Capital Gains Tax Changes 2026

Capital Gains Tax Changes 2026

The 50% Discount Is Gone. What It Means for Investors, Business Owners and SMSFs.

As part of the Government's broader tax reform package, changes to Australia's Capital Gains Tax (CGT) rules will proceed, fundamentally altering how capital gains are taxed on investment assets.

For more than 25 years, Australians have relied on the 50% CGT discount as a key part of investment and wealth-building strategies. That concession is now being replaced with a new system consisting of a 30% flat tax on capital gains together with an inflation adjustment mechanism.

The changes are expected to affect property investors, business owners, family trusts, farmers and Self-Managed Super Fund (SMSF) members across Australia.

What Is Changing?

Under the existing rules, individuals and trusts that held an asset for more than 12 months were generally entitled to a 50% CGT discount.

For example, if an investor made a $400,000 capital gain on the sale of an investment property, only $200,000 would typically be included in their taxable income.

Under the new law, the 50% discount will be abolished and replaced by:

  • A 30% flat tax on capital gains and
  • An inflation adjustment designed to recognise increases in asset values caused by inflation.

The Government argues the new system is fairer because it reduces tax concessions on investment gains while ensuring taxpayers are not taxed on purely inflationary increases in value.

For many investors, the outcome could be a significantly different tax result than under the current rules.

Who Will Be Affected?

Property Investors

Property investors are likely to be among the most impacted.

Many investment property strategies have historically relied on long-term capital growth combined with the 50% CGT discount when the property is eventually sold.

The removal of the discount may reduce the after-tax return from property investment and could influence future decisions about purchasing, holding or selling investment properties.

Business Owners

Business owners who hold commercial property, investment assets or business interests outside their trading entity should review their structures carefully.

The tax outcome on a future business sale or asset disposal may differ substantially under the new rules.

While some small business CGT concessions may continue to apply, the broader CGT changes could still have significant implications for succession planning and retirement strategies.

Family Trusts

Many family trusts have been established with long-term asset accumulation in mind.

The removal of the 50% discount may change the attractiveness of certain trust structures and could impact future distribution and wealth-transfer strategies.

Given the Government's recent focus on trust taxation, many families may benefit from a comprehensive review of their arrangements.

SMSF Members

Self-Managed Super Funds are also likely to attract increased attention.

Many SMSFs hold property and other growth assets that have accumulated significant unrealised gains over many years.

At the same time, the Government has introduced Division 296 tax measures for superannuation balances exceeding $3 million and has signalled concerns about the use of borrowing arrangements within SMSFs.

The combined effect of these reforms may lead many trustees to reconsider future investment and retirement planning strategies.

What Could It Mean for Investment Decisions?

The new rules encourage investors to think differently about how assets are held and when they are sold. Some investors may decide to hold assets longer, while others may review whether trusts, companies, SMSFs or personal ownership remain the most appropriate structure.

Importantly, the changes are likely to increase the value of proactive tax planning.

Investment decisions that were made under one set of tax assumptions may now produce very different outcomes in the future.

Why Planning Matters More Than Ever

Major tax reforms often create both challenges and opportunities.

The impact of the new CGT rules will depend on a range of factors including:

  • The type of asset owned
  • How long it has been held
  • The ownership structure
  • Future inflation rates
  • Retirement and succession planning goals

For some taxpayers, the effect may be relatively minor. For others, particularly those holding substantial investment assets, the difference could be significant.

The Bottom Line

The Government's agreement with the Greens means Australia's long-standing 50% Capital Gains Tax discount is being replaced with a new taxation framework.

For property investors, business owners, trustees and SMSF members, this represents a major shift in the tax landscape.

While the full impact will vary from person to person, one thing is clear: strategies that worked under the old rules may need to be reviewed under the new ones.

Frequently Asked Questions About the New Capital Gains Tax Changes 2026

What is happening to the 50% Capital Gains Tax discount?

The Government has announced plans to replace Australia's long-standing 50% Capital Gains Tax (CGT) discount with a new framework that includes a 30% flat tax on capital gains together with an inflation adjustment mechanism.

For more than 25 years, eligible investors have been able to reduce their taxable capital gain by 50% when assets were held for more than 12 months.

Will property investors pay more tax under the new CGT rules?

Potentially, yes.

Many investment property owners have relied on the 50% CGT discount to reduce the tax payable when selling a property. Depending on the property's purchase price, sale price, ownership structure and inflation adjustments, some investors could face a higher tax bill than under the current system.

How will the new CGT rules affect investment properties?

The changes may alter the after-tax returns generated from residential and commercial property investments.

Investors may need to reconsider:

  • When to sell assets
  • Whether to retain existing properties
  • Future property acquisition strategies
  • Ownership structures such as trusts, companies and SMSFs

Do the CGT changes affect family trusts?

Yes.

Family trusts have traditionally benefited from the 50% CGT discount when disposing of long-term assets. The removal of this concession could change the tax outcomes for trust beneficiaries and may require a review of existing trust structures.

Will SMSFs be affected by the new CGT rules?

Many Self-Managed Super Funds (SMSFs) could be affected.

SMSFs often hold growth assets such as shares, managed funds and property that have accumulated substantial unrealised capital gains over many years. Trustees should consider how the proposed CGT changes may interact with other superannuation reforms, including Division 296 tax measures.

Do small business CGT concessions still apply?

Current indications suggest that existing small business CGT concessions may remain available.

However, business owners should seek advice because the interaction between the new CGT framework and existing concessions may vary depending on the structure and circumstances of the business.

Should I sell assets before the new CGT rules begin?

There is no one-size-fits-all answer.

The right decision depends on:

  • The size of any unrealised capital gain
  • Your marginal tax rate
  • Whether the asset is held personally, in a trust or through an SMSF
  • Your retirement objectives
  • Succession planning considerations

Seeking professional tax advice before making a decision is critical.

What assets could be affected by the CGT changes?

The proposed changes could impact:

  • Investment properties
  • Commercial properties
  • Shares and managed funds
  • Business assets
  • Family trust investments
  • SMSF investments
  • Farming properties and rural assets

What should investors do now?

Investors should review their existing structures and long-term plans. This may include reviewing:

  • Family trusts
  • SMSFs
  • Asset ownership arrangements
  • Estate planning strategies
  • Retirement plans
  • Business succession plans

Eary planning may help identify opportunities and reduce future tax risks.

Need Advice?

At Cashflow Financial, we help investors, business owners and families review their tax structures, trusts, SMSFs and wealth strategies to ensure they remain effective as legislation changes. We have offices in the Wollongong suburb of Fairy Meadow and Sutherland.

If you are concerned about how the new CGT rules could affect your investments, property holdings or retirement plans, contact Cashflow Financial today to arrange a review.