The enacted 2027 capital gains tax reform gives a specific exemption to people who receive the Age Pension or another listed payment. It removes the minimum-tax top-up, not tax on the gain itself. It also does not decide what happens to your Age Pension after you sell shares or an investment property. Those are separate questions, governed by tax law and social security rules respectively.
What changes when you sell from 1 July 2027?
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 changes the treatment of gains realised through a CGT event on or after 1 July 2027. For ordinary eligible assets held across that date, the Act generally separates growth before the reset from growth after it. The deferred pre-reset gain may keep the 50% CGT discount; the post-reset cost base can instead be indexed for inflation if the statutory conditions are met. An asset acquired after the reset has no pre-reset component. The original explanatory memorandum explains this split, while the as-made Act is the final authority.
The Act also creates a 30% minimum-tax calculation for defined capital gains of resident individuals. It compares a benchmark amount with the extra basic income tax attributable to the defined gain, before tax offsets. Extra tax arises only if there is a positive gap. It is not a flat 30% tax added to your ordinary tax bill. The Act's Division 119 method statement sets out the calculation.
Before these rules apply, the individual CGT discount may halve an ordinary eligible gain after the holding-period test, and there is no Division 119 top-up. For a covered sale from 1 July 2027:
- Post-reset growth generally uses eligible cost-base indexation; a deferred pre-reset gain may retain the discount.
- A resident individual may owe a minimum-tax top-up on the defined gain after the statutory comparison. Section 119-10 does not apply for an income year in which that person receives a payment listed in section 119-15.
- The Age Pension income and assets tests continue. The tax exemption does not exempt sale proceeds from those tests.
This summarises the ordinary case. The Act preserves specific housing discounts, treats pre-CGT assets separately and has conditions for residency, holding period and indexation. See the 2027 CGT reform calculator, the shares and ETFs explanation and the property investor explanation for those cases.
Who receives the minimum-tax exemption?
Under section 119-15 of the as-made Act, section 119-10 does not apply to you if you receive a payment in its fixed list at any time during the income year. The supplementary explanatory memorandum, paragraphs 1.26–1.30, confirms that Parliament put the list in the Act. The earlier bill contemplated a ministerial list, but that proposal was replaced before enactment.
Social security and family payments
The Act lists Age Pension, Austudy, Carer Payment, Disability Support Pension, Double Orphan Pension, JobSeeker Payment, Parenting Payment, Special Benefit and Youth Allowance under the Social Security Act 1991. It also lists Family Tax Benefit, the stillborn baby payment, Farm Household Allowance, Parental Leave Pay and an ABSTUDY payment that includes a living allowance. Receiving a similarly named concession or being eligible to claim a payment is not the statutory test: the provision requires that you receive a listed payment.
Veterans' and military payments
The Act also covers the specified age, carer, invalidity and partner service pensions, income support supplement and veteran payment under the Veterans' Entitlements Act 1986. Its Part II and IV pensions qualify only at the rates expressly described in section 119-15(4). Under the Military Rehabilitation and Compensation Act 2004, it lists the Special Rate Disability Pension, the weekly amount in paragraph 234(1)(b), including the specified reduced amount, and the lump sum in subsection 236(5). For an unusual payment, check the complete statutory list rather than relying on a payment's general description.
When is payment status tested?
The test is the income year, not a snapshot on the day you sell. A person who receives Age Pension once in the income year containing the CGT event meets the receipt condition for that whole year, even if the payment began after the sale or ended before it. The top-up is not prorated by the number of pension fortnights. A payment received only in a different income year does not establish the exemption for the sale year. For a contracted property sale, the ATO says the CGT event generally occurs on the contract date, which can precede settlement.
The Act speaks to the individual who receives the payment. It does not say that one spouse's receipt automatically exempts the other spouse's personal gain. Similarly, a Commonwealth Seniors Health Card, a Pensioner Concession Card or merely being old enough to claim the Age Pension is not itself one of the listed payments. These distinctions follow from the Act's wording; they are not additional ATO procedures.
What tax remains for an Age Pensioner?
The carve-out only switches off the Division 119 top-up. The ordinary net capital gain still enters taxable income, and the reset, discount, indexation and capital-loss rules still determine its size. The supplementary explanatory memorandum also explains that deductible gifts and conservation covenants can reduce the defined minimum-tax gain for someone who is otherwise subject to the top-up. The receipt exemption does not replace those rules.
Capital gains made inside a complying superannuation fund are governed by the fund's own CGT treatment. The minimum-tax provision discussed here charges individuals, and the new indexation provision concerns individuals and trusts other than complying superannuation entities. That is the scope of these CGT measures, even though the same Act also contains a separate superannuation amendment.
