CGT reform in Australia is now law. What should you be considering in the lead-up to the CGT reforms commencing on 1 July 2027?1
Some key Australian income tax planning issues are:
- The CGT impact extends far beyond residential dwellings.
- The reforms may also affect business owners, trusts and investors, particularly when considering long-term ownership and succession strategies.
- The period leading up to 1 July 2027 provides an important window to assess how the new rules may affect your wealth, investments and business interests.
- Taking action early may provide greater choice when considering future transactions and ownership arrangements.
In June 2026, Australia introduced some of the most significant CGT reforms seen in more than 25 years.
Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Cth) (Act #49 of 2026) was passed by the Australian Parliament in June 2026, and whereby:
- The 50% CGT discount for individuals, trusts and partnerships is removed from 1 July 2027;
- A cost-base indexation applies to CGT assets and the portion of any capital gain that accrues from 1 July 2027; and
- A new 30% minimum tax rate exists on capital gains and the value that exists from 1 July 2027 and is assessed on individual taxpayers.
Since May 2026, there has been a large amount of Australian media discussion regarding these measures and the housing impact in relation to affordability and property investment, however the Australian income tax implications on many CGT assets are far broader.
Furthermore, a new definition of residential dwelling exists which aims to provide a specific distinction between new residential dwelling investment and other residential investment in Australia.
Business owners, family groups, investors and trustees may benefit from reviewing how the CGT changes align with their long-term wealth, investment and succession goals.
Planning considerations before 1 July 2027
In the lead-up to 1 July 2027, you may wish to review how the new CGT framework could influence your investment portfolio and future plans.
At the date of this publication:
- The Federal Government has not introduced any new legislation regarding the proposed minimum 30% income tax on trustees as announced in the May 2026 Federal Budget; and
- The Australian Taxation Office (ATO) has not published any substantive written guidance on the ATO interpretation of these rules on the ATO website (including in relation to valuations as at 30 June 2027) and which will occur in coming months.
Australian CGT system – since 1999
Since 1999, individuals and trusts have generally been able to reduce eligible capital gains by 50% where assets were held for at least 12 months.
From 1 July 2027, the CGT regime will introduce significant changes for individuals, trusts and partners in partnerships.
The new regime replaces the CGT discount with inflation-based cost-base indexation and introduces a minimum 30% tax rate on capital gains.
Existing gains accrued before 1 July 2027 are generally protected through transition rules, meaning taxpayers effectively enter a new CGT regime from 1 July 2027.
For assets held by individuals, trusts and partners in partnerships as at 30 June 2027, transitional rules will require careful consideration, including obtaining asset valuations.
The portion of pre-CGT assets acquired prior to 20 September 1986 and that relates to the period from 1 July 2027, now are caught in the CGT net. This rule extends to all Australian companies (noting the additional aspect of the CGT rule in the existing CGT Event K6).
The 2026 CGT reforms introduce a significant change that has the potential to reshape investment decisions, business exits, family wealth structures and succession planning.
Business owners considering an exit or succession event in the coming years should revisit their plans now to better understand how the new rules may influence future outcomes.
For many privately owned businesses, CGT is an important consideration when assessing after-tax proceeds from a future sale.
These after-tax proceeds can materially influence both deal structure and timing.
The period leading up to 1 July 2027 gives business owners time to revisit their plans and understand how the new rules may affect future transactions.
In some circumstances, there may be opportunities to accelerate transactions or restructures. However, depending on the type of CGT asset, other CGT assets may require a longer-term strategy.
Importantly, business owners should not focus solely on the headline CGT changes – an important aspect of any commercial transaction, but not the sole focus.
The reforms also include changes to the small business CGT concessions, including an increase in the eligibility threshold from $2 million to $10 million and changes to the small business 50% reduction. These may be important considerations when seeking tax advice.
If a business sale is likely within the next three to five years, now is the time to budget the potential outcomes in respect of any Australian tax payable.
Many Australian family groups have used trust structures for decades to support asset protection, succession planning and intergenerational wealth transfer.
The CGT reforms arrive alongside broader changes affecting trust taxation in Australia, giving families a timely reason to review whether their current trust and ownership structures continue to support their long-term objectives.
Some important questions worth considering include:
- Are investment assets held in the most appropriate structure?
- Does the current ownership framework support future succession objectives?
- Are there assets that may be sold or transferred over the short term or medium term?
- Will existing trust arrangements continue to achieve the desired outcomes for future generations?
There is unlikely to be a one-size-fits-all answer for each particular circumstance.
For Australian family groups, reviewing ownership structures and succession plans well in advance of a transaction can help preserve flexibility and support better long-term outcomes.
Investors should focus on long-term strategy and seek tailored advice to their individual circumstances.
While major tax reforms often generate significant discussion, taking a considered approach can help investors make informed decisions aligned with their broader goals.
While some assets may attract a higher effective tax burden under the new rules, investment decisions should continue to be driven by underlying commercial fundamentals rather than tax alone.
The more productive exercise is to understand where unrealised gains exist, review expected holding periods and model future outcomes under the new CGT framework.
Under transitional rules, certain taxpayers may be required to obtain valuations in relation to CGT assets held as at 30 June 2027. Please review our other recent Nexia publication involving “Tax requirements for asset valuations as at 30 June 2027.”
For some investors, the changes may have a relatively modest impact. For others, particularly those holding assets with significant embedded gains, the implications could be substantial.
Record keeping
One aspect of the reforms that has received less attention is the additional record-keeping and valuation requirements that may apply.
The transition to the new system will require taxpayers to clearly identify gains that accrued before and after 1 July 2027.
You should review your record-keeping practices and ensure accurate records, valuations and supporting documentation are maintained, particularly for privately held assets.
For business owners, investors and trustees, good record keeping may have a direct bearing on future tax outcomes.
Rather than waiting until July 2027, we recommend taking a proactive approach during the next six months.
Summary
The introduction of CGT reform marks a significant shift in Australia’s taxation framework.
While the new rules do not take effect until 1 July 2027, the period beforehand provides an opportunity to review structures, evaluate future transactions and prepare for the new framework.
Understanding the changes early can help ensure future investment, business and succession decisions align with your broader financial objectives.
Some key questions worth considering include:
- What unrealised gains currently exist within my investment portfolio?
- When am I likely to sell a business or undertake a succession event, and what tax outcomes could arise?
- Are my existing trust and ownership structures fit for purpose and efficient?
- Which CGT concessions may be available to me, and do I qualify for them?
- How might the changes to the small business 50% reduction and the $10 million threshold affect my business from 1 July 2027?
- Do I have accurate records and up-to-date valuations for my investment assets?
- How may my future tax position change under the new CGT rules?
The answers to these questions will vary depending on your circumstances and objectives.
Next steps
The CGT reforms commencing on 1 July 2027 may affect how you approach future investments, business succession and wealth planning.
While the new rules are still some time away, now is a good opportunity to understand how they may apply to your personal circumstances and identify any actions worth considering before they take effect.
If you’d like to discuss how the reforms may affect you, your family or your business, speak with your local Nexia Advisor.
12028 Federal Election Assumption – Given the reforms are scheduled to commence from 1 July 2027, this publication assumes the legislation will remain in its current form beyond the next Australian Federal Election and that no further changes will be made from 1 July 2028.
As future government policy and legislation may change, the information in this article is intended as general guidance only and should not be relied upon as a substitute for tailored tax advice. You should seek professional advice based on your individual circumstances.
