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By Simon Terry LLB BCom CA, Director, Porters CA. As at 23 September 2026.

From 1 July 2027, the 50% CGT discount for Australian resident individuals and trusts is replaced by indexation of the cost base, and resident individuals will pay at least 30% tax on their real capital gains. Assets you already own are treated as sold and reacquired just before 1 July 2027, and the gain to that date is deferred until you actually sell. You do not need to sell anything for the 2027 CGT changes to matter, but you also do not need to rush to sell, and the law does not require you to value every asset by 30 June 2027.

For business owners the practical questions are whether to sell before 30 June 2027, which assets are worth valuing now, and what happens to the small business CGT concessions. This article answers each of them.

The 2027 CGT changes at a glance

Change	Who it affects	Status
50% CGT discount replaced by cost base indexation for gains accruing from 1 July 2027	Resident individuals and trusts	Law
Assets treated as sold and reacquired just before 1 July 2027, with the gain deferred until a later sale	Individuals and trusts	Law
Minimum 30% tax on capital gains from CGT events on or after 1 July 2027	Resident individuals	Law
No change to how capital gains are taxed	Companies	Law
One-third discount continues	Superannuation funds, including SMSFs	Law
50% active asset reduction available to businesses with turnover under $10 million	Small business owners	Law

What is changing on 1 July 2027?

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received assent on 26 June 2026. It makes three changes to capital gains tax that matter to business owners:

• for gains accruing from 1 July 2027, the 50% CGT discount for individuals and trusts is replaced by indexation of the cost base to inflation
• resident individuals pay a minimum 30% tax on capital gains from CGT events on or after 1 July 2027
• existing assets pass through a transition at 30 June 2027, so that the gain built up before that date keeps the old treatment.

The same Act also changes negative gearing for residential property. That is outside the scope of this article.

How does cost base indexation work?

Instead of halving the gain, the cost base is increased for inflation. The indexation factor is the Consumer Price Index for the quarter in which you sell, divided by the index for the quarter in which the cost was incurred. Only the gain above inflation is taxed.

To use indexation:

• you must have held the asset for at least 12 months before the sale; the deemed sale and reacquisition at 30 June 2027 is ignored for this test, so the 12 months run from when you actually acquired the asset
• if you are an individual, you must not have been a foreign resident or a temporary resident at any time between 1 July 2027 and the sale.

New residential dwellings and affordable housing have their own rules and are not covered here.

Whether indexation is better or worse than the 50% discount depends on how fast the asset grows compared with inflation. For a business or property that grows well ahead of inflation, halving the gain was usually the better deal. For assets that barely keep pace with inflation, indexation can produce a smaller taxable gain.

What is the 30% minimum tax on capital gains?

It is a top-up tax for resident individuals. If the income tax on your capital gain works out at less than 30%, you pay extra tax to bring it up to 30%. It applies to capital gains from CGT events on or after 1 July 2027. How it interacts with the deferred gain from before 1 July 2027 is worth modelling for any significant sale.

The minimum tax mainly affects people on lower incomes who sell an asset in a year when their other income is low, for example after retiring. It is designed to reduce the benefit of timing a sale for a low-income year. Someone already on the top marginal rate is largely unaffected.

There are exclusions for new residential dwellings, affordable housing and some recipients of social security and veterans’ payments. The minimum tax applies to individuals, not to companies or superannuation funds.

What happens to assets I already own?

Eligible assets held by individuals and trusts are treated as sold just before 1 July 2027 and reacquired. The gain up to that point is not taxed at the time. Under sections 112-165 and 112-170 of the Act, it is deferred and worked out when you actually sell, under the old rules including the 50% discount.

When you sell, the gain has two parts:

• the deferred gain up to 1 July 2027, taxed under the old rules
• the gain after 1 July 2027, calculated using the indexed cost base.

The dividing line is the asset’s market value just before 1 July 2027, or an alternative apportioning method that the Minister may determine. You do not have to choose between them until you lodge your tax return for the year you sell. Assets acquired before 20 September 1985 also go through the transition.

Do I need a valuation by 30 June 2027?

No. The law does not require every asset to be valued by 30 June 2027, and the alternative apportioning method, once it is published, may suit some assets better than a valuation.

A valuation made at the time can still be worth having where the market value just before 1 July 2027 will be hard to support years later. The usual examples are:

• business premises and other commercial property
• farmland
• shares in a private company or units in a unit trust
• business goodwill.

