2026 Budget CGT changes: what the new rules mean for shares, property, crypto, and trading

The 2026 budget headline

The 2026 to 2027 Federal Budget, delivered by Treasurer Jim Chalmers on Tuesday 12 May 2026, announced the most significant overhaul of Australia's capital gains tax regime since the 50 percent CGT discount was introduced in 1999. Parliament passed it in June 2026. For gains accruing from 1 July 2027, the 50 percent discount under Division 115 of the Income Tax Assessment Act 1997 is removed for individuals and trusts, partners included. In its place: a return to cost base indexation against inflation, plus a 30 percent minimum tax on the resulting capital gain.

The change affects every Australian taxpayer who holds capital assets, but the impact is highly uneven. Asset classes that have historically benefited from the discount (long-held shares, investment property, cryptocurrency, collectibles) carry most of the burden. Asset classes that already sat outside the CGT regime (most retail forex and CFD trading, prop firm payouts) are largely unaffected. Anyone who receives a payment on the closed income support list in section 119-15 in a given year is exempt from the minimum for that year.

This pillar is the cross-vertical reference. It covers the law, the new mechanic, transitional arrangements at 1 July 2027, what changes for each major asset class, what is not changing, and the EOFY 2027 planning window. For asset-class-specific deep dives, this pillar cross-references the existing tax pillars at /guides/forex/forex-tax-australia/, /guides/crypto/crypto-tax-australia/, and /guides/prop-trading/prop-firm-tax-australia/, each of which carries its own 2026 budget update section.

The measures are law. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026) and the Income Tax Rates Amendment (Tax Reform No. 1) Act 2026 (Act No. 50 of 2026) received Royal Assent on 26 June 2026, after the Senate passed the bill with amendments on 25 June and the House agreed the same day. The ATO now describes the measures as law. Two ministerial instruments the law relies on, the apportioning method and the definition of a new residential dwelling, are still in draft.

The new indexation plus minimum tax mechanic

From 1 July 2027, capital gains of individuals and trusts (partners included) are taxed using two mechanisms operating together: cost base indexation against inflation, available once you have owned the asset for 12 months, and a 30 percent minimum tax on gains accruing after 1 July 2027, whatever the holding period.

Cost base indexation

The cost base of the asset (purchase price plus eligible incidental costs) is uplifted in line with the Consumer Price Index (CPI) over the holding period. Only the real, above-inflation portion of the gain is taxed. This is a return to the pre-1999 regime that the 50 percent discount replaced; the discount was introduced to simplify CGT administration and was widely understood to be more generous to long-held assets in periods of moderate inflation than the indexation it replaced.

The mechanic in plain terms: if you buy an asset for AUD 100,000 in August 2027 and sell it years later when the CPI index is 12 percent higher than in the September 2027 quarter, your cost base for tax purposes becomes AUD 112,000. If you sell for AUD 180,000, your taxable gain is AUD 68,000 (sale price minus indexed cost base), not AUD 80,000 (sale price minus raw cost base). For an asset you already hold at 1 July 2027, indexation does not reach back to your original purchase: it runs only from the September 2027 quarter, on the 1 July 2027 value.

The 30 percent minimum tax rate

The indexed gain is added to your income and taxed at your marginal rate as usual. Division 119 then adds a top-up: if the extra income tax the post-1 July 2027 gain adds (before offsets, excluding Medicare) is less than 30 percent of that gain, you pay the difference. If your other taxable income already puts you in the 30 percent bracket or higher, the gain is taxed at 30 percent or more anyway and the top-up is nil. If you sit in the tax-free threshold or the bottom bracket (16 percent in 2025-26, 15 percent in 2026-27, and scheduled to fall to 14 percent in 2027-28), the top-up lifts the tax on the gain to 30 percent, while your ordinary income remains on its own bracket scale. The minimum covers only gains accruing after 1 July 2027, not the deferred pre-2027 gain.

This is an important departure from the existing regime, where a low-marginal-rate investor could pay very little CGT on a substantial gain (because the 50 percent discount halved an already-low marginal-rate calculation). Under the new framework, that same investor pays at least 30 percent on the inflation-adjusted gain.

