset's value just before 1 July 2027. The law gives you two ways to get it, and you choose when you sell, not now.

• Market value. The actual value at that date. Easy for listed shares (closing prices). For property, unlisted shares and business interests, you'll want an independent valuation.
• Apportionment. A formula the Minister must set by legislative instrument, expected to spread your total growth evenly across the time you've owned the asset. It hasn't been made yet, and the ATO says guidance will follow once it is. The Tax Reform No. 3 Bill proposes that apportionment won't be available for some events, such as certain trust events.

Which one helps you depends on when your asset grew.

You can only compare if you have both numbers. That's why we recommend gathering market value evidence now for any material asset, even if you might end up using apportionment. Our historical property value agent can give an indicative value for a past date to sense-check a valuation, but for anything significant a qualified valuer's report is the evidence the ATO will expect.

How does indexation work?

Indexation increases each eligible part of your cost base by the movement in the CPI between when the cost was incurred (or 1 July 2027, for assets you already own) and when you sell. You then subtract the indexed cost base from what you receive.

Indexation isn't new. It applied to assets bought between 1985 and 1999, and anyone who chose the "frozen indexation" option on an older asset will recognise the method. Two practical points:

• It only works for assets held at least 12 months. The 12-month test uses your original purchase date. If you bought in March 2027 and sell in April 2028, you qualify.
• It protects you from inflation, not from real growth. When an asset's growth is mostly inflation, indexation can produce less tax than the old discount. When an asset grows well above inflation, indexation produces more.

Worked example: selling shares in 2032

Hypothetical. Inflation assumed at 2.5% a year. Figures rounded.

Say you bought a share portfolio in 2018 for $200,000. On 30 June 2027 its market value is $500,000. You sell five years later, in July 2032.

Step 1: the pre-2027 gain. $500,000 − $200,000 = $300,000. You've held it more than 12 months, so the 50% discount applies. Taxable: $150,000.

Step 2: index the 1 July 2027 cost base. $500,000 × 1.025^5 ≈ $565,700.

Step 3: the post-2027 gain, under two different outcomes:

If you're on the top tax rate, the minimum tax makes no difference: the post-2027 gain is already taxed above 30%. If your income in the year of sale is low, the post-2027 part is taxed at no less than 30%, unless you receive a qualifying payment such as the Age Pension that year. And the deferred $150,000 from Step 1 isn't subject to the minimum tax at all.

Two lessons. First, the new rules are not always worse. For assets that track inflation, they can be better. Second, the 30 June 2027 value drives everything. If that portfolio had been an unlisted property trust with no valuation on file, Step 1 would be an argument rather than a calculation.

How are capital losses applied after 1 July 2027?

The order changes, and this is where people will quietly lose money.

From 1 July 2027 the method for working out your net capital gain makes you apply capital losses to your deferred pre-2027 gains (the ones that get the 50% discount) before your post-2027 gains (which don't). Using a $100 loss against a gain that would only have been half-taxed saves less tax than using it against a fully taxed gain.

Example (hypothetical): you have $100,000 of carried-forward losses, an old parcel with a $100,000 pre-2027 gain, and a newer parcel with a $100,000 post-2027 gain. Sell both in the same year and the loss is soaked up by the old parcel's gain first. Sell them in different years, with the newer parcel sold first, and the loss can be used against the fully taxable gain. Same assets, same losses, different tax.

Residential property losses quarantined under the new negative gearing rules also interact with this ordering when you sell residential property. Plan sale timing across years with your accountant before you sign contracts. Our CGT agent works through the ordering and the discount, indexation and concessions for each disposal, and your accountant checks the result before it's relied on.

How do the CGT changes work for family trusts and partnerships?

Trusts and partnerships are covered by the same law. A family trust's assets get the deemed sale just before 1 July 2027 like an individual's, so pre-2027 growth keeps the discount and later growth is indexed.

Three trust-specific points:

• Streaming still matters. When a trust distributes a capital gain, the beneficiary includes it in their own net capital gain. A post-2027 gain reaching an individual beneficiary on a low income may be lifted by the 30% minimum tax. We expect this to be confirmed in ATO guidance; plan on it.
• Corporate beneficiaries. A company beneficiary never got the discount on a distributed gain, and that doesn't change.
• More detail is coming. The Tax Reform No. 3 Bill 2026 includes clarifications of how the CGT reforms apply to a range of trust structures, and proposes limits on apportionment for certain trust events. It's a Bill, not law, and could change.

Separately, the same Bill proposes a 30% minimum tax on discretionary trusts from 1 July 2028. That's a different measure from the CGT change and is not law. Our guide to the discretionary trust tax changes covers it.

Partnerships are simpler: each partner's share of each asset is treated like an asset they hold themselves, so the split and the minimum tax apply partner by partner.

Should I sell or restructure before 30 June 2027?

For most people, no to selling and maybe to restructuring.

Selling before 30 June 2027 gets the whole gain under the old rules, but you pay the tax now instead of later, plus transaction costs, and you lose the asset. Since the deemed sale already protects the discount on growth to 1 July 2027, selling only makes sense if you were going to sell soon anyway.

Restructuring before 30 June 2027 is different. If an asset is held by the wrong person or entity, for example an investment portfolio in a company director's own name, moving it triggers CGT and often stamp duty. Doing it before 30 June 2027 means the 50% discount, and for business assets possibly the small business concessions, reduce that cost. After 1 July 2027, the same move costs more. See our guide to asset protection strategies and our CGT advice service.

What records should I keep now?

• Purchase records for every asset: contract, settlement statement, broker confirmations, cost of improvements.
• Evidence of value at 1 July 2027: 30 June 2027 closing price statements for listed shares and ETFs; a valuation report as at 1 July 2027 for property, unlisted shares, units in private trusts and business interests.
• Dividend reinvestment and corporate action records, because each reinvested parcel has its own cost base and date.
• Capital loss schedules carried forward from earlier years.
• Ownership changes since purchase: transfers between spouses, inheritances, rollovers.

Our 30 June 2027 checklist turns this into a list you can tick off. For the bigger picture, start with our guide to the 30 June 2027 tax changes.

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.