If you’ve been following the headlines this year about capital gains tax (CGT) being overhauled, negative gearing changes and the 50% discount disappearing, you’ve probably been left with more questions than answers. Here’s a clear, practical picture of what’s happening, and what it means for you as a business owner.

This is the biggest change to how capital gains are taxed in Australia since the current discount system began back in 1999. The good news is that most of it doesn’t start until 1 July 2027, so you have time. The aim of this article is to make sure you use that time well.

The short version of CGT changes

This isn’t a rumour or a Budget-night announcement that might not go ahead. It’s now actual law. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 passed the House of Representatives on 4 June 2026, passed the Senate with amendments on 25 June, and received Royal Assent the very next day, 26 June 2026.

The headline changes mostly start from 1 July 2027 – just under 11 months from now. Some detail is still to be finalised, such as the exact definition of a ‘new residential dwelling’ and the official indexation numbers, which the ATO will publish closer to the date. But the core architecture of the new law is locked in.

What’s staying the same

Let’s start with the reassuring part, because there’s a lot of noise out there suggesting everything is changing. It isn’t.

The fundamental building blocks of CGT haven’t been touched. The way a gain or loss is calculated (cost base, capital proceeds, CGT events like selling, transferring or losing an asset) hasn’t changed.

• Your family home is still exempt under the main residence exemption.
• If you’ve got money in superannuation, the fund itself still gets its existing one-third CGT discount on gains, untouched by any of this.
• Companies are largely unaffected too. They’ve never received the 50% discount anyway, since they’re taxed at the company tax rate on the full gain, though they are swept up in one part of the transition (more on that below).
• The small business CGT concessions themselves (the 15-year exemption, the retirement exemption and the small business rollover) are all staying in their current form too.

There’s also a genuinely useful grandfathering rule: if you genuinely sell an asset before 1 July 2027, it’s taxed under today’s rules in full – the old 50% discount, no minimum tax, none of the new mechanics described below. And if you already own an investment property bought before Budget night, 7:30pm AEST on 12 May 2026, the current negative gearing rules keep applying to that property indefinitely. It’s only residential property purchases from that date onwards that get caught by the new quarantining rules.

What’s changing with CGT from 1 July 2027

Goodbye to the 50% discount

From 1 July 2027, individuals no longer get the 50% CGT discount on capital growth from that date. It isn’t being reduced; it’s being replaced entirely with cost base indexation, using the Consumer Price Index. If that sounds familiar, it should: it’s essentially reintroducing the system Australia had before the 50% discount was brought in back in 1999. Instead of only being taxed on half your gain, you get to inflate your original cost base by CPI, and you’re taxed on the gain above that indexed amount. There’s one condition worth flagging: you still need to have held the asset for at least 12 months to get the benefit.

Broadly, whether indexation ends up better or worse than the old discount depends on how much the asset has grown versus inflation. For assets that grow a lot faster than CPI, which describes most successful investments, indexation alone is usually a smaller tax benefit than the 50% discount was.

A new 30% minimum tax on capital gains

On top of losing the discount, there’s a brand-new minimum tax on the post-1 July 2027 portion of a gain – Division 119 – a 30% floor for Australian resident individuals. Think of it as a top-up: it doesn’t change how your gain is calculated, it looks at the actual tax you paid on the post-1 July 2027 gain, and if that comes out below 30%, you pay the difference. It’s designed to stop people using deductions, super contributions or a low marginal rate in a given year to get a big capital gain taxed cheaply.

There’s a carve-out for people receiving certain government payments (the age pension, JobSeeker, the disability support pension and a handful of others). As a guide, around $227,000 of taxable income is roughly where your own average tax rate already reaches 30%. Below that, the minimum tax can add extra tax on a gain.

The one-off reset on 30 June 2027

This is the transitional arrangement that catches most people by surprise. On 30 June 2027, every CGT asset you still own – property, business assets, shares, the lot – is treated as if you sold it at market value, then immediately bought it back on 1 July. Nothing physically happens and no money changes hands, but for tax purposes there’s a line drawn in the sand. If you own anything genuinely pre-CGT (bought before 20 September 1985, and so completely capital-gains-tax-free right now), that free ride ends on this date.

For everything else, this creates two calculations bolted together for the one asset. Growth up to 30 June 2027 is frozen and deferred. When you eventually sell, that slice is still taxed under today’s rules, including the old 50% discount. Growth from 1 July 2027 onward is taxed under the new rules – indexation and the minimum tax. So, a single sale, years from now, could involve two different tax calculations stitched together. For example, buy for $100,000, worth $180,000 on 30 June 2027, sold in 2030 for $250,000: the first $80,000 of growth is the deferred gain taxed under today’s rules, and the remaining $70,000 is taxed under the new regime.

Why valuations matter more than ever

Because that 30 June 2027 figure becomes your new cost base, potentially for years or decades to come, getting it right matters enormously.

For real property or a private business interest without a ready market price, you have a choice:

• get a formal market valuation as at 30 June 2027, or
• fall back on a default ‘apportionment’ method that assumes your asset grew at a steady, constant rate across your whole ownership period, splitting the gain into a pre-2027 slice and a post-2027 slice on that assumption.

Listed shares wouldn’t use this at all, since the market already tells you what they’re worth.

The catch is that real assets rarely grow at a steady, constant rate. If most of your growth happened years ago and the asset has been fairly flat more recently, that assumption can shortchange you. A real valuation would show more of the gain sitting in the pre-2027 bucket, taxed under today’s more favourable rules. The sensible move is to run the numbers both ways and use whichever comes out better. If you do go the valuation route, the ATO expects it from a suitably qualified, independent valuer, and it needs to be well documented – using only information reasonably known at the time, not hindsight.