The exemption is a closed list in section 119-15. You are exempt for any income year in which you receive the Age Pension, Disability Support Pension, JobSeeker, Carer Payment, Youth Allowance, Austudy, Parenting Payment, Special Benefit, Family Tax Benefit, Parental Leave Pay, Farm Household Allowance, ABSTUDY living allowance, Double Orphan Pension, Stillborn Baby Payment, or a DVA pension. There is no separate income or wealth test.

The Treasury rationale

The Treasury rationale, as set out in the budget tax explainer, is that the existing 50 percent discount disproportionately benefits high-income taxpayers and contributes to inequities between asset-class returns (favouring assets that generate capital gains over those that generate ordinary income). Indexation plus a minimum rate is presented as a fairer middle ground that retains some recognition of inflation effects while broadening the tax base.

Transitional arrangements at 1 July 2027

Gains arising before 1 July 2027 retain the existing 50 percent CGT discount. The new framework applies only to gains arising on or after that date.

For assets you still hold at 30 June 2027, the law (Subdivision 112-E) treats you as selling them just before 1 July 2027 and buying them back on 1 July 2027:

• The deemed sale is not taxed in 2026-27. The gain accrued from acquisition to that point is deferred to the year you actually sell. It keeps the 50 percent CGT discount where eligible and is not subject to the 30 percent minimum.
• The gain accrued from 1 July 2027 to disposal is taxed under the new indexation plus 30 percent minimum framework, with the 1 July 2027 value as the starting cost base.

Valuation methods at the transition

1. Market value (the default). The value used is the asset's market value immediately before 1 July 2027. Listed shares must use it, and liquid cryptocurrencies such as BTC and ETH very likely must too.

2. The apportioning method. Instead of market value, you can choose an apportioning method set by ministerial instrument (section 112-185), making the choice by lodging your return for the year you sell. The draft instrument released on 4 August 2026 compounds daily growth from the first element of the cost base across the holding period and is limited to real property and assets without a readily ascertainable market value. Listed shares are excluded. The instrument is not final.

The ATO has not yet issued a ruling on transitional valuation.

Pre-CGT assets

Assets acquired before 20 September 1985 ("pre-CGT assets") remain exempt from CGT for gains accrued before 1 July 2027. After 1 July 2027, gains on pre-CGT assets become taxable under the new framework with indexation applied from 1 July 2027 (not from the original acquisition date). This is a substantive change for the small population of taxpayers still holding pre-CGT assets.

Practical implication

Because the deferred gain keeps the discount, you do not need to sell before 1 July 2027 to protect the 50 percent discount on gains already made. The decision that remains is about timing and future growth, and it is fact-specific; the analysis is covered in the EOFY 2027 planning section below. Each later sale, including a crypto-to-crypto swap, brings that asset's deferred gain to account.

What changes for share investors

Share investing is one of the asset classes most directly affected by the change. Australian retail share investors have historically used the 50 percent CGT discount to materially reduce tax on long-held positions, especially in CBA, BHP, CSL, WBC, and other ASX 200 large caps held across multiple market cycles.

Worked example: long-held CBA position

Consider an investor who purchased 1,000 CBA shares at AUD 60 each in January 2020 (cost base AUD 60,000). In March 2028, the shares are sold at AUD 140 each (proceeds AUD 140,000). Holding period exceeds 12 months. Marginal rate 37 percent.

Under existing rules (assume disposal before 1 July 2027): gain is AUD 80,000. The 50 percent CGT discount applies. Taxable gain AUD 40,000. Tax at 37 percent: AUD 14,800.

Under the new rules (March 2028 disposal, position spans the 1 July 2027 transition):

• Deferred gain (Jan 2020 to the deemed sale just before 1 July 2027): calculated using CBA's market value at that point (assume AUD 120). Gain on 1,000 shares: AUD 60,000. Taxed in 2027-28, the year of the actual sale, with the 50 percent CGT discount and no minimum. Taxable: AUD 30,000. Tax at 37 percent: AUD 11,100.
• Post-2027 gain (1 July 2027 to disposal in March 2028): cost base is AUD 120 per share (AUD 120,000 total). Sale at AUD 140 per share (AUD 140,000). Raw gain AUD 20,000. Indexation runs from the September 2027 quarter to the March 2028 quarter, two quarters (assume 3 percent annual CPI, so roughly 1.5 percent): cost base uplifted to AUD 121,787. Indexed gain: AUD 18,213. Tax at 37 percent (above the 30 percent minimum): AUD 6,739.

