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Big tax changes
- Title
- Big tax changes
Legislation recently passed that changes the way gains and losses from certain investments will be taxed. While these reforms don’t take effect until 1 July 2027, now is the right time to understand what’s changing and why getting advice matters more than ever.
A new way of taxing capital gains
One of the biggest changes is the way capital gains tax (CGT) will be calculated for property, shares, managed funds and some other investments that you hold outside super.
Under the current rules:
- capital gains are generally discounted by 50% if the asset has been held for at least 12 months, and
- tax is payable at personal marginal tax rates.
This treatment will continue to apply to the portion of any gains that accrue up until 30 June 2027.
What’s changing is the gains that accrue from 1 July 2027 will be taxable, after an adjustment is made for inflation. Also, a minimum tax rate of 30% will apply, which may be higher than the personal marginal tax rate that some people pay.
These changes may mean a bigger tax bill when capital gains are realised.
Summary of CGT rules
| Gains accured up to 30/6/2027 | Gains accured from 1/7/2027* | |
|---|---|---|
| Taxable amount | 50% of gain (if held for at least 12 months) | 100% of inflation adjusted gain |
| Tax rate | Personal marginal tax rates | Minimum of 30% |
*Exceptions may apply
Negative gearing to narrow for residential property investments
Negative gearing is when investment costs (eg interest on a loan) are greater than the income received (eg rent), creating an income loss.
Residential properties purchased before the Federal Budget announcement (7.30pm AEST on 12 May 2026) and any ‘newly built residential property’ will still be able to use this income loss to offset income from other sources such as salary.
However, from 1 July 2027, an income loss on an existing residential property purchased after the Federal Budget announcement can only offset income and capital gains from residential property. It cannot offset income from other sources.
What can residential property income losses be used to offset?
| Property type | Up to 30/6/2027 | From 1/7/2027 |
|---|---|---|
| All residential properties purchased before Federal Budget announcement | Any sources of taxable income | Any sources of taxable income |
| Existing residential properties purchased after Federal Budget announcement | Any sources of taxable income | Only income and capital gains from residential property |
| Newly built residential property | Any sources of taxable income | Any sources of taxable income |
Why these changes matter
These changes could impact the:
- tax you pay on your investments, and
- potential after-tax returns offered by different investment options and strategies.
It’s important to take this into account when assessing current and future investment opportunities.
Don’t try to navigate this alone
Taxation of investments is complex and about to change considerably. A financial adviser can help you:
- understand how the new rules apply to you
- review your current portfolio
- adjust your strategy, if necessary, before the changes take effect, and
- avoid costly mistakes or missed opportunities.
Seek advice
A qualified financial adviser can help you make sense of your options and ensure your super and investments are structured appropriately. Contact us for a complimentary discussion to see if advice is right for you.