Two readers sell the same parcel of shares
These figures come from the site's CGT reform engine. Both readers are Australian resident individuals. Each acquired one share parcel on 1 January 2026 with a $100,000 cost base, held it across the reset at an illustrative $120,000 market value and sold it on 30 June 2028 for $150,000. Each has $25,000 of other taxable income, no capital losses or later cost-base expenditure and uninterrupted resident status. For the first reader, that other taxable income includes the hypothetical Age Pension. The illustrative CPI index inputs are 100 for the reset expenditure quarter and 105 for the disposal quarter. They are scenario inputs, not a forecast or published CPI reading. The example avoids improvements, whose expenditure would need its own indexation quarter.
| Engine result | Pensioner | Self-funded |
|---|---|---|
| Pre-reset gain | $20,000 | $20,000 |
| Deferred taxable gain | $10,000 | $10,000 |
| Post-reset gain | $30,000 | $30,000 |
| Indexed cost base | $126,000 | $126,000 |
| Post-reset taxable gain | $24,000 | $24,000 |
| Total taxable gain | $34,000 | $34,000 |
| Ordinary extra tax | $7,585 | $7,585 |
| Minimum-tax top-up | $0 | $1,600 |
| Total extra tax | $7,585 | $9,185 |
These modelled income-tax figures exclude the Medicare levy and Medicare levy surcharge. The ATO's resident tax rates exclude those charges; an actual assessment may differ.
Example: an Age Pension recipient
The first reader receives a payment under the Age Pension provision in the same income year as the sale. The engine therefore switches off the $1,600 top-up that would otherwise appear in this scenario. It still calculates $7,585 of ordinary extra income tax from the gain, excluding Medicare levy and surcharge. This illustrates the engine's specified income and tax settings, not a pensioner's final assessment: the reform engine does not collect the household details needed for the seniors and pensioners tax offset (SAPTO) and its related Medicare levy threshold. For a reader otherwise entitled to SAPTO or the seniors Medicare levy threshold, a gain this size can reduce or remove those concessions, so the actual extra tax on the gain can be higher than shown. The top-up comparison is unaffected because Division 119 applies before offsets.
Example: a self-funded retiree
The second reader has the same asset, taxable income and sale date but receives no payment in section 119-15 that year. The engine returns the same $7,585 ordinary extra income tax plus a $1,600 top-up, for $9,185 of modelled extra income tax attributable to the gain, excluding Medicare levy and surcharge. As in the first example, a reader otherwise entitled to SAPTO and the seniors Medicare levy threshold can lose some or all of them to a gain this size, so the actual extra tax can be higher than shown. Being retired or holding a seniors card alone does not activate the receipt exemption. A qualifying payment received at any time in 2027–28 would have removed the top-up under the Act.
The CPI indexation worked example explains the reset arithmetic in more detail. For a property, costs of ownership, improvements, prior losses, main-residence use and any surviving housing discount can change the calculation. Enter the actual facts in the reform calculator rather than transplanting the table's numbers.
What happens to your Age Pension after the sale?
The tax outcome and pension outcome are separate. The DSS Social Security Guide on real estate says an investment property is an assessable asset and cash proceeds from its sale are assessed as an asset. The Guide on real-estate income says the capital gain itself is not income for income-support purposes. That distinction can feel counterintuitive when the same gain appears in a tax return.
Assets test: the holding changes form
Before the sale, an investment property or shares can count toward the Age Pension assets test. After a property sale, the cash proceeds or an amount owed by the buyer can count instead. DSS says a valid, binding contract can change the form of the assessable interest before final settlement. Selling an assessable investment does not, by itself, remove its value from the assets test. The Services Australia assets-test page gives the current limits for single and partnered people.
Do not apply the special temporary exemption for principal-home sale proceeds to an investment property. DSS confines that exception to a former principal home where its conditions are met. A holiday house or rental property is not covered merely because its owner intends to buy another home.
Income test: financial assets can be deemed
Shares are financial assets. So are proceeds held in a bank account or another financial investment. The DSS deeming guide says proceeds held as a financial investment are subject to deeming, and Services Australia explains that it uses a set assumed return rather than the actual interest or dividend for the pension income test. The Age Pension rate is calculated under both the income and assets tests; the lower resulting rate applies.
Use the Age Pension calculator to explore the two tests with your current assessable assets and financial assets. It is an estimate, not a Centrelink determination. Services Australia says to report changes to income, assets and financial investments within 14 days. The CGT exemption does not remove that reporting obligation.
Frequently Asked Questions
Yes. Section 119-15 tests whether you receive a listed payment at any time during that income year. It does not apportion the top-up by pension fortnights.
The Act says the exemption applies if you receive a listed payment. It contains no rule making one spouse's receipt cover the other's separately assessed gain.
No. A card or eligibility for a payment is not receipt of one of the payments in section 119-15. The Commonwealth Seniors Health Card has its own income test, under which taxable capital gains can matter.
No. It removes only the defined minimum-tax top-up. The net capital gain can still increase ordinary taxable income.
DSS says a capital gain from real estate is not itself income for income-support purposes. The property and later sale proceeds can still count as assets, while proceeds held as financial assets can produce deemed income.
The Act states the payment-receipt test. It does not specify an application form, automatic matching process or documentation procedure, and no ATO administration guidance for this particular exemption was available at this verification date.
The rules described here are enacted law as at the verification date. Treasury has consulted on a second tranche of CGT legislation, which is separate from the as-made Act. Check the law applying in the income year of the actual CGT event.
General information, not financial, tax or Centrelink advice. Verified on 29 September 2026 against the as-made Act, Parliament's bill documents, Treasury, the ATO, Services Australia and the DSS Social Security Guide. Confirm your own eligibility with Services Australia, the DVA or a registered tax agent.