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From 1 July 2027, the 50% CGT discount is replaced with CPI cost-base indexation plus a 30% minimum tax, and negative gearing is quarantined for established dwellings bought after 7:30pm AEST on 12 May 2026. This is the largest change to Australian personal tax in 25 years. Everything on this page is sourced directly to the Act text, checked 2 August 2026.
Old law vs new law, side by side
Check your property in three questions
Full cash flow with the quarantine applied
Individuals, trusts and partnerships lose the unconditional 50% CGT discount from 1 July 2027. In its place: the cost base of an asset is indexed by CPI from the quarter the expenditure was incurred to the quarter of disposal — the same method used before 1999 — and a 30% minimum tax applies as a top-up if ordinary marginal-rate tax on the gain would otherwise come in under that rate. Companies and complying super funds are unaffected.
Anything held across the change is treated as sold at market value just before 1 July 2027 and bought back at that value just after — a deemed disposal and reacquisition, not a pro-rata split of one gain. The portion of the gain up to that point keeps the current discount rules; growth after it is indexed under the new rules. Assets bought before 20 September 1985 lose their blanket pre-CGT exemption for growth after the change, using the same deemed-disposal mechanism.
Income-support recipients — including Age Pensioners, JobSeeker, Carer Payment, DVA pensioners and several other listed payments — are exempt from the minimum tax top-up for any income year they receive a qualifying payment. Ordinary tax on the gain at marginal rates still applies as usual.
From 1 July 2027, a net rental loss on an established (previously-occupied) residential dwelling contracted after 7:30pm AEST on 12 May 2026 can only offset residential rental income or a residential capital gain — not wages or other income. It isn't forfeited: it carries forward and pools with your other quarantined residential properties per taxpayer, not per property, until you have residential income or a gain to use it against.
Anything contracted before that moment is grandfathered and keeps full negative gearing indefinitely, and so are new residential dwellings — regardless of contract date. What legally counts as "new" is not yet defined: the Act delegates that definition to a Ministerial legislative instrument that has not been made as of this page's last verification date.
"New residential dwelling"
Delegated to a Ministerial legislative instrument (s26-160(4)) that has not been made yet — confirmed genuinely open, not a research gap.
Deferred-gain reconciliation mechanics
The Act defers the notional gain/loss from the deemed disposal at commencement rather than taxing it immediately (s112-160(2)), but the exact reconciliation mechanics at the real, later disposal (s112-160(3)-(4)) aren't pinned to primary text yet.
Named CPI series
The indexation formula itself is sourced directly to the Act (s960-275(1B)/(1C)); which published ABS series 'index number' refers to is inferred from the historical pre-1999 definition, not independently re-verified against this Act's current text.
Royal Assent — Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (No. 49, 2026) and its companion (No. 50) become law.
Every mechanic below verified directly against the Federal Register's full Act text and the Treasurer's second reading speech — see the sourcing note at the bottom of this page.
CGT reform calculator, negative gearing grandfathering checker and the rebuilt Negative Gearing Calculator published.
Two things. First, the 50% CGT discount is abolished for individuals, trusts and partnerships and replaced with CPI cost-base indexation plus a 30% minimum tax on net capital gains. Second, net rental losses on an established residential dwelling bought after 7:30pm AEST on 12 May 2026 are quarantined — they can only offset residential rental income or residential capital gains, not wages.
For individuals, trusts and partnerships, yes — replaced with indexation and a minimum tax top-up. Companies and complying super funds are out of scope for this change. New residential dwellings and affordable housing can elect to keep a flat discount instead of indexation.
No. It's a top-up, calculated separately (s119-10), that only applies if your ordinary marginal-rate tax on the gain would otherwise come in under 30% of it. If your marginal rate is already 30% or higher on the gain, the top-up is zero.
The Act treats it as sold at market value just before 1 July 2027 and bought back at that value just after (s112-155) — a deemed disposal and reacquisition, not a pro-rata split. The pre-portion keeps the current 50% discount rules; the post-portion is indexed under the new rules.
Age Pensioners and recipients of several other listed income-support payments (JobSeeker, Carer Payment, DVA pensions, Family Tax Benefit and others) are exempt from the 30% minimum tax top-up for any income year they receive a qualifying payment (s119-15). Ordinary marginal-rate tax on a gain still applies as usual.
No. Anything contracted before 7:30pm AEST on 12 May 2026 is grandfathered and keeps full negative gearing indefinitely. New residential dwellings are also grandfathered, regardless of contract date.
This isn't defined in the Act yet — it's delegated to a Ministerial legislative instrument that hasn't been made as of this page's last verification date. Expected criteria (from explanatory material, not law) include genuinely adding to supply, bought from the builder, and not previously occupied for more than 12 months.
Pre-CGT assets lose their blanket exemption for growth after 1 July 2027 (s112-175). Growth up to that date stays exempt; growth after it is taxable, via the same deemed-disposal mechanism used for the general apportionment.
Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (No. 49, 2026), Royal Assent 26 June 2026. Sourced directly from the Federal Register of Legislation and the ATO's Act text mirror. Last checked 2 August 2026. General information only, not personal tax advice — see our full disclaimer below.
ATO rates checked against official sources — verified 2 August 2026
Estimates only. Not financial or tax advice. Full disclaimer for your rights and our limitations of liability.
Rates and thresholds last updated for the 2026–27 financial year.