Key points:
- The rules have changed. Australia’s landmark CGT reforms are now law and will reshape how capital gains are taxed from 1 July 2027.
- The impact extends far beyond property. Business owners, family trusts and investors should all be assessing how the new regime could affect their long-term plans.
- The opportunity to act is now. Taking proactive steps before the reforms commence may create options that are not available once the new rules take effect.
Australia’s capital gains tax landscape is set to undergo its most significant change in more than 25 years.
Following the passage of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, the long-standing 50% CGT discount for individuals, trusts and partnerships will be replaced from 1 July 2027 with a cost-base indexation model and a new 30% minimum tax rate on capital gains.
While much of the public debate has focused on housing affordability and property investors, the implications are far broader. Business owners, family groups, investors and trustees should all be considering what the changes mean for their long-term wealth and succession plans.
The good news is that there is still time to plan.
A fundamental shift in the CGT system
For more than two decades, individuals and trusts have generally been able to reduce eligible capital gains by 50% where assets were held for at least 12 months.
From 1 July 2027, that framework changes.
The new regime replaces the CGT discount with inflation-based cost-base indexation and introduces a minimum 30% tax rate on capital gains. Existing gains accrued before 1 July 2027 are generally protected through transition rules, meaning taxpayers effectively enter a new CGT regime from that date forward.
This is a change that has the potential to reshape investment decisions, business exits, family wealth structures and succession planning.
Business owners should review exit and succession plans now
For many privately owned businesses, CGT forms a significant part of the value equation when planning a future sale.
Whether the objective is a third-party sale, management buyout, private equity transaction or family succession, the after-tax proceeds can materially influence both deal structure and timing.
The period leading up to 1 July 2027 creates an important window for business owners to revisit their plans and understand the potential impact of the new rules. In some circumstances, there may be opportunities to accelerate transactions or restructures. In others, a longer-term strategy may remain appropriate.
Importantly, business owners should not focus solely on the headline CGT changes. The small business CGT concessions (including the proposal to increase the eligibility thresholds) remain a critical part of the conversation and may continue to deliver significant benefits where eligibility requirements are met.
The key message is simple: if a business sale is likely within the next five years, now is the time to model the potential outcomes.
Family groups and trusts may need a fresh look
Many Australian family groups have used trust structures for decades to support asset protection, succession planning and intergenerational wealth transfer.
The CGT reforms arrive alongside broader changes affecting trust taxation, creating a timely opportunity for families to reassess whether their current structures remain fit for purpose.
Questions worth considering include:
- Are investment assets held in the most appropriate structure?
- Does the current ownership framework support future succession objectives?
- Are there assets that may be sold or transferred over the medium term?
- Will existing trust arrangements continue to achieve the desired outcomes for future generations?
There is unlikely to be a one-size-fits-all answer. However, families who proactively review their position will have greater flexibility than those who wait until a transaction is imminent.
Investors should focus on strategy, not headlines
Whenever significant tax reform is announced, there is a temptation to make rushed decisions.
In our view, investors should resist that urge.
While some assets may attract a higher effective tax burden under the new rules, investment decisions should continue to be driven by underlying commercial fundamentals rather than tax alone.
The more productive exercise is to understand where unrealised gains exist, review expected holding periods and model future outcomes under the new framework.
For some investors, the changes may have a relatively modest impact. For others, particularly those holding assets with significant embedded gains, the implications could be substantial.
Record keeping becomes more important
One aspect of the reforms that has received less attention is the increased complexity they introduce.
The transition to the new system will require taxpayers to clearly identify gains that accrued before and after 1 July 2027. This means accurate records, valuations and supporting documentation will become increasingly important, particularly for privately held assets.
For business owners, investors and trustees, good record keeping may have a direct bearing on future tax outcomes.
What should you do now?
Rather than waiting until 2027, we recommend taking a proactive approach during the next 12 months.
Key priorities include:
- Reviewing investment portfolios and unrealised gains.
- Assessing potential business sale or succession events.
- Revisiting trust and ownership structures.
- Confirming eligibility for CGT concessions.
- Ensuring asset records and valuations are up to date.
- Modelling future tax outcomes under the new rules.
Early planning will provide greater flexibility and create opportunities to make informed decisions rather than reactive ones.
Looking ahead
The introduction of CGT reform marks a significant shift in Australia’s taxation framework.
While the new rules do not take effect until 1 July 2027, the decisions made between now and then may have a lasting impact on after-tax wealth outcomes.
Those who understand the implications early, review their structures and seek advice ahead of major transactions will be best placed to navigate the change with confidence.
This article provides general information only and should not be relied upon. Professional advice should be sought based on your individual circumstances before making decisions based on the new CGT rules.