Listed shares and managed funds do not need one, because their market value is on the public record.

Our advice is to check your cost base records now and decide asset by asset. If some assets warrant a valuation, arrange it early, because valuers are likely to be busy in the first half of 2027. We would rather clients spend money on the two or three valuations that matter than on a blanket exercise across everything they own.

Should I sell my business or other CGT assets before 30 June 2027?

Not for tax reasons alone. Because of the transition, the gain built up before 1 July 2027 keeps the old treatment, including the 50% discount, whether you sell before or after that date. What changes is the tax on growth after 1 July 2027.

For most business owners and investors selling at the top marginal rate, there is no tax cliff at 30 June 2027 on the value already built up. The 30% minimum tax can change that for an individual on a lower income, and that should be modelled before a sale.

Many business sales also qualify for the small business CGT concessions, which can reduce the gain substantially or remove it altogether. Where they apply, the difference between selling before and after 1 July 2027 may be small. A sale should be timed around the buyer, the price and your plans, with the tax modelled, rather than around a date.

What happens to the small business CGT concessions?

They continue. The 15-year exemption, the 50% active asset reduction, the retirement exemption and the small business rollover all remain.

One concession becomes easier to reach. The Act removes the $2 million turnover threshold for the 50% active asset reduction, so businesses with aggregated turnover under $10 million can access it. The other concessions, including the 15-year exemption and the retirement exemption, still require you to meet the existing basic conditions, including the $2 million turnover test or the $6 million maximum net asset value test.

The Act also directs, in sections 112-160 and 112-170, that the deemed sale and reacquisition at 30 June 2027 be disregarded when the small business concessions are applied to the deferred gain. In other words, the transition itself is not meant to cost you access to the concessions. A restructure after the transition is a separate question and needs its own advice.

Are companies and super funds affected?

Companies are not. They never had the 50% discount, and their capital gains continue to be taxed as before. The relative position of companies has shifted, though, because individuals and trusts have lost the discount on future growth.

Superannuation funds, including SMSFs, keep their one-third discount. The main residence exemption is unchanged.

If your business runs through a family trust, the proposed 30% minimum tax on discretionary trusts from 1 July 2028 is also relevant. We cover it in Is a family trust still the right structure for my business?

What about farmland?

Farmland held by individuals or trusts goes through the same transition as any other asset. For farming families, the more important points are usually the small business CGT concessions, which often apply to farm sales and to farm succession, and the records needed to support the value of the land just before 1 July 2027.

Farmland is also one of the assets where a valuation made at the time is most likely to be worthwhile, because recent comparable sales can be scarce in some districts. Our Regional Business and Farming page covers the farm tax matters we work on from our Albany office.

What is still unknown?

• The detail of the alternative apportioning method has not been published.
• The ATO has not issued guidance on how it expects the 1 July 2027 value to be supported.
• How a restructure after 1 July 2027 affects the deferred gain depends on the rollover used, and should be confirmed before you rely on it.

We are not recommending anyone act on assumptions about these points. The records work can start now regardless.

What should I do before 30 June 2027?

1. List the assets that will go through the transition: business real property, shares in private companies, interests in trusts, farmland, investment property and any assets acquired before 20 September 1985.
2. Find the acquisition dates, cost bases and improvement costs for each one. The deferred gain is still calculated from your original cost base, so those records matter as much as the 1 July 2027 value.
3. Decide which assets warrant a valuation made at the time, and book those early.
4. If a sale is possible in the next few years, check whether the small business CGT concessions are likely to apply, and review your trust deed and distribution history, because they affect access to the concessions.
5. If you are already planning a restructure, get advice on timing. Some restructures are simpler before 1 July 2027. Others, such as moving out of a discretionary trust under the proposed trust rollover, can only happen after it.

To have us review which of your assets are affected and what records you will need, contact us or call Simon Terry in South Perth on (08) 6436 0900 or Jodi Bradley in Albany on (08) 9842 2511.

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About the author. Simon Terry LLB BCom CA is a Director of Porters CA, a Chartered Accounting firm with offices in South Perth and Albany, Western Australia. He is a registered tax agent and advises business owners and family groups on tax and structuring.

This article is general information based on the law as at 23 September 2026. You should seek advice specific to your circumstances.