1 hour ago
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June 10, 2026 — 5:01am
I have owned an investment property since 1997 and, with the proposed removal of the 50 per cent capital gains tax (CGT) discount, I am confused about the rules that may apply after July 2027. I originally owned two apartments, but sold one in 2015, using the proceeds to pay out the mortgages on both properties. The remaining apartment is no longer negatively geared, so the rental income, combined with my pensions, places me in a higher tax bracket. I understand that I will have to pay CGT whether the 50 per cent discount remains available. What confuses me is the proposed new system that allows increases in the Consumer Price Index to be considered when calculating the taxable gain. The treasurer said the system from July 2027 will be based on the pre-1999 rules, which I know little about.
I am looking for a comparison of the likely outcome if I sold now, before July 2027, or sometime after that date. I would appreciate your guidance as I am trying to decide whether to sell or keep the property. It earns about $36,000 a year, so it remains a worthwhile investment. I’m thinking about selling it, maybe in the next 12 months or even beyond 2027.
If you sign a contract to sell before June 30, 2027, the entire capital gain will be assessed under the current rules, and you will receive the full 50 per cent CGT discount. If you sign a contract after that date, the gain will be apportioned between the period before July 1, 2027 and the period after.
Using your example, if you bought the property in 1997 and sold it in 2029, you would have owned it for 32 years. Of those, 30 years would fall under the current rules and only two years under the new rules.
As a result, only the gain in the last two years of ownership would be affected by the proposed changes, so the impact on your overall CGT liability is likely to be relatively small. If you decide to keep the property beyond June 30, 2027, it would be prudent to obtain a professional valuation as at that date.
The taxation of the post-2027 component will depend on the new indexation method, and having a valuation in place could prove valuable if there is any dispute or uncertainty later.
The proposed rules are complex, and the legislation has not yet been finalised. Before making any major decision, you should obtain professional tax advice based on your specific circumstances.
My mother is 102 and is finally considering moving into residential aged care. She owns her own home in Brighton, Victoria, and is completely self-funded, so she will not qualify for any government subsidies. The refundable accommodation deposits (RADs) at the facilities she is considering are very high, but she has sufficient funds available to pay them.
With the new rules allowing aged care providers to retain part of a RAD, would she be better off paying the accommodation cost upfront as a RAD, or paying it through ongoing daily payments?
Aged care expert Rachel Lane says that for a self-funded retiree, deciding whether to pay a RAD is much simpler because two major variables are removed from the equation: the effect on the age pension and the impact on means-tested fees.
If neither of those are relevant, the key question is whether paying the RAD represents good value. For example, if the RAD is $1 million, your mother would forgo the investment earnings on that money.
At a return of 7 per cent a year, that would be about $70,000. Under the new rules, the provider can also retain 2 per cent of the RAD each year for up to five years, which amounts to $20,000 a year.
Another often-overlooked consideration is what happens to the RAD after your mother leaves the facility. The aged care provider stops charging fees and pays interest on the remaining RAD balance until it is refunded.
While that may sound attractive, it can actually cost the estate money because the current interest rate is only 3.25 per cent a year, which could be well below the return available from other investments. The provider can also retain the RAD until probate or letters of administration have been granted.
The alternative is to pay a Daily Accommodation Payment (DAP). At the current rate of 7.96 per cent a year, indexed over time, a $1 million accommodation cost would result in a DAP of about $218 a day, or $79,600 a year.
On these assumptions, the DAP appears to be the cheaper option by about $10,000 a year. However, the decision should also consider the likely return on her investments, any tax consequences of selling assets now or in the future, and how paying a RAD fits with her estate planning objectives.
I have a question about the government co-contribution for superannuation. My grandsons are 19 and 17 and both earn less than the income threshold for the maximum co-contribution.
If I contribute $1000 directly from my bank account into each of their super accounts, would they still qualify for the government co-contribution of up to $500? Or must the contribution come from their own bank accounts to be eligible?
To be eligible for the government co-contribution, your grandsons must make personal super contributions to a complying super fund. It must be a contribution they make themselves, and not a contribution made directly to their super fund from a third party such as a parent or grandparent.
Another requirement is that your grandsons must derive at least 10 per cent of their income from employment, carrying on a business, or a combination of the two. They will also need to lodge a tax return to qualify for the government contribution.
We are due to pay the tax assessed by the ATO on June 16 following the lodgment of our tax return by our accountant. My question relates to capital gains tax. When calculating the capital gain on a property, is the cost base determined by the actual purchase price paid for the property, or by the council valuation shown on the rates notice at the time of purchase? In our case, the purchase price was almost double the council valuation when we bought the property, so I would appreciate clarification on which figure is used for CGT purposes.
The sole purpose of the council valuation is to work out how much you’re paying in rates. It has no relevance for CGT purposes. The base cost of the property will include the price you paid as per the purchase contract, plus all costs, including stamp duty and any items such as renovation and improvements that were not deducted from your income against the rents each year.
Noel Whittaker is author of Retirement Made Simple and other books on personal finance. Questions to: [email protected]
- 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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