Total tax under new rules: AUD 17,839. Total tax if the old rules applied to the whole gain: AUD 14,800. Difference: AUD 3,039, or about 21 percent more tax on the same disposal.

Employee share schemes

The 50 percent CGT discount on shares acquired through Employee Share Scheme (ESS) interests is also affected. For ESS interests where the deferred taxing point has passed and the holder continues to hold the shares for 12 months thereafter, the discount has historically applied to the post-taxing-point appreciation. From 1 July 2027, that discount is replaced by indexation plus the 30 percent minimum.

Start-up concession shares and options similarly lose access to the discount on post-acquisition gains accruing after 1 July 2027.

Dividend-paying vs growth-stock strategies

The change has an indirect effect on dividend-paying versus growth-stock strategies. Under the existing regime, investors had a tax-efficiency reason to favour growth stocks that generated capital gains (eligible for the 50 percent discount on long holding) over dividend payers (taxed at marginal rate with franking credits). From 1 July 2027, the tax-efficiency gap narrows because gains accruing after that date lose the half-discount and are taxed on the indexed gain with a 30 percent minimum. Franked dividends remain taxed at marginal rate with full franking credit offset.

What changes for crypto investors

Cryptocurrency is the asset class where the 2026 budget changes are most consequential because of the typical investor profile: relatively younger, longer-held positions, with the 50 percent CGT discount factored into multi-year HODL strategies.

Detailed analysis with a worked BTC example across the transition is in the crypto tax pillar's 2026 budget update section. The key points summarised here:

• The same indexation plus 30 percent minimum framework applies to crypto from 1 July 2027 as applies to any other CGT asset.
• Crypto-to-crypto trades, sales for AUD, spending crypto on goods or services, and gifting crypto all remain CGT events. The new treatment applies to each event from 1 July 2027.
• Crypto held at 30 June 2027 is deemed sold and reacquired at market value just before 1 July 2027. The draft apportioning method only covers real property and assets without a readily ascertainable market value, so liquid cryptocurrencies (BTC, ETH, major altcoins) very likely have to use market value.
• There is no crypto-specific rule. Each crypto-to-crypto swap after 1 July 2027 is a CGT event, and it brings the deferred pre-2027 gain on the coin you swapped away to account.
• Trader-versus-investor classification under TR 97/11 is unchanged. Crypto activity that satisfies the business-like trading indicia falls under ordinary income (no discount historically, no change post-transition).
• The personal use asset exemption under section 118-10 is unchanged.
• DeFi yield and staking rewards remain ordinary income at fair market value on receipt; the new CGT framework only affects the subsequent disposal of the underlying token.
• SMSF crypto holdings: complying super funds are outside the reform and keep the one-third discount, preserving the SMSF crypto holding strategy.

For EOFY 2027 planning specifically for crypto, including the worked BTC example showing a roughly AUD 4,200 tax difference between the old rules and the new rules for a typical position, see the crypto tax pillar's budget section.

What changes for property investors

Property is affected by two separate but related budget measures: the CGT discount changes, and a new restriction on negative gearing deductibility.

CGT discount changes apply to investment property

The 50 percent CGT discount applies to investment property held for more than 12 months. From 1 July 2027, that discount is replaced by cost base indexation plus the 30 percent minimum tax rate, on the same framework as shares and crypto.

For investment property held across the 1 July 2027 transition, the deemed sale at market value applies like any other asset, and the gain to that point is deferred with the discount. A formal valuation is optional: real property is one of the asset types that can use the apportioning method instead (draft instrument), which works from your cost base, sale price, and holding period. Formal valuations typically cost AUD 400 to AUD 1,500 depending on property type and location.

The main residence exemption is unaffected. Your principal place of residence remains CGT-free under the existing rules, with no change to the absence-from-home rules, the partial-use rules, or the six-year absence rule.

