Changes to the capital gains tax discount - BDO Australia
The Government announced that it will replace the current 50% capital gains tax (CGT) discount with an indexation method for assets held for more than 12 months.
www.bdo.com.auHere are the latest prominent developments on the capital gains tax discount, focused on Australia:
-
Budget reforms announced in May 2026 propose replacing the current 50% CGT discount with an inflation-indexed approach for assets held more than 12 months, plus a 30% minimum tax on net capital gains. Transitional rules will apply only to gains arising from 1 July 2027 onward; gains realized before that date may continue to benefit from the 50% discount. This marks the most significant overhaul to CGT since the policy’s introduction in 1999.
-
The indexation-based CGT framework would apply to individuals, trusts, and partnerships, and includes exemptions for pre-1985 assets in certain cases. Transitional arrangements are designed to grandfather existing holdings, so earlier gains may retain the current discount, while future gains use the new method.
-
Public and expert commentary since early 2026 has largely framed the move as a broad reform aimed at housing affordability and intergenerational equity, with expectations of a cautious, phased approach rather than an abrupt end to the CGT discount. The Grattan Institute and other policy groups have proposed tiered or tapered designs, and SNPs of reform have circulated through media and policy discussions.
-
Several outlets highlighted ongoing parliamentary inquiries and budget briefings examining how these reforms would interact with negative gearing, housing supply, and investor behavior, including potential grandfathering provisions and transitional mechanics.
-
Related coverage notes that if the reforms proceed on the outline described, the impact would be most pronounced for long-held investments and new purchases after the transitional date, with existing arrangements continuing under current rules for a period.
If you'd like, I can:
- Pull the most up-to-date official budget papers and summary analyses from the government and major accounting firms for precise transition rules and examples.
- Create a quick comparison table showing current CGT discount vs proposed indexation approach (including who’s affected, transition dates, and estimated tax outcomes for representative scenarios).
- Provide a short explainer tailored to your circumstances in Amsterdam (NL) if you’re evaluating cross-border impacts or international investments.
Would you like me to fetch specific sources or prepare a comparison chart?