(AUSTRALIA) – The Albanese government announced major capital gains tax changes in the 2026–27 federal budget, replacing the current 50 per cent CGT discount with an inflation-based discount from 1 July 2027 and adding a minimum 30 per cent tax on gains.

The changes apply only to gains arising after 1 July 2027. Gains made before that date remain outside the new rules.

Investors in new builds will keep a choice. They may use either the old 50 per cent CGT discount or the new inflation-based rules.

The budget package places the tax overhaul inside a wider housing and revenue agenda. It also proposes limiting negative gearing to new builds from 1 July 2027 and imposing a minimum 30 per cent tax on discretionary trusts from 1 July 2028.

Ministers have cast the CGT overhaul as a response to housing affordability and tax fairness concerns. Critics have argued the plan would hit property investors and business owners who rely on the current discount.

Parliament had already examined the issue before the budget. A Senate select committee on the operation of the CGT discount was established on 4 November 2025, and it tabled its final report on 17 March 2026.

The government says the new system is designed to tax only real capital gains. Under that approach, gains would be indexed for inflation rather than reduced through a flat discount.

That marks a structural shift in how tax relief would work. The current system offers a fixed concession through the 50 per cent CGT discount; the proposed model ties relief to inflation instead.

In practice, the new framework would split capital gains into two time periods. Gains arising before 1 July 2027 would stay under the existing rules, while gains arising after that date would face the new treatment.

That prospective start date is one of the central design points in the package. The reform does not operate retroactively, which means it does not reach back to gains made before 1 July 2027.

The exception for new home builds gives one group of investors a different path. Those investors may choose between the old discount and the inflation-based arrangement, even as the broader market shifts to the new system.

That carve-out aligns with another budget measure aimed at housing supply. Negative gearing would be limited to new builds from 1 July 2027, pushing tax concessions toward newly built homes rather than existing stock.

Taken together, the measures place new housing at the center of the tax package. Existing settings for property investment would narrow, while new builds would retain access to more than one CGT treatment and the budget’s negative gearing concession.

The minimum 30 per cent tax on gains adds another layer to the CGT plan. The budget documents pair that rule with the inflation-based discount rather than treating the change as a simple replacement of one concession with another.

The separate trust measure expands the package beyond individual investors. From 1 July 2028, discretionary trusts would face a minimum 30 per cent tax, extending the government’s tax fairness argument into another common investment structure.

Property investors are among the groups most directly exposed to the change because they have long relied on the existing CGT discount when selling assets. Business owners who count on the current concession also stand to lose a familiar tax setting.

New home buyers sit in a different position. The budget directs investor tax benefits toward new builds, which could alter the relative appeal of buying newly built homes compared with established properties.

Discretionary trusts also face a separate timetable that matters for tax planning. The CGT changes begin on 1 July 2027, while the trust measure starts on 1 July 2028.

That staggered timing matters for anyone with assets that may be sold across those years. One set of rules would change in 2027, and another would follow in 2028.

The political fight around the package reflects a broader argument over who benefits from tax concessions tied to property and investment income. The government has tied the reforms to housing affordability and fairness; opponents have focused on the cost to investors and small business owners.

The Senate committee timeline shows that the dispute did not emerge overnight. Parliament began formal scrutiny of the CGT discount months before the budget, then received the final report less than three months before the government unveiled the new model.

No part of the announced reform removes the old discount for every transaction from day one. Its operation turns on when gains arise, which preserves the current treatment for gains before 1 July 2027 and leaves new-build investors with an explicit choice after that date.

That distinction is likely to shape tax planning over the next year. Investors, new home buyers and trustees will need to track the legislative path to 1 July 2027 and review portfolios against the shift from a 50 per cent CGT discount to an inflation-based discount.

If an investor expects to realize gains after 1 July 2027, the announced rules place the timing and type of asset at the center of the decision. New builds would carry a different tax choice from other assets, while discretionary trusts would face another change a year later.

The government has presented the package as a reset of how Australia taxes capital growth. From 1 July 2027, the flat discount that has defined capital gains tax treatment for years would give way to inflation indexing and a minimum tax floor, with housing policy driving much of the change.