CGT Changes 2027: 50% Discount Replaced | Indexation Explained

At a glance

•Current system: half of any capital gain (held >12 months) is added to taxable income
•From 1 July 2027: cost base indexed by CPI, then taxed at marginal rate with a 30% floor
•Only applies to gains accruing after 1 July 2027 — earlier accrual uses the old 50% discount
•New-build investors can choose between new and old systems
•Main residence exemption unchanged

Compare old vs new with the CGT calculator →

Old system vs new system

Until 30 June 2027

Method

50% discount on the gross gain (held >12 months), then added to taxable income

Effective rate

Half your marginal rate — e.g. 22.5% if you're on 45%

Inflation

Ignored — nominal gain is taxed

From 1 July 2027

Method

Cost base indexed by CPI; net real gain added to taxable income; minimum 30% tax floor on net realised gains

Effective rate

Marginal rate on real gain, but never below 30%

Inflation

Excluded — only above-CPI gains are taxed

Worked examples

The new system can produce a higher or lower tax bill depending on how much of the gain is inflation versus real, and your marginal rate. Below assumes a 10-year hold, $500,000 purchase, $800,000 sale, and 3%/year CPI.

Old system (50% discount)

Gross gain$300,000

Taxable portion (50%)$150,000

Tax at 45% marginal$67,500

New system (indexation + 30% floor)

Indexed cost base (3% × 10 years)$671,958

Real gain$128,042

Tax at 45% marginal$57,619

30% floor on net gain ($300K)$90,000

Tax payable (higher of)$90,000

Key insight: When inflation is low or the hold period is short, the indexation benefit is small and the 30% minimum tax bites. When inflation is high or the hold period is long, indexation can save more than the old 50% discount.

Who's affected most?

Likely worse off

•High-marginal-rate investors with large nominal gains
•Short to medium holds (under 10 years)
•Established residential property held outside grandfathering

Likely better off (or neutral)

•Long holds (20+ years) with high CPI accumulation
•Lower-marginal-rate investors (the 30% floor matches their effective rate)
•New-build investors who can choose between systems
•Anyone with a main residence (unchanged)

Frequently Asked Questions

When does the new CGT regime start?

From 1 July 2027. Only capital gains that accrue after that date are affected. Gains accrued before 1 July 2027 (even if realised later) continue under the existing 50% discount rules.

Are my existing investments grandfathered?

Assets acquired before 7:30pm AEST on 12 May 2026 retain the existing arrangements for gains accrued up to 30 June 2027. From 1 July 2027 onward, the new indexation + minimum-tax rules apply to future accrual.

What is cost base indexation?

Your purchase price (cost base) is adjusted upward for inflation (CPI) between purchase and sale. Only the increase above inflation is taxed. This is similar to the system Australia used before 1999, but with a 30% minimum tax floor on net realised gains.

Does the change apply to my main home?

No. The main residence exemption is unchanged. You still pay no CGT when you sell your home (subject to the existing rules around income-producing use and absences).

Does it apply to shares as well as property?

Yes — to all CGT assets held more than 12 months. The Government has signalled exemptions for new builds, where investors can choose between the new and old systems.

Is this change legislated yet?

Not yet. It was announced in the 2026-27 Federal Budget on 12 May 2026 and requires legislation. Final rules may differ from the announcement.

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Last updated: 25 May 2026

CGT Changes from 1 July 2027