Australia to implement CGT reform and indexation in July 2027

Australia is set to implement significant changes to Capital Gains Tax (CGT) rules on 1 July 2027, following the Royal Assent of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026. The reform replaces the existing 50 per cent CGT discount for individuals, trusts, and partnerships with a cost base indexation method, which adjusts the cost base for inflation based on the Consumer Price Index (CPI).

A key feature of the transition is that assets will be treated as if they were reacquired at their market value on 1 July 2027. Gains accrued prior to this date will retain the 50 per cent discount, while gains accrued after the date will be subject to the new indexation rules and a minimum 30 per cent tax on net capital gains for assets held longer than 12 months.

The new rules create an asymmetric tax treatment: while the cost base for capital gains increases with indexation, indexation does not apply to capital losses. This may result in investors paying tax on real economic gains that do not exist. Additionally, negative gearing on established residential property will be limited to new builds, though properties held prior to 12 May 2026 will be grandfathered. Superannuation funds remain unaffected by these specific discount changes.