Prime Minister Anthony Albanese has confirmed a major tax overhaul that will affect Australians profiting from selling shares and other investments. The changes, unveiled in Tuesday night's federal budget, will scrap the long-standing 50 per cent capital gains tax discount and replace it with an inflation-linked system from July 1, 2027.
Current System Scrapped
Since 1999, Australians selling assets like shares, farms, investment properties, or small businesses after holding them for more than 12 months only paid tax on half the profit. This meant someone on the top marginal tax rate of 47 per cent effectively paid a maximum capital gains tax rate of 23.5 per cent.
New Indexation System
Under Labor's new system, investors will pay tax on their 'real' profit after accounting for inflation, while also facing a minimum 30 per cent tax rate on those gains. The changes apply to shares, farms, small businesses, investment properties, and other capital investments, though new housing builds will be exempt.
The Albanese government said the move aims to 'restore the taxation of real gains.' A government statement noted: 'We're replacing the 50 per cent capital gains tax discount with inflation-adjusted indexation from 1 July 2027 to restore the taxation of real gains, with a minimum tax rate of 30 per cent on realised gains. The introduction of the minimum tax reduces the benefit of taxpayers deferring capital gains realisation to years where their marginal tax rates are low.'
The overhaul is expected to increase tax revenue and address concerns about wealth inequality, though critics argue it may discourage investment.