More businesses can access the small business 50% reduction

Here’s a genuinely positive change for business owners.

The 50% active asset reduction (one of the four small business CGT concessions) currently only applies if your turnover is under $2 million, or you pass the net asset value test. From 1 July 2027, that turnover threshold for the 50% reduction specifically rises to $10 million. If your business turns over somewhere between $2 million and $10 million, and you don’t currently pass the net asset value test either, this concession may become available to you for the first time. The other three concessions (the 15-year exemption, the retirement exemption and the small business rollover) keep their existing tests.

Rental property losses face new quarantining rules

This is the change most people have heard about as ‘negative gearing changes’, but it’s really a CGT change in disguise.

From 1 July 2027, if you purchase an existing residential rental property after Budget night (7:30pm AEST on 12 May 2026) and your rental expenses exceed your rental income, that net loss gets quarantined. It doesn’t disappear, but it can only be used against rental income from residential properties, or carried forward against a future capital gain when you sell a residential property. It can no longer reduce your wages or other income.

Properties bought before that date are fully grandfathered, and brand-new dwellings are generally excluded from quarantining to encourage new housing supply. The quarantined amount also gets built into the capital gains calculation itself when you sell, so it directly affects your final CGT bill.

Less flexibility with capital losses

Beyond rental losses specifically, the whole system for using capital losses has been tightened up.

Gains now get split into categories – deferred and new, residential and non-residential – and a strict, mandatory order governs which losses go against which gains. Deferred gains first, then non-residential, then residential, before any discount, indexation or small business concession is applied. Under today’s rules there’s some flexibility in directing a loss to preserve the discount on another gain; from 1 July 2027, that flexibility disappears.

Practically, this means less scope to plan losses after the fact. The planning needs to happen before the gain and loss crystallise, not at tax return time.

What this means for you

Most business owners are affected by the CGT changes through the ordinary things they already own, not through some complicated structure.

• If you personally own an investment property, you’re affected by the 30 June 2027 reset and, if you bought it after Budget night, the new rental loss quarantining rules.
• If you hold shares or an investment portfolio in your own name, you lose the 50% discount on growth from 1 July 2027 and become subject to the new minimum tax.
• If you own your business premises personally, separate from the entity that runs the business, the small business CGT concessions may now reach further because of the $10 million turnover change.
• And if your growth assets sit inside your own super fund, none of this touches you at all. The fund keeps its existing one-third discount.

The question isn’t whether this reform affects you. It’s which of these categories your assets sit in, and which set of rules applies to each one.

A natural moment for succession and exit planning

There’s a bigger conversation hiding inside this reform, beyond compliance.

Many business owners will, at some point, hand their business to someone else – a family member, a business partner, a buyer – or wind it down and step back. This reform creates a natural prompt to have that conversation now rather than later.

You’re going to need a valuation of your business or assets as at 30 June 2027 anyway, so that’s a natural moment to also ask: what’s this actually worth, and what would I do with it? And if your turnover sits between $2 million and $10 million, the widened active asset reduction might genuinely change the maths on stepping back sooner rather than later. If timing your exit, bringing in the next generation, or simply understanding what your business is worth has been on your mind, the next 11 months are a good, low-pressure window to start that conversation.

What to do between now and 1 July 2027

Whatever category your assets fall into, here’s what we’d suggest doing between now and the changeover, and beyond.

1. Get valuations moving now, not in June 2027

List every asset you own that’s pre-CGT, or that you plan to keep long-term through the reset, and book a suitably qualified, independent valuer well ahead of time.

Insist on a documented, defensible valuation, and keep every working paper. Everyone in Australia holding one of these assets will need a valuer around the same time in the lead-up to June 2027, so valuers are going to get busy. Starting early is the smart move, even though a later, retrospective valuation is technically allowed. It’s also worth asking your accountant to sanity-check a real valuation against the default apportionment method before you commit to either. If the numbers come out similar, a formal valuation may not be worth the cost; if they don’t, that gap is exactly what tells you it’s worth paying for.

2. Model your timing decisions

For any asset you’re already thinking about selling around this period, get the numbers modelled both ways: what does it look like if you sell before 1 July 2027 under today’s rules, versus waiting and dealing with the deemed disposal, indexation and minimum tax? There’s no universal right answer – it depends on the asset, how much it’s grown, your other income in each year, and whether a widened concession might make waiting worthwhile for you specifically.

While you’re at it, go through your investment properties and note down which were bought before or after 12 May 2026, so you know exactly which negative gearing regime applies to each.

3. Get your records in order

All these new calculations – the deemed disposal, the indexed cost base, the deferred gain – depend on having a clean, accurate history of what you paid for things and what you’ve spent on them since. If your records for a long-held asset are patchy, now is the time to reconstruct that history while people can still remember and documents can still be found.

If you’re thinking about reorganising how you hold any growth assets, that’s a conversation to have well before the reset date, because the tax consequences of doing it before or after 30 June 2027 can be very different.

Your next steps

▢  Book a dedicated CGT planning meeting with your accountant now. Don’t leave it until May or June 2027.

▢  If that meeting identifies assets needing a valuation, get it booked in ahead of the 2027 rush.

▢  Keep across ATO guidance as the fine detail (definitions, indexation factors) is finalised, and get advice before signing anything significant between now and 2027.

The bottom line

This isn’t a tweak to the CGT rate. It’s the biggest rebuild of the system since 1999. But it doesn’t start for another 11 months. The businesses and individuals who come out of this well will be the ones who start the conversation now, get their valuations and records sorted early, and make deliberate, well-modelled decisions.

If you’d like to talk through how any of this applies to your own situation, get in touch with our team at Synectic Accountants & Advisers. We’re already working through these questions with business owners, and we’re happy to help you make sense of what it means for you.