The CGT discount changes from 1 July 2027: what the law actually says

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 is Act No. 49 of 2026. It received Royal Assent on 26 June 2026. It is not a proposal, not a bill, and not contingent on anything further: it is law. Anything you read describing these CGT measures as "announced", "not yet law" or "if enacted" is out of date.

But commencement is not application, and that distinction governs every sentence below. All four Parts of Schedule 1 commenced on 1 July 2026 — Part 2 on the condition that the companion Income Tax Rates Amendment (Tax Reform No. 1) Act 2026 (Act No. 50 of 2026) commenced, which it did on the same day. Commencement simply means the amendments are now in the statute book. What they do is keyed to a later date, written into the provisions themselves.

Schedule 1 rewrites section 115-100 of the Income Tax Assessment Act 1997 — the provision that sets the discount percentage. The old paragraph (a), which gave 50% to individuals and to trusts other than complying superannuation entities, is replaced by three paragraphs, and a new residual paragraph (f) is added at the end: "0% if none of the above paragraphs applies to the gain."

That residual paragraph is what produces the headline. It is not an abolition provision — it is a fall-through. Whether it applies to you depends entirely on whether one of the paragraphs above it catches your gain first.

New s 110-36(1A) reintroduces indexation of the cost base — but as a narrow, conditional replacement, not a general restoration of the pre-1999 system. It allows the elements of the cost base (other than the third element) to be indexed for the purposes of working out the capital gain where every one of the following is true.

• The gain is the capital gain of an individual or a trust. A company is outside s 110-36(1A) — its position is unchanged, and the older frozen indexation in s 110-36(1) continues to be available to it.
• The CGT event happens on or after 1 July 2027. Before that date, there is no indexation under this provision at all.
• The requirements of Division 114 are met. That includes the 12-month rule — the asset must have been acquired at least 12 months before the CGT event — and, for individuals, new s 114-25, which requires that you were neither a foreign resident nor a temporary resident at any time during the relevant period.

New s 114-30 then excludes from indexation the assets that kept a percentage discount: those to which s 115-102 (new residential dwellings) or s 115-125 (affordable housing) applies. You get one relief or the other, not both.

This is the single most consequential detail in Schedule 1, and it is routinely missed. Indexation does not run from the day you bought the asset.

One question follows immediately from that deemed sale — what happens to the gain that had already accrued on the asset before 1 July 2027 — and this resource does not answer it. We make no claim about how the notional gain on the deemed sale is treated, when it is assessed, or what discount percentage attaches to it. The Subdivision 112-E and Division 119 interactions are complex, several of the definitions they rely on were not independently verified against the current compilation, and no ATO guidance on Schedule 1 had been published at 13 July 2026. Any source that tells you the pre-2027 gain is safe — or that it is not — is going further than the verified position. That is a matter for advice on your own facts.

It helps to understand why the two reliefs behave so differently, without pretending anyone can yet compute the result. They scale off different things.

The primary law is enacted. The layer beneath it is not. Two gaps in particular are load-bearing.

• The "new residential dwelling" instrument has not been made. Section 26-160(4) says the Minister must, by legislative instrument, determine the requirements — and the Act itself contains no substantive definition. No such instrument could be located on the Federal Register of Legislation at 13 July 2026. Until it is made, what qualifies for the surviving 50% discount under s 115-102 cannot be described. We will not speculate, and neither should any source you rely on.
• No ATO administrative guidance on Schedule 1 had been published at the verification date. Nothing here tells you how the ATO will administer these measures, what records it will expect, or what positions it will accept.

Schedule 1 is also broader than the discount. Beyond the discount percentage and the indexation rules set out above, it contains further measures that this resource does not cover and whose detail was not independently verified for publication. Their absence from this page does not mean they do not apply to you. If they might, speak to a registered tax agent.

1 July 2027 is now a genuine pivot date in the tax calendar, and it is far enough away to plan around rather than react to. But planning is not the same as acting: whether any change to your holdings makes sense depends on your own circumstances, your other income, the structure your assets sit in, and non-tax considerations that have nothing to do with this Act. Nothing on this page is a recommendation to buy, hold or sell anything.

• Records matter more, not less. Indexation is applied to cost-base elements, and a cost base you cannot substantiate cannot be indexed. See our CGT records checklist for property investors.
• Structure is now a live question rather than a settled one. Individuals, trusts, companies and complying superannuation entities are treated differently from 1 July 2027 in a way they were not before. That is a reason to get advice — not a reason to assume any one structure is better; see company vs trust.
• Timing turns on the CGT event, not settlement. For property sold under contract, the CGT event generally happens on the contract date. That is the date the 1 July 2027 line is drawn against.
• Watch for the instruments and the ATO guidance. The picture for new residential dwellings, in particular, cannot be completed until the s 26-160(4) instrument is made.