From 1 July 2027, the proposed capital gains tax (CGT) rules for individuals, trusts and partnerships are expected to change. Under the proposed new system, the current 50% CGT discount would be replaced with cost base indexation and a 30% minimum tax on real capital gains.
At first glance, this may suggest that selling before 1 July 2027 is the obvious choice. However, the proposed changes are designed to preserve existing gains accrued before that date, meaning a pre-1 July 2027 sale may not provide the advantage many people expect.
Your gains so far are protected
The new legislation treats assets you hold on 30 June 2027 as sold at market value on that date and bought back the next day. You do not pay any tax then. Instead, the gain built up to 1 July 2027 is locked in and keeps the 50% discount whenever you actually sell. Only the growth after that date falls under the new indexation and minimum tax rules.
In short, holding past the deadline does not cost you the discount you have already earned. This is why a number of advisers describe rushing to sell purely to beat the deadline as one of the more expensive mistakes investors make during tax reform.
Reasons to be cautious
Some assets are not affected at all. New builds can still choose the discount, and qualifying affordable housing keeps its existing discount of up to 60%. The small business CGT concessions remain. Income support recipients are exempt from the 30% minimum tax.
Also note that super is unaffected, meaning super funds continue to receive the one-third CGT discount on capital gains.
The bottom line
For most people, there is no need to sell simply because the rules are changing. The gain you have made up to 1 July 2027 stays on the old rules. The decision to sell should rest on your own plans, your asset, your income and your timeframe, not on the calendar.
This article is general information only and does not take into account your personal objectives, financial situation or needs. It is not personal financial or taxation advice.