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. Effective from 1 July 2027, the 50 percent discount under Division 115 of the Income Tax Assessment Act 1997 will be abolished for individuals, trusts, and partnerships. In its place: a return to cost base indexation against inflation, plus a new minimum effective tax rate of 30 percent 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. Income support recipients including pensioners are exempt from the minimum tax rate to ensure low-income and low-wealth taxpayers are not disadvantaged.

This pillar is the cross-vertical reference. It covers the announcement detail, 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 /forex/forex-tax-australia/, /crypto/crypto-tax-australia/, and /prop-trading/prop-firm-tax-australia/, each of which carries its own 2026 budget update section.

The measures are announced but not yet legislated. The enabling bill will move through Parliament in the second half of 2026 with effect from 1 July 2027. The final form of the legislation may differ from the announcement. This pillar reflects the budget tax explainer published at budget.gov.au on 12 May 2026 and subsequent analysis by major Australian accounting and law firms.

The new indexation plus minimum tax mechanic

From 1 July 2027, capital gains on assets held for at least 12 months by individuals, trusts, and partnerships are taxed using two mechanisms operating together: cost base indexation against inflation, and a 30 percent minimum tax rate on the resulting gain.

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 bought an asset for AUD 100,000 in 2020 and CPI grew by 15 percent over your holding period, your cost base for tax purposes becomes AUD 115,000. If you sell for AUD 180,000, your taxable gain is AUD 65,000 (sale price minus indexed cost base), not AUD 80,000 (sale price minus raw cost base).

The 30 percent minimum tax rate

The indexed gain is taxed at your marginal rate, except that the effective tax rate cannot fall below 30 percent. If your marginal rate is above 30 percent, the marginal rate applies. If your marginal rate is below 30 percent (you sit in the tax-free threshold or the 19 percent bracket), the 30 percent minimum applies to the capital gain portion, while your ordinary income remains on its own bracket scale.

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.

Income support recipients (Age Pension, Disability Support Pension, JobSeeker, Carer Payment, and other Centrelink income support categories) are exempt from the 30 percent minimum to ensure the change does not disadvantage low-income and low-wealth Australians.

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 owned across the 1 July 2027 transition, the gain is apportioned between pre-transition and post-transition portions:

• The pre-1 July 2027 portion is the gain accrued from acquisition to 30 June 2027. This portion retains the 50 percent CGT discount.
• The post-1 July 2027 portion is the gain accrued from 1 July 2027 to disposal. This portion is taxed under the new indexation plus 30 percent minimum framework.

Valuation methods at the transition

Two valuation options are available to taxpayers:

1. Actual valuation at 1 July 2027. The taxpayer obtains or uses a valuation of the asset as at 1 July 2027. For listed securities, the closing quoted price on 30 June 2027 is acceptable. For liquid cryptocurrencies (BTC, ETH, major altcoins), exchange-quoted prices are acceptable. For other assets (real property, unlisted shares, private business interests), a formal valuation is required.

2. Specified apportionment formula. The taxpayer applies a formula that estimates the value at 1 July 2027 based on the asset's growth over the full holding period, pro-rated by the number of days held before and after the transition. This is administratively simpler but may not reflect actual market movements close to the transition date.

The choice is at the taxpayer's discretion and can be made asset by asset. The cost of obtaining a formal valuation is added to the cost base.

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

Taxpayers holding capital assets with substantial unrealised gains face a one-time decision before 1 July 2027: crystallise to lock in the 50 percent discount on the full pre-transition gain, or hold to defer the disposal and accept apportioned treatment. This decision is fact-specific and the analysis is covered in the EOFY 2027 planning section below.

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):

• Period 1 (Jan 2020 to 30 June 2027): pre-transition gain calculated using the CBA closing price at 30 June 2027 (assume AUD 120). Pre-transition gain on 1,000 shares: AUD 60,000. The 50 percent CGT discount applies. Taxable: AUD 30,000. Tax at 37 percent: AUD 11,100.
• Period 2 (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. CPI uplift over 9 months (assume 3 percent annualised, so roughly 2.25 percent applied to AUD 120,000): cost base uplifted to AUD 122,700. Indexed gain: AUD 17,300. Tax at 37 percent (which exceeds the 30 percent minimum): AUD 6,401.

