Capital Gains Tax Australia: What the Federal Budget 2026 Means for Your Clients

The rules around capital gains tax in Australia just changed fundamentally.

The federal budget 2026 didn’t tinker at the edges. For the first time since CGT was introduced in 1985, the core architecture of how capital gains are taxed is being rebuilt. For accounting firms advising clients with business interests, investment properties, or long-held assets, the implications are significant, and the planning window is already open.

Here’s a clear breakdown of what’s changing, what it means for your client base, and where the planning opportunities sit.

What Are the Capital Gains Tax Changes in the Australian Federal Budget 2026?

1. The 50% CGT discount is being replaced by indexation

From 1 July 2027, the 50% discount on capital gains for assets held more than 12 months will be replaced by cost base indexation. Under the new model, only the gain above inflation is taxable, rather than half the total gain being exempt regardless of inflation. Assets disposed of before 1 July 2027 retain the existing 50% discount in full.

The practical impact will vary by client. For assets with modest real gains but long holding periods, indexation may produce a comparable or better outcome. For assets with substantial real gains, the shift will increase the taxable amount.

2. A 30% minimum tax on net capital gains

A minimum 30% tax rate will apply to net capital gains for individuals, trusts, and partnerships from 1 July 2027. This directly limits the benefit of timing a disposal to a low-income year – a planning strategy commonly used to reduce effective CGT rates. The change applies to individuals, trusts, and partnerships; companies, already taxed at a flat rate, are largely unaffected.

3. Pre-1985 assets enter the tax net

Assets acquired before 20 September 1985 have been fully exempt from CGT since its introduction. Under the federal budget 2026 capital gains tax framework, gains accruing on these assets from 1 July 2027 will be taxable. Critically, only gains accruing after that date are captured with historical gains remaining untaxed. A market valuation as at 1 July 2027 establishes the new cost base.

For clients with pre-CGT business assets or property, securing a defensible valuation well before the deadline is not optional; it’s foundational to any planning strategy.

How Do the Federal Budget 2026 CGT Changes Affect Your Clients?

The changes affect different client segments in different ways.

Business owners planning an exit

The post-July 2027 rules apply to gains realised after that date. Clients considering a business sale or ownership transition in the next two to three years need to revisit their exit timing and deal structure now. The interaction with the small business CGT concessions also warrants careful modelling.

Clients with investment properties or mixed asset portfolios

The replacement of the 50% discount with indexation will require revised projections for clients holding negatively geared or appreciating property assets. Trust structures add another layer, given that the 30% minimum tax applies to trusts and partnerships.

Long-held or pre-1985 asset holders

This is arguably the most time-sensitive category. Without a formal market valuation as at 1 July 2027, determining the taxable portion of any future gain becomes significantly more complex — and potentially more costly to defend. Early valuation engagement is strongly advisable.

Are Small Business CGT Concessions Still Available After the Federal Budget 2026?

The existing small business CGT concessions remain intact under the capital gains tax changes introduced in the Australian federal budget 2026. Eligible businesses can still access the active asset reduction, the retirement exemption, and the rollover concession – concessions that can substantially reduce or eliminate CGT liability even under the new framework. For clients approaching retirement or succession who have built their business over many years, these concessions remain a critical planning tool.

Key Dates for Capital Gains Tax Australia: Federal Budget 2026 Timeline

Now: Review ownership structures, asset registers, and succession plans across your client base
Before 1 July 2027: Obtain formal valuations for pre-1985 assets; model disposal scenarios under both the existing discount and the new indexation method
1 July 2027: New CGT rules take effect; 30% minimum tax applies; pre-1985 assets enter the tax net

How Can Accounting Firms Prepare for the Capital Gains Tax Changes?

The CGT changes will generate significant advisory work across most accounting practices. The challenge is capacity: reviewing client portfolios, modelling scenarios, and preparing documentation across a large client base requires time that many firms don’t have in-house.

If concerns about quality, data security, or loss of control have kept your firm from exploring outsourcing, you’re not alone — but many of those concerns are based on outdated assumptions. We address the most common ones directly in Debunking the Myths Around Outsourced Accounting.

SuperRecords provides outsourced support to Australian accounting and financial services firms, including tax and compliance preparation, bookkeeping, and back-office processing. Our team integrates directly into your existing workflow, giving your practice the capacity to handle increased advisory demand without adding headcount.

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Book a demo to see how we can support your practice.

FAQs: Capital Gains Tax Australia and the Federal Budget 2026

Does the 50% CGT discount disappear entirely from 1 July 2027?

For most assets, yes. From 1 July 2027, the 50% discount is replaced by cost base indexation for individuals, trusts, and partnerships. Assets disposed of before that date retain the full 50% discount. Investors in newly constructed residential property will have the option to choose between the two methods going forward.

Will pre-1985 assets be taxed on their full historical gain?

No. Only gains accruing after 1 July 2027 are taxable. A market valuation as at that date establishes the new cost base, leaving historical gains untaxed. Acting early to document that valuation is strongly advisable.

Does the 30% minimum CGT tax apply to companies?

No. The 30% minimum tax applies to individuals, trusts, and partnerships. Companies are already subject to a flat tax rate and are largely unaffected by these specific changes.

Are the small business CGT concessions still available under the new framework?

Yes. The government has confirmed that existing small business CGT concessions are preserved. Eligible businesses can still access significant CGT relief on the disposal of qualifying active assets.

What should accounting firms be doing right now?

The priority actions are: identifying clients with pre-1985 assets and initiating valuation conversations; modelling disposal scenarios for clients considering business sales or asset disposals before July 2027; and reviewing trust and partnership structures in light of the 30% minimum tax.

When do the new CGT rules take effect?

The new rules, including the replacement of the 50% discount with indexation, the 30% minimum tax, and the inclusion of pre-1985 assets, all take effect from 1 July 2027.