According to Forbes on July 17, Australia has passed the 2026 Treasury Laws Amendment (Tax Reform No. 1), which will eliminate the 50% capital gains tax (CGT) discount for assets held longer than 12 months, starting July 1, 2027. This applies to all asset classes, including stocks, real estate, and cryptocurrencies, representing Australia’s most significant capital gains tax reform in the past 25 years.
Australia to eliminate the 50% capital gains tax discount from July 2027
Under the 2026 Treasury Laws Amendment (Tax Reform No. 1), Australia’s current 50% capital gains tax discount will be removed starting July 1, 2027. The current system has been in place for more than 20 years and provides that individual investors who sell assets such as stocks, real estate, and cryptocurrencies after holding them for more than 12 months will have only 50% of their capital gains included in taxable income.
For example, if you hold crypto assets for more than 12 months and generate $20,000 in total capital gains: under the current system, the taxable gain would be only $10,000; after July 1, 2027, this calculation method will no longer apply.
Two new mechanisms: indexation of cost base and a minimum 30% capital gains tax rate
The new regime replaces the current 50% discount with two separate mechanisms. Cost base indexation means that before calculating capital gains, the original purchase price is adjusted upward for inflation. In theory, it protects investors from paying tax on the portion attributable to inflation rather than actual appreciation; however, indexation requires tracking each acquisition individually and applying inflation adjustments, making record-keeping complexity far higher than the current single discount.
The minimum 30% capital gains tax rate is the second mechanism: the new regime sets a minimum tax rate of 30% on capital gains that meet the new rules and no longer taxes based on the marginal tax rate after enjoying the discount. This could be disadvantageous for investors with lower incomes who previously benefited from the discount; for high-income investors whose marginal tax rate is already higher than the effective tax rate under the old discount, calculations will also be more complex.
Transitional rules and record-keeping requirements: Gains before July 2027 are protected under the old rules
Under the transitional provisions, gains accumulated before July 1, 2027 are generally protected by the old rules (50% discount); gains generated after that date apply under the new rules. For investors who hold crypto assets long term, gains may need to be calculated separately for the two periods and subject to different rules. Tax experts recommend taking the following two preparation steps before the deadline:
Organize asset records: Set up records for the asset acquisition date, cost base (original purchase price), and the fair market value as of July 1, 2027. For assets held on centralized exchanges, existing price data can be used for verification; for self-custodied assets or assets with poorer liquidity, additional valuation documentation must be created.
Assess tax scenarios for unrealized gains: Some investors sell long-term held assets before the deadline. Under the current 50% discount regime, their post-tax gains may be better than holding under the new rules after they take effect. Tax experts advise consulting a qualified tax advisor familiar with the transitional rules and your personal income situation before deciding whether to take action.
FAQ
What is the effective date and scope of impact of Australia’s elimination of the 50% capital gains tax discount?
Under the 2026 Treasury Laws Amendment, the 50% capital gains tax discount will be abolished starting July 1, 2027, covering all asset classes including stocks, real estate, and cryptocurrencies. Gains accumulated before July 1, 2027 are protected under the transitional provisions.
What are the two replacement mechanisms in Australia’s new capital gains tax regime?
The new regime replaces the current 50% discount with two mechanisms: cost base indexation (adjusting the original purchase price for inflation) and a minimum 30% capital gains tax rate. The specific tax impact varies depending on an individual’s income level and asset holding situation; it is recommended to consult a qualified tax advisor.
Are gains on crypto assets accumulated before July 1, 2027 protected?
Under the transitional provisions, gains accumulated before July 1, 2027 are generally protected by the old rules; however, you must be able to prove the value of the assets held as of that date. Detailed document preparation and strategy assessment should be discussed with a qualified tax advisor.
