Labor’s change to the capital gains tax discount is one of the biggest items in the budget – but it’s also one of the most complicated.
CGT is paid when an asset is sold but, since 1999, owners have had a CGT discount. Under the changes, from 1 July 2027, the CGT discount will be replaced with a new cost-base indexation system. It’s important to note that your main residence – or the family home – is still exempt from CGT under the new scheme.
But how much tax will someone have to pay under the new scheme compared with the old? What happens if inflation goes up, or house price growth slows?
Here, we compare the new and old policies with Jan, a hypothetical property investor. Skip to the end for an interactive calculator with all the numbers behind Jan’s story.
This comic shows only one example of how the current and new system compare – the outcome changes with different asset price growth, inflation, and other parameters.
Here, you can use the calculator to explore differences in the two schemes. It’s important to note that this calculator only compares an asset wholly under the new scheme, and wholly under the old scheme. In reality if you had an asset prior to 1 July 2027 and sold it after, you’d need to calculate using both the old and new rules.