Total tax under new rules: AUD 17,501. Total tax under old rules (same gain, disposed before 1 July 2027): AUD 14,800. Difference: AUD 2,701, or about 18 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 capital gains lose the half-discount and are taxed at the higher of the 30 percent minimum or the marginal rate on the indexed gain. 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.
• Valuation at 1 July 2027 can use exchange-quoted prices for liquid cryptocurrencies (BTC, ETH, major altcoins) or the specified apportionment formula.
• Crypto-to-crypto trades within the apportionment framework may attract specific ATO guidance; this is one of the items on the legislation watch list.
• 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 not expected to lose CGT discount eligibility under the announced measures, preserving the SMSF crypto holding strategy.

For EOFY 2027 planning specifically for crypto, including the worked BTC example showing the AUD 4,000 tax difference between pre-transition and post-transition disposal of 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, gains are apportioned. A formal valuation at 1 July 2027 is required (the specified apportionment formula is available but listed-price valuation does not apply to real property; formal valuations typically cost AUD 400 to AUD 1,500 depending on property type and location). The cost of the valuation is added to the cost base.

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

Investors in new residential builds (purchased off-the-plan or new-construction) acquired after 12 May 2026 can elect at disposal to use either the existing 50 percent CGT discount framework or the new indexation plus 30 percent minimum framework, whichever is more favourable. 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 (other than for build-to-rent or new-construction purposes)

Negative gearing changes (separate measure)

The 2026 budget also introduced changes to negative gearing deductibility for residential investment property. Effective from 7:30pm AEST on 12 May 2026 (budget announcement time), net rental losses on established residential properties acquired on or after that date can no longer offset other (non-rental) income. The loss can be carried forward to offset future rental profits from the same property, or used to offset capital gains on the property at disposal.

Established residential properties acquired before 7:30pm AEST 12 May 2026 are grandfathered: existing negative gearing arrangements continue under the current rules indefinitely.

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

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.
• Complying superannuation funds. SMSFs and APRA-regulated super funds are not expected to lose CGT discount eligibility under the announced measures. The one-third CGT discount applicable to complying super funds is preserved.
• Personal use asset exemption. Crypto, collectibles, and other personal use assets under AUD 10,000 in cost remain exempt from CGT under section 118-10.
• 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.
• Rollover relief for small business restructures. Three-year rollover relief from 1 July 2027 to 30 June 2030 is provided for small businesses and others restructuring in response to the changes.
• 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. The new framework does not change the quarantining rule.

EOFY 2027 planning considerations

The 2026 to 2027 Australian financial year closes 30 June 2027. This is the last full financial year where the 50 percent CGT discount applies in its current form. For investors holding capital assets with substantial unrealised gains and a planned disposal horizon within the next 2 to 3 years, EOFY 2027 is the strategic decision point.

The decision is: crystallise the disposal before 30 June 2027 to lock in the 50 percent discount on the full pre-transition gain, OR hold past the transition and accept apportioned treatment on any further appreciation.

Factors favouring crystallisation before 30 June 2027

• Expected disposal anyway within 2 to 3 years
• Marginal rate at 30 percent or above (limited benefit from the minimum-rate floor)
• Modest expected further appreciation (limits the cost of forgone compounding)
• Tax-free threshold or 19 percent bracket year (year of disposal, not future years)
• Significant capital losses available to offset against the gain in the disposal year

Factors favouring holding past the transition

• Long horizon disposal (5+ years out)
• Significant expected further appreciation (compounding benefit outweighs tax saving)
• Asset is a long-term core holding (CBA, CSL, BTC, ETH in a long-horizon portfolio)
• Marginal rate uncertainty in future years (could fall below 30 percent in retirement)
• 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. Under the new framework, the effective rate on the indexed gain is 37 percent (above the 30 percent minimum). For inflation at 3 percent annualised, the indexed-gain reduction roughly offsets 3 percent of cost base per year of post-transition holding.

