by Luke Quinnell

The Federal Government has announced significant tax reforms affecting capital gains tax (CGT), negative gearing, and discretionary trusts minimum tax of 30%.

While some measures have now been legislated, others remain in draft form and are still subject to consultation and parliamentary approval. As a result, it is important to distinguish between changes that are law and those that are currently proposed only.

CGT Changes

For capital gains tax, legislation has been passed to replace the existing 50% CGT discount for individuals, trusts, and partnerships from 1 July 2027 with a system based on cost base indexation and a minimum 30% tax rate on future capital gains. Transitional rules are intended to preserve concessions for gains (i.e. including unrealised gains) accrued prior to that date.

One practical issue arising from these changes is the need for asset valuations as at 30 June 2027 or 1 July 2027. Property owners, family trusts and investors holding private company shares, business interests or other unlisted assets may require formal valuations to establish the asset value at the commencement of the new regime. Given the expected demand on valuers, taxpayers with significant assets should consider discussing valuation requirements with their advisers well in advance.

Negative Gearing Changes

For negative gearing, residential properties owned prior to the Budget announcement on 12 May 2026 are generally grandfathered. The term “grandfathered” means that the prior rules will still be applied up to the 1 July 2027, so the 50% CGT discount still applies for all gains accrued prior to then. From 1 July 2027, deductions for losses on newly acquired established residential properties will be restricted, while new builds will continue to be eligible for negative gearing deductions against other income. These measures have also been enacted.

Discretionary Trust Changes

The proposed 30% minimum tax on discretionary trusts is less certain. Treasury has released exposure draft legislation and consultation is underway, with a proposed commencement date of 1 July 2028. However, the measure has not yet been passed by Parliament and the final rules may differ from the current draft. Proposed restructuring relief is expected to be available for a limited period to assist affected taxpayers if the measures proceed.

How We Can Help

While there is still uncertainty around the trust measures, the CGT and negative gearing reforms are sufficiently advanced that investors should begin reviewing their valuation requirements now. Early planning will be critical to ensure taxpayers are prepared for the transition and positioned to make informed decisions as further details emerge.

Valuers can provide valuations that apply to assets after 1 July 2027 so there is no rush required. Also you will only require the valuation when selling the asset, so assets that you intend holding for another 10 years will not need a valuation until then if the valuer is able to provide the value as at 30 June 2027 in the future.

Please get in touch with us below or call us on 02 4969 6600 if you need any advice or assistance.