New residential builds: investor election

Individuals and trusts that own a new residential dwelling can choose the 50 percent CGT discount (no deemed sale and no minimum tax) or indexation plus the 30 percent minimum for the whole holding period. Affordable housing can get a discount of up to 60 percent. The Senate removed the Minister's power to add other asset types, so these are the only discount assets. Which dwellings count as new is set by a ministerial instrument that is still in draft, so eligibility, including any acquisition-date condition, is not final. This is a targeted incentive to maintain investor demand for new housing construction, consistent with the government's housing supply agenda.

The election does NOT apply to:

• Established residential property (existing housing stock)
• Commercial property
• Industrial or specialist property
• Vacant land

Negative gearing changes (separate measure)

The same law also changed negative gearing for residential investment property. From the 2027-28 income year, net rental losses on residential dwellings acquired on or after 7:30pm AEST on 12 May 2026 (budget announcement time) are quarantined: they can no longer offset salary or other non-rental income. Quarantined losses can be used against residential rental income across all your dwellings and against residential capital gains, with any excess carried forward.

Residential properties acquired before 7:30pm AEST 12 May 2026, including contracts entered before then, are grandfathered: existing negative gearing arrangements continue under the current rules.

The negative gearing change does NOT apply to:

• New residential builds (preserves new-build investor incentive)
• Commercial property
• Shares and other non-property investments
• Property held by complying superannuation funds or widely held trusts
• Approved social and affordable housing purposes

Combined effect for new-property investors

A property investor purchasing established residential property after 12 May 2026 faces a doubled tax cost: lost negative gearing offset against non-rental income, plus the future CGT discount changes from 1 July 2027 on any eventual gain. The combination is the most material change for the property investor cohort and shifts the relative attractiveness of new residential builds (which retain both the negative gearing flexibility and the CGT election) versus established properties.

What changes for forex, CFD, and prop firm traders

Detailed analysis with TR and section citations is in the forex tax pillar's 2026 budget section and the prop firm tax pillar's 2026 budget section. The key points summarised:

• For retail forex and CFD traders, the practical impact is limited. Two ATO rulings (TR 2005/15 for CFDs, TR 97/11 for business-like trading) already place retail forex activity on revenue account, not capital account. The 50 percent CGT discount that is being abolished did not apply to most retail forex P&L in the first place.
• The exception is genuine long-term spot currency holdings (actual physical currency held as a capital investment, not via a CFD wrapper), which is uncommon for retail traders. For those positions, the new indexation framework applies for the post-transition portion of any gain.
• Prop firm payouts are ordinary assessable income under section 6-5 of the ITAA 1997, taxed at the trader's marginal rate. CGT under section 102 does not engage because the trader does not own the underlying capital or positions; the prop firm does. The 50 percent CGT discount has never applied to prop firm payouts, and its replacement does not change the treatment.
• Indirect effects can arise where the funded trader runs a personal trading account on capital account (crypto, shares), or where business-like trader classification under TR 97/11 spills over into personal trading positions.

What is NOT changing

The 2026 budget changes are targeted. A material list of CGT-relevant rules and concessions remains unchanged:

• Main residence exemption. Your principal place of residence is unaffected. No change to the six-year absence rule, the partial-use rules, the renting-out rules, or the deceased-estate rules.
• Small business CGT concessions. The four existing small business concessions under Division 152 of the ITAA 1997 (15-year exemption, 50 percent active asset reduction, retirement exemption, and rollover relief) remain in place for businesses meeting the AUD 2 million turnover or AUD 6 million net asset value thresholds. The Senate amendments lifted the turnover threshold for the 50 percent active asset reduction to AUD 10 million; the other concessions keep the AUD 2 million turnover test.
• Complying superannuation funds. SMSFs and APRA-regulated super funds are outside the reform. The explanatory memorandum confirms the one-third CGT discount for complying super funds is preserved.
• Personal use asset exemption. Personal use assets costing AUD 10,000 or less remain exempt from CGT under section 118-10. Crypto rarely qualifies, because the test is its main use at the time of disposal. Collectables are a separate category with a AUD 500 threshold.
• Investor versus trader classification. TR 97/11 indicia (regularity, system, scale, time devoted, profit intent) continue to determine whether activity is business-like trading (ordinary income) or investment (CGT). No change to the indicia or to ATO administrative practice.
• TR 2005/15 treatment of CFDs. Contracts for difference remain on revenue account regardless of holding period or trader-investor classification. Retail forex, share CFDs, index CFDs, and commodity CFDs are unaffected by the CGT framework.
• Foreign currency gains and losses. Section 775 forex measures and the TOFA regime continue to govern foreign currency holdings outside the CFD wrapper.
• Pre-CGT exemption on pre-1985 gains. Gains on pre-CGT assets accrued before 1 July 2027 remain exempt. Post-1 July 2027 gains on the same assets become taxable with indexation from 1 July 2027.
• CGT loss quarantining. Capital losses can still only offset capital gains, not ordinary income. What changed is the order (section 102-5): losses now reduce deferred pre-2027 gains first (non-residential, then residential), then post-2027 gains (non-residential, then residential), all before any discount.

