Big Changes are here.
Tax Reform | Boosting Home Ownership: Reforming negative gearing & Capital Gains Tax
Changes to tax arrangements for capital gains
From 1 July 2027, the 50 per cent CGT discount will be replaced by cost base indexation for assets held for more than 12 months, with a 30 per cent minimum tax on capital gains. These changes will apply toall CGT assets, including pre-1985 CGT assets, held by individuals, trusts and partnerships.
Note | No changes have been flagged for the taxation of CGT assets held by superannuation funds, including SMSFs. This means the 1/3 discount will continue to apply to superannuation entities including SMSFs.
Transitional arrangements will apply, allowing the 50 per cent CGT discount to continue to apply to gains arising before 1 July 2027. Likewise, capital gains on pre-1985 assets arising before 1 July 2027 will remain exempt from CGT. With the Government’s focus on new housing supply, investors in new residential properties will be able to choose to apply either the 50 per cent CGT discount, or cost base indexation and the minimum tax.
Note | Income support payment recipients, including Age Pension recipients, will be exempt from the minimum tax.
Reforming negative gearing to support new housing supply
The Government will limit negative gearing for residential property to new builds. From 1 July 2027, negative gearing from established residential properties will only be deductible against rental income or the capital gains from residential properties. Excess losses will be carried forward and can be offset against residential property income in future years.
Note | Non-residential property and other investment classes including shares will not be impacted by this change. These changes will apply to established residential properties acquired from 7:30PM (AEST) on 12 May 2026. Properties acquired prior to this time (including contracted entered into but no yet settled) will be exempt from the changes until disposed of.
Eligible new builds will be exempt from the changes, ensuring the benefits of negative gearing are directed to investment that increases the housing stock.
Note | Properties in widely held trusts and superannuation funds will be excluded, alongside targeted exemptions for build-to-rent developments and private investors supporting government housing program.
Tax Reform | Introducing a minimum tax on Discretionary Trusts
The Government will introduce a 30 per cent minimum tax on discretionary trusts to improve the fairness of the tax system and help fund new tax cuts for workers. From 1 July 2028, trustees will pay a minimum tax of 30 per cent on the taxable income of discretionary trusts.
Beneficiaries, other than corporate beneficiaries, will receive non-refundable credits for the tax payable by the trustee. Note: The minimum tax will not apply to other types of trusts such as fixed and widely held trusts (including fixed testamentary trusts), complying superannuation funds, special disability trusts, deceased estates and charitable trusts.
Some types of income such as primary production income, certain income relating to vulnerable minors, amounts to which non-resident withholding tax applies, and income from assets of discretionary testamentary trusts existing at announcement will also be excluded. Rollover relief will be available for three years from 1 July 2027 to assist small businesses and others that wish to restructure out of a discretionary trust into other arrangements, such as a company or a fixed trust.
