Capital Gains Tax Changes Announced in the 2026 Australian Budget

Capital gains tax has long been a critical consideration for Australian investors, property owners, and business operators. The 2026 Federal Budget introduced targeted changes to the CGT framework that will affect how gains are calculated and taxed — particularly for high-value assets and certain investor categories.

When you sell a capital asset — such as an investment property, shares, or a business — for more than you paid for it, the profit is a capital gain. That gain is included in your assessable income and taxed at your marginal rate.

The key concession that has made long-term investing tax-efficient in Australia is the CGT discount: if you have held an asset for more than 12 months, only 50% of the capital gain is included in your taxable income (for individuals and trusts). This effectively halves the tax rate on long-term gains.

The most significant announcement was a reduction in the CGT discount for capital gains above a threshold. Under the proposed changes:

• Gains up to $500,000: The existing 50% CGT discount continues to apply for assets held more than 12 months.
• Gains above $500,000: The CGT discount is reduced to 25% for the portion of the gain exceeding $500,000.

This is a tiered approach rather than a blanket reduction. For most investors realising modest gains — for example, selling a single investment property — the impact may be limited. For those realising large gains from business sales, high-value property, or significant share portfolios, the additional tax cost can be material.

Example: An individual sells an investment property held for 5 years, realising a capital gain of $800,000.

• First $500,000 of gain: 50% discount applies → $250,000 included in assessable income.
• Remaining $300,000 of gain: 25% discount applies → $225,000 included in assessable income.
• Total assessable gain: $475,000 (compared to $400,000 under the previous rules).

Complying superannuation funds currently receive a one-third (33.3%) CGT discount on assets held more than 12 months, resulting in an effective CGT rate of 10%. The Budget did not change this concession, which remains intact.

Companies have never been eligible for the CGT discount — gains are taxed at the corporate rate (30% or 25% for small business entities). This remains unchanged.

The small business CGT concessions (15-year exemption, 50% active asset reduction, retirement exemption, and rollover relief) were largely preserved in the Budget announcement. These concessions can significantly reduce or eliminate CGT on the sale of a qualifying small business and remain an important planning tool for business owners approaching retirement or exit.

However, the interaction between the new tiered discount and the small business concessions will need careful analysis — particularly the active asset reduction, which operates alongside the general 50% discount.

The CGT changes are proposed to apply to CGT events occurring on or after the date of Royal Assent of the enabling legislation. This means the timing of asset disposals in the period between the Budget announcement and Royal Assent will be important for taxpayers considering selling high-value assets.

Property investors with significant unrealised gains: Those holding investment properties purchased many years ago with large embedded gains will face a higher effective tax rate on the portion of the gain above $500,000.

Business owners planning an exit: If you are considering selling your business and the sale price will generate a large capital gain, the timing and structure of the transaction deserves careful review — particularly in light of the small business CGT concessions.

Share investors with concentrated positions: Investors holding large positions in shares or managed funds with significant unrealised gains should model the impact of the tiered discount on their portfolio.

Trusts distributing capital gains: The interaction between the new tiered CGT discount and the proposed 30% minimum tax on trust distributions (covered in our separate article) creates additional complexity for trust structures.

Do not rush to sell: The instinct to crystallise gains before legislation passes can be costly if the transaction is not otherwise commercially justified. Transaction costs, market timing, and the loss of future growth potential all need to be weighed against the potential tax saving.

Review your asset holding structure: For future acquisitions, the structure in which you hold assets — individual, trust, company, or SMSF — will have different CGT outcomes under the new rules. Getting the structure right before you acquire is far more effective than restructuring later.

Small business concessions review: If you own a business, now is a good time to review whether your structure and assets qualify for the small business CGT concessions. These concessions can be transformative for business exit planning and are worth understanding well in advance of any sale.

Model your exit scenarios: For any asset where you are considering a sale in the next two to three years, run the numbers under both the old and new rules. The difference may influence your timing.

Seek advice on the legislation: As with all Budget announcements, the final law may differ from what was announced. Transitional provisions, definitions, and interaction rules will be critical. We recommend reviewing your position once the legislation is released rather than acting solely on the announcement.

The 2026 Budget's changes to negative gearing, trust distributions, and CGT represent a coordinated shift in how investment income and gains are taxed in Australia. Taken together, the measures reduce the tax advantage of several strategies that have been widely used by investors and business owners over the past two decades.

This does not mean those strategies are no longer viable — it means the numbers need to be recalculated. In many cases, the after-tax return on investment property, trust structures, and business ownership remains attractive. The key is understanding the new landscape and planning accordingly.

Golden Mane Advisory works with clients across Perth and Australia to navigate complex tax changes and develop strategies that are compliant, practical, and aligned with your financial goals.

This article provides general information about the 2026 Budget CGT announcement and does not constitute personal tax or financial advice. The proposed measures are subject to legislation and may change. Contact Golden Mane Advisory to discuss how these changes apply to your specific situation.