EOFY 2027 planning considerations

The 2026 to 2027 Australian financial year closes 30 June 2027. It is the last year before the new rules start. When the measures were only announced, many investors assumed they had to sell before then to keep the 50 percent discount on gains already made. The enacted law removes most of that pressure: the deemed sale just before 1 July 2027 fixes the gain to that date, and that deferred gain keeps the discount where eligible whenever you eventually sell.

So the decision is narrower than it first looked: does selling before 30 June 2027 leave you better off than holding, given that growth after 1 July 2027 is taxed under indexation plus the minimum either way if you stay invested?

Factors favouring selling before 30 June 2027

• Expected disposal anyway within a year or two (little to gain from deferring)
• Tax-free threshold or lowest-bracket year, 16 percent in 2025-26 and 15 percent in 2026-27 (the deferred gain is taxed at your rate in the year you actually sell, so a low-income year now can beat a higher-income year later)
• Significant capital losses available to offset against the gain in the disposal year (from 2027-28, losses must be applied to deferred gains first)
• An asset bought in the 12 months before 30 June 2027: whether its deferred gain gets the discount is not yet settled
• You would rather rely on an actual sale price than on evidence of market value just before 1 July 2027

Factors favouring holding past the transition

• Long horizon disposal (5+ years out)
• Significant expected further appreciation (deferred tax keeps compounding in your favour)
• Asset is a long-term core holding (CBA, CSL, BTC, ETH in a long-horizon portfolio)
• The deferred pre-2027 gain keeps the discount and is not subject to the minimum, so holding costs nothing on gains already made
• Cost base indexation applies to the post-transition portion (reduces effective rate on inflation-driven gains)
• Estate planning considerations (death and CGT cost-base reset on inheritance)

A break-even framework

For a position with marginal rate 37 percent, the 50 percent CGT discount reduces the effective rate from 37 percent to 18.5 percent of the raw gain. That 18.5 percent applies to the gain accrued to 30 June 2027 whether you sell before then or hold, so it drops out of the comparison (unless your marginal rate in the year of sale differs).

What differs is the growth from 1 July 2027. If you hold, it is taxed at 37 percent of the indexed gain (above the 30 percent minimum). If you sell and buy back in, the new purchase falls under the new rules from day one, so future growth is taxed the same way. For a 10 percent annual asset appreciation with 3 percent inflation, the post-transition gain compounds at roughly 7 percent net after indexation, taxed at 37 percent, on either path.

Selling and buying back therefore just brings forward tax on the pre-2027 gain. Selling and staying out avoids the new regime on future growth only by giving up that growth. For most long-horizon holders, holding comes out ahead because tax deferred is capital still compounding. The exceptions are the ones listed above.

This is genuinely fact-specific. The break-even point depends on inflation expectations, marginal rate trajectory, asset appreciation, and disposal horizon. The SatoshiMacro CGT Comparison Calculator automates this comparison: it shows tax owed under old rules, new rules, and actual transitional treatment side-by-side for any combination of purchase date, sale date, cost base, sale price, marginal rate, CPI assumption, and 1 July 2027 valuation. Use it to model your specific scenario, then speak to a registered tax agent before crystallising significant gains.

What you should NOT do

• Crystallise a long-horizon core holding purely to "save tax" without modelling the compounding cost
• Take advice from generalist commentary that ignores the indexation benefit on the post-transition portion
• Rely on commentary written before the Act passed that still says you must sell before 30 June 2027 to keep the discount
• Assume the draft instruments are final; the apportioning method and the new-dwelling definition can still change
• Forget that capital losses still only offset capital gains; crystallising gains creates the offset opportunity but also crystallises any matched losses

How the indexation rate is determined

The indexation rate comes from the All Groups Consumer Price Index (CPI) published quarterly by the Australian Bureau of Statistics.

