The 50% CGT Discount Ends in 2027: What Australian Investors Need to Know

Key Takeaways

• The measures have been announced, not legislated. Detail is subject to consultation and parliamentary passage, and may change before taking effect.
• Under the announced measures, from 1 July 2027 the 50% Capital Gains Tax discount on assets held longer than 12 months would be replaced with cost-base indexation, plus a new 30% minimum tax rate on real capital gains.
• The 12-month holding period would stay. Gains on assets sold inside a year would continue to be taxed at full marginal rates, as they are today.
• The proposed changes would apply to individuals, trusts, and partnerships. Super funds, including SMSFs, appear to be outside the scope, based on Treasury commentary so far.
• The proposed transitional rules would preserve the 50% discount on appreciation accrued up to 1 July 2027, even where the asset is sold later.

Treasurer Jim Chalmers handed down the 2026-27 Federal Budget on Tuesday 12 May 2026. Tucked inside the housing measures is the most significant proposed change to investment taxation since 1999: the government has announced it intends to replace the 50% Capital Gains Tax (CGT) discount from 1 July 2027. If legislated as drafted, the change would affect Australians holding shares, property, crypto, or physical metal in personal name. Ainslie Bullion has reviewed the announced detail for clients holding precious metals; the analysis below is general information only and is not financial or tax advice.

What is proposed to change on 1 July 2027?

Under the announced measures, from 1 July 2027 the 50% CGT discount would be replaced by two new mechanics that work together.

First, cost-base indexation. Instead of halving the nominal gain, the original cost base of the asset would be lifted by inflation (CPI) for the period it was held. Only the real gain above the indexed cost base would be taxable.

Second, a 30% minimum tax rate. Whatever the marginal rate would otherwise apply, the effective rate on the gain could not fall below 30%. Age pensioners and other income-support recipients would be exempt from this floor.

The proposed system is closer to the pre-1999 design than to the one most Australians have grown up with. Indexation was the original CGT mechanism from 1985 until the Howard government introduced the 50% discount in 1999.

What would the change look like across the timeframes?

The proposed system uses 1 July 2027 as the dividing line. The table below illustrates how the announced rules would apply to the same asset across three different sale dates: 10 ounces of gold bought in 2024 for A$30,000, with example sale prices five years later.

Two patterns stand out in the gold scenarios above. First, on the same nominal gain, the post-2027 tax bill would be materially higher under the announced rules, because the indexation adjustment is smaller than the 50% discount it replaces. Second, the proposed 30% floor would change the calculus for low-bracket sellers: in Scenario C, a retiree at the 19% marginal rate would still pay the 30% floor on the indexed gain, roughly $7,000.

(Worked examples are illustrative only, are based on the announced measures, use 2.5% annual CPI, and do not account for buy/sell costs. Actual outcomes will depend on the final legislation and individual circumstances.)

What about gold and silver bullion you already own?

Under the announced transitional rules, appreciation accrued on bullion already held would keep the 50% discount, even if the asset is sold after 1 July 2027.

The proposed mechanism is a transitional valuation. On 1 July 2027, each asset would be given a value (either through a formal market valuation or an ATO-prescribed apportionment formula). The gain up to that date would keep the 50% discount when the asset is eventually sold. Only the gain accruing after 1 July 2027 would fall under the new indexation-plus-30%-floor rules.

Should the measures pass in their announced form, good documentation between now and 30 June 2027 may make the transitional valuation simpler. Purchase invoices, holding records, and a market valuation as at 30 June 2027 are likely to be useful evidence under the proposed rules. The ATO's apportionment formula has not yet been published, so the exact methodology may still change.

The election promise this budget broke

Labor went to the May 2025 federal election with explicit pledges that negative gearing and the CGT discount would not be touched. Asked on 9 April 2025 to rule out changes, Prime Minister Anthony Albanese said: “Yes. How hard is it? For the 50th time.” In August 2025 he restated the position: “The only tax policy we're implementing is the one we took to the election.”

The 12 May 2026 budget represents a clear reversal. Treasurer Jim Chalmers has acknowledged the political cost, telling the ABC the changes carry “an element of political risk” because the government has “come to this different view... for very good reasons.” Albanese has defended the shift by pointing to intergenerational concerns about home ownership.

Labor's reversal matters because the package is announced, not legislated. The change of position is part of why the Coalition has signalled it would seek to repeal the measures if it forms government.

What did Treasury say, and who has pushed back?

Treasury frames the change as “restoring the original intent of the CGT arrangements.” The 30% floor, according to the Treasurer's speech, addresses the pattern of investors realising gains in low-income years, including retirement, to pay tax at well below the rate that applies to wage income.

Industry response has been split.

• The Australian Council of Trade Unions (ACTU) welcomed the package as correcting an imbalance.
• Master Builders Australia cited Treasury's own modelling that the housing component of the package will reduce supply by approximately 35,000 homes over the next decade.
• The Australian Shareholders Association ran a pre-budget survey: 75.9% of respondents said removing the discount would either reduce their long-term equity allocation or that the impact would depend on the details.
• The Coalition has signalled it would seek to repeal the changes if it forms government. The Greens have described the package as “tinkered.”

The legislation has not yet been drafted. The shape of the final rules, including the ATO's apportionment methodology, the treatment of joint ownership and deceased estates, and a possible startup-sector carve-out, will be settled in consultation between now and 1 July 2027.

What it means for investors

If the announced measures are enacted as drafted, the proposed transitional rules appear designed to insulate existing appreciation: the 50% discount would be preserved on gains accrued up to 1 July 2027. From here, the practical considerations are future acquisitions, documenting existing holdings, and conversations with a qualified tax adviser about how the final rules would interact with each investor's individual structure. Nothing in this article is tax or financial advice.

Ainslie Bullion holds detailed transaction records for every client. Purchase invoices, weights, dates, and counterparty details are accessible through your account, which clients may find useful evidence under any transitional valuation regime that ultimately applies.

This article is general information only and does not constitute financial advice. Past performance is not indicative of future results. Always conduct your own research or consult a licensed financial adviser before making investment decisions.

At Ainslie Bullion, we've been helping Australians own physical gold and silver since 1974. If you would like to understand how physical precious metals fit alongside other assets, our team is here to help.