For a 10 percent annual asset appreciation, the post-transition gain compounds at roughly 7 percent net after indexation (10 percent appreciation minus 3 percent inflation uplift), taxed at 37 percent. The pre-transition gain (locked in at 30 June 2027 valuation) gets the 50 percent discount and is taxed at 18.5 percent.

A taxpayer with substantial unrealised gain and a 10-year horizon may find that crystallising before 30 June 2027 (taking the 18.5 percent rate now) leaves them ahead of holding and accepting the 37 percent rate on the post-transition portion of further appreciation. A taxpayer with a 20-year horizon may find the opposite, because the compounding benefit of not realising and paying tax now outweighs the higher post-transition rate.

This is genuinely fact-specific. The break-even point depends on inflation expectations, marginal rate trajectory, asset appreciation, and disposal horizon. A SatoshiMacro CGT comparison calculator is on the development roadmap to automate this comparison. In the meantime, run the numbers manually using the worked-example mechanics in the shares and crypto sections above, or 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
• Assume the announcement framework is final; minor changes during the parliamentary process are likely
• 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 is the Consumer Price Index (CPI) published quarterly by the Australian Bureau of Statistics, applied to the cost base over the holding period from 1 July 2027 (or from acquisition if acquired after 1 July 2027) to the date of disposal.

The methodology mirrors the pre-1999 indexation regime in most respects. CPI is measured at the quarter ending closest to acquisition and the quarter ending closest to disposal. The cost base is multiplied by the ratio of the disposal-quarter CPI to the acquisition-quarter CPI.

For pre-transition acquisitions (assets owned at 1 July 2027), the indexation starts at 1 July 2027 using the CPI for the June 2027 quarter as the base. The original cost base is uplifted only from 1 July 2027 forward; the pre-transition gain is calculated using the 30 June 2027 valuation 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 date of the improvement, not from the original acquisition date)

Non-eligible costs

Ongoing holding costs (interest on borrowings, insurance, rates, body corporate fees, repairs and maintenance) are not part of the cost base and cannot be indexed. These costs may be deductible against rental or other income under the existing deductions framework but cannot 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.

Legislation watch list for the next 18 months

The 2026 budget measures are announced but not yet legislated. The enabling bill is expected to be introduced to Parliament in the second half of 2026 with effect from 1 July 2027. Specific items to monitor over the next 12 to 18 months:

• Final text of the legislation. The announcement framework may be refined during the parliamentary process. Specific carve-outs, definitions, and transitional rules will be finalised in the bill.
• Treatment of crypto-to-crypto trades. Whether each crypto-to-crypto trade triggers an immediate apportionment calculation or whether a simplified treatment applies pending disposal of the converted asset.
• Valuation methodology for illiquid assets. Specific guidance for valuations of unlisted shares, private business interests, real property in thin markets, and other assets where a quoted price is unavailable.
• Interaction with the TOFA regime. Whether the new framework affects taxpayers electing the various TOFA methods for financial arrangements.
• Specified apportionment formula detail. The exact formula that estimates value at 1 July 2027 based on holding-period growth, including any caps, floors, or anti-avoidance provisions.
• ATO Practice Statements and draft rulings. The ATO will publish guidance on administering the new framework. Expect draft rulings on valuation, apportionment, indexation, and the 30 percent minimum tax in the first quarter of 2027.
• State and territory stamp duty interactions. Any flow-through effects on stamp duty calculations for property at the transition date.
• Sunset clauses or grandfathering extensions. Whether the bill introduces additional grandfathering or sunset provisions not announced in the budget.
• Treatment of discretionary trusts. The announcement included a separate 30 percent minimum tax on discretionary trusts from 1 July 2028, with exceptions. The exact scope of the exceptions is yet to be detailed.

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

Authoritative sources

For the announcement detail and ongoing legislation tracking, the primary sources are:

• 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 under New legislation, specifically the page titled "Tax reform – Boosting home ownership – Reforming negative gearing and capital gains tax"
• Parliament: aph.gov.au under Bills and Legislation for tracking the enabling bill as it moves
• 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.

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