The methodology mirrors the pre-1999 indexation regime in most respects. Each cost base amount is multiplied by an indexation factor: the CPI index for the quarter in which the CGT event happens, divided by the index for the quarter in which the expenditure was incurred. You need to have owned the asset for at least 12 months (the whole ownership period counts, including time before 1 July 2027) and been an Australian resident for the whole testing period.

For assets owned at 1 July 2027, the earliest base quarter is the quarter starting 1 July 2027 (the September 2027 quarter). The 1 July 2027 value is uplifted only from that quarter forward; the deferred pre-2027 gain is calculated using that value and the 50 percent discount, not indexation.

Eligible cost base elements for indexation

• Original purchase price
• Incidental costs at acquisition (stamp duty, conveyancing fees, legal fees, brokerage)
• Incidental costs at disposal (selling agent commissions, settlement legal fees)
• Capital improvement costs incurred during the holding period (indexed from the quarter of the improvement, not from the original acquisition date)

Costs that are not indexed

Third-element costs, the non-capital costs of owning an asset such as interest, rates, and insurance where you could not deduct them, can form part of the cost base but are not indexed. Where those holding costs are deductible against rental or other income under the existing deductions framework, they are claimed as deductions instead and do not reduce the capital gain. The negative gearing changes from 12 May 2026 affect how these costs flow against non-rental income for new-acquisition established residential property; the indexation methodology is unaffected.

What is still being finalised

The core law passed on 26 June 2026 (Act No. 49 and Act No. 50 of 2026). The pieces still open:

• The apportioning method instrument. Released in draft on 4 August 2026. It compounds daily growth from the first cost base element and covers only real property and assets without a readily ascertainable market value. The final version may change the formula or the eligible assets.
• The new residential dwelling instrument. Defines which dwellings get the choice between the 50 percent discount and indexation. Still in draft, including any acquisition-date condition.
• Tranche 2. Exposure drafts released on 4 August 2026 cover apportioned indexation for people whose residency changes, attribution managed investment trusts (AMITs), and a minimum tax for trusts. None of this is law yet, and the start date for any trust minimum tax is not confirmed.
• ATO guidance. The ATO has not yet issued a ruling on transitional valuation or published detailed guidance on the minimum tax and indexation.

This pillar is updated as material guidance is published. The asset-class-specific pillars (forex, crypto, prop firm) carry their own 2026 reform sections relevant to those verticals.

Authoritative sources

For the law itself and the guidance still to come, the primary sources are:

• The Act: Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026) on the Federal Register of Legislation, alongside the Income Tax Rates Amendment (Tax Reform No. 1) Act 2026 (Act No. 50 of 2026)
• Bill history: bill home page on aph.gov.au, covering introduction on 28 May 2026, the Senate amendments, and assent
• Draft apportioning instrument: Treasury exposure draft (4 August 2026)
• Treasury budget portal: budget.gov.au (the tax explainer at budget.gov.au/content/04-tax-reform.htm and the negative gearing / CGT factsheet published 12 May 2026)
• Australian Taxation Office: ato.gov.au New legislation page, titled "Tax reform – Boosting home ownership – Reforming negative gearing and capital gains tax", which confirms the measures are now law
• Australian Bureau of Statistics: abs.gov.au for quarterly CPI updates relevant to the indexation methodology

Professional analysis from major Australian accounting and law firms is published as analysis becomes available. Notable analysis from firms specialising in tax: Baker McKenzie, BDO, Pitcher Partners, Grant Thornton, Ashurst, Clayton Utz, William Buck, Corrs Chambers Westgarth, Herbert Smith Freehills Kramer, and K&L Gates have all published Budget 2026 analysis pieces in May 2026 covering specific aspects of the CGT changes.

Continue reading: vertical-specific tax pillars

This pillar is the cross-vertical reference. For asset-class-specific deep dives covering deductions, classification, worked examples, and EOFY planning, continue with the dedicated pillars below.

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