Client Note



CGT & Negative Gearing Changes — Investment Implications

Core change

The Budget proposes replacing the 50% CGT discount with CPI indexation combined with a 30% minimum tax from 1 July 2027. Negative gearing is also being restricted for new residential property investments. Certain as yet undefined “new builds” are to be excluded from the changes.

CGT Implications

• Higher effective tax on most growth assets exceeding inflation
• Reduced flexibility in timing capital gains to optimise tax outcomes
• Pre-CGT assets become taxable on gains after 1 July 2027
• Increased reliance on valuations and dual record keeping

Negative gearing implications

• Losses on new properties quarantined against property income and gains
• Reduced attractiveness of leveraged residential investment
• Existing assets largely grandfathered but structurally impacted over time

Key risks

• Underestimating effective tax on long-term capital growth
• Costly valuation requirements and compliance burden
• Reduced after-tax investment returns

• Main residence as an unproductive “go to” asset class may face future tax policy risk
• Structural mismatch between investment strategy and tax outcomes

Immediate considerations

• Prepare for asset valuations prior to 1 July 2027
• Reassess long-term investment holding strategies
• Review property portfolios in light of reduced tax benefits

• Reconsider tax profiles of growth assets, overall asset mix, and holding structures
• Avoid premature restructuring until final legislation is known

Our view

These changes significantly alter the economics of growth investing and property ownership. The practical outcome is a shift toward higher taxation of capital and reduced reliance on tax-driven investment strategies. Decisions should now be based on after-tax returns under the new rules rather than legacy assumptions.

Disclaimers

Financial Product Advice

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Currency of Income Tax Advice

Any taxation advice included in this correspondence is current to the date of writing. Taxation laws in Australia are complex and constantly changing. The government often changes rules effective from the date announced and, in some cases, retrospectively. If there is any delay in the use of this advice you should consider having it refreshed.

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Chancellors Chartered Accountants | Private Wealth Advisory