Capital gains tax changes in Australia from 1 July 2027

What the reform does

The capital gains tax changes that received assent in June 2026 confine the 50% discount to gain accrued before 1 July 2027. Current rules run until that day and are replaced from it.

• Until 1 July 2027, a gain on an asset held for at least 12 months is halved before tax applies, under the 50% CGT discount.
• From 1 July 2027, the discount gives way to indexation of the cost base, together with a minimum tax rate of 30%.
• Whatever accrued before 1 July 2027 carries its 50% discount treatment through to a sale in any later year.

Indexation adjusts the cost base for inflation before the gain is measured, where the discount instead halves the gain itself.

Why one date matters more than the sale date

A property held across 1 July 2027 produces one gain that the reform treats as two. Growth up to the date is taxed the old way and everything after it under the new rules, whichever later year the sale happens in.

The split is set primarily by the property's market value at 1 July 2027, or by the ATO's time-apportionment formula. One sale can then carry both treatments at once.

The ATO formula

The formula assumes the property grew at one steady compounding rate over the whole ownership period, from the price paid to the sale price, and the value that rate gives at 1 July 2027 sets how much of the gain counts as accruing before it. Electing it requires nobody to value anything.

A recorded market value at 1 July 2027 beats the ATO formula only where the property grew faster before that date than its own average across the whole ownership period. Where the early years were slow and the later ones quick, a steady rate hands more of the gain to the protected side.

The free CGT calculator runs both splits on the same figures. It says so when the ATO formula wins.

What protection covers

Protection covers a share of the gain, measured by when it built up rather than by who owns the property or how long they have owned it. The 50% discount also keeps its own entry condition, and the asset must still have been held for at least 12 months.

Reading it as an investor

The arithmetic is identical for an owner-occupier and an investor, though the decision rarely is. Rental growth tends to arrive in bursts, and bursts pull the two split methods furthest apart. Capital gains tax on an investment property in Australia takes the reform property by property.

Evidence, if it is needed at all

Two levels of evidence exist for a market value at a past date. A Property Value Estimate Report is an automated estimate for an owner's own planning. It is not a professional valuation and no certified practising valuer signs it. A certified valuation is countersigned by a certified practising valuer, and an ATO position generally calls for that level. How it works covers the difference between the two.