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June 27, 2026 — 5:01am
Where did our profit prospects land after all the controversy about capital gains tax changes? Somewhere quite different from originally expected – thanks to cave ins and a surprise last-minute carve out.
That painting you think might be worth something? Or maybe your record collection that is so epic as to be appealing to someone?
Well, sell those and the profits may well be caught and taxed more heavily. But inherited assets and divorce settlements appear to have earned unexpected protection – to be legislated retrospectively.
Here is how the new CGT rules affect your every asset, and what you can do about it.
Property: Let’s be clear, firstly, that your home is not affected. Your principal place of residence is now – and stays – exempt from CGT. But any gains in investment properties from the application date of new rules on July 1, 2027 will be taxed differently.
Instead of the 50 per cent discount that applies until then on gains (you simply get to halve it), there will be a new calculation: gains will be reduced only by the inflation rate in each year of ownership.
The big decision most people have in the next year is to sell or hold because changes are not grandfathered.
What’s more, the capital gains tax from there – on any gains made after July 1, 2027 – will be a minimum 30 per cent. That is the standard calculation, mostly. The way around it – a bid to increase housing supply – is to build or buy newly built property.
Otherwise, don’t miss that even lower-income investors or those earning below the tax-free threshold of $18,200 will be subject to a minimum 30 per cent rate on gains. However, there is an exemption for people on means-tested income support payments, such as JobSeeker or the age pension, so there will be far greater sport in qualifying for even $1 after retirement.
But here come what some are calling the unintended consequences – or maybe unintended applications.
Collectables: That art deco duchess? That antique motorbike that’s risen in value? Perhaps that piece of art you were hoping to use to fund life some day? Sell them for a profit and yep, it could be caught and taxed.
This has theoretically always been the case but the tax will soon be much higher. Whether a collectable falls in or out of the regime will come down to one factor: whether you bought/buy it for $500 or more.
If it was bought above that threshold, CGT on sale will be calculated on the whole proceeds, precisely as above. What about something that you can justify was for personal use only, like a boat or furniture? Then you get leeway up to a value of $10,000.
But sell for more than that, and you must declare the capital gain and pay CGT on it the new way.
Shares: An unexpected – and I consider unwelcome – inclusion in the CGT shake-up was shares. And there’s been no backdown. So from July 1, 2027, any gains in shares or other market investment will also be discounted only for the inflation rate each year held.
The idea was to standardise the tax treatment so as not to favour some assets over others. The outcome is that young people in particular, who have en masse turned to equity investments in lieu of property, will be slugged.
Income-generating shares, rather than those with higher potential for capital growth, could also become more attractive, not skewing just portfolios but also possibly markets.
Small businesses and start-ups: Here, there was a big outcry and a subsequent carve-out. Remember the social media hoo-hah from innovators and start-up investors?
Well, it worked: the new CGT calculation will still apply to some businesses but, in the end, it will apply only where annual turnover is above $10 million. This was previously $2 million.
Inherited assets and divorce settlements: The government has committed to amending the legislation to ensure the so-called widow’s tax does not inadvertently become a death or divorce tax.
It looks as though the previous tax treatment until July 1, 2027, will be inherited in both of these cases – cases where an asset was originally jointly owned
Finance Minister Katy Gallagher told the Senate on Thursday that “we intend to address these… for jointly owned assets in circumstances like inheritance, or divorce in subsequent legislation”.
But the CGT reform process has been much more painful – and the outcome much more convoluted – than expected.
Your tax-mitigation options: The big decision most people have in the next year is to sell or hold because changes are not grandfathered – while you’ll keep the tax treatment on captured assets until July 1, 2027, gains from then will be taxed in the new way.
So, key will be that date – anyone with anything of value will need to ascertain its value at that moment, which means valuers are the huge beneficiaries of the tax changes.
You’ll need to see one to get every asset you own, including those sitting in your home, valued on July 1, 2027. And the higher the value on that date, the more of your potential sale proceeds will remain taxed favourably.
Nicole Pedersen-McKinnon is author of How to Get Mortgage-Free Like Me, available at nicolessmartmoney.com. Follow her on Facebook, X and Instagram.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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