Capital Gains Tax Changes: everything we know so far

The Albanese government has signalled to the $4.5 trillion superannuation sector that super funds are likely to be exempted from capital gains tax changes in the federal budget, allowing them to keep their existing 33 per cent discount on earnings. Capital Gains Tax Changes has emerged this Friday as one of the stories drawing attention in Australia.

Key facts

• The Albanese government has signalled to the $4.5 trillion superannuation sector that super funds are likely to be exempted from capital gains tax changes in the federal budget, allowing them to keep their existing 33 per cent discount on earnings.
• Seven years ago, proposed changes to capital gains tax and negative gearing were named as part of the reason Labor lost the unlosable election.
• The treasurer is widely expected to modify the 50% tax discount on profits from the sale of assets held for more than one year, potentially returning to the pre-1999 model where capital gains are adjusted for inflation.
• The Grattan Institute has calculated that halving the capital gains tax discount and phasing it in over five years to include all investments would generate $6.5bn a year for the budget.
• In contrast, a fully grandfathered policy package of returning to the pre-1999 inflation-adjusted capital gains tax regime and scrapping negative gearing would generate just $2bn in extra revenue in the first four years, according to recent estimates by CBA.

What we know

Going deeper, Seven years ago, proposed changes to capital gains tax and negative gearing were named as part of the reason Labor lost the unlosable election.

On the substance, the treasurer is widely expected to modify the 50% tax discount on profits from the sale of assets held for more than one year, potentially returning to the pre-1999 model where capital gains are adjusted for inflation.

Beyond the headlines, the Grattan Institute has calculated that halving the capital gains tax discount and phasing it in over five years to include all investments would generate $6.5bn a year for the budget.

More precisely, In contrast, a fully grandfathered policy package of returning to the pre-1999 inflation-adjusted capital gains tax regime and scrapping negative gearing would generate just $2bn in extra revenue in the first four years, according to recent estimates by CBA.

It is worth noting that But the benefits to the budget bottom line would grow over time, with revenue gains estimated at $25-30bn over the first 10 years – although whether investors end up paying more or less capital gains tax than under the flat 50% discount would depend on economic conditions, the bank said.

By the numbers

“I think that even if you just go back to around the turn of the century, those changes that were made to capital gains [to the current regime in 1999], you can see that that’s had an impact in the composition of the housing market.

On a related note, Labor is expected to announce in the May 12 budget that it is abandoning the 50 per cent discount for personal investors earning capital gains from property, shares and other assets held longer than 12 months, and reverting to the Keating-era pre-1999 inflation indexation model.

Going deeper, Economic modelling suggests changes to tax settings for investors could lower home prices by between 1% and 4%, but that it could lift home ownership rates by three percentage points as investors are discouraged from buying property.

On the substance, If reports are to be believed (the same ones the government hasn't gone out of its way to correct), the May 12 budget is expected roll back the 50 per cent CGT discount for assets held for more than 12 months — potentially reverting back to the pre-1999 system.

What they're saying

“Without getting into hypotheticals about policies, what you try and do is to make sure that we recognise the decisions that people have taken in the past,” he told the CommBank View podcast.

“If you do a partial or staged form of grandfathering you would get additional revenue in the door more quickly, but you would add complexity to the system, which I think is a risk,” Yeaman said.

“We’re not trying to target a certain change necessarily in price,” he said.

The wider context

On a related note, Prime Minister Anthony Albanese used the argument when asked about whether the government was about to move on negative gearing and the capital gains tax discount.

Going deeper, Chalmers said the government was mindful of “transitional issues” around tax changes, suggesting that only the future gains on an existing investment would be subject to the new CGT rules.

On the substance, Largely overlooked in the weeks of pre-budget speculation is whether superannuation funds, including self-managed funds, would also be caught up in the changes.

Beyond the headlines, Massive paper profits earned over recent years by property investors will be shielded from Labor’s changes to the CGT discount, after Jim Chalmers said any new tax rules would “recognise the decisions that people have taken in the past”.

More precisely, With negative gearing rules also in the government’s sights, investors and some experts have called for any changes to tax rules to only apply to new investments – an approach known as “grandfathering”.

The bottom line

• The treasurer is widely expected to modify the 50% tax discount on profits from the sale of assets held for more than one year, potentially returning to the pre-1999 model where capital gains are adjusted for inflation.
• The Grattan Institute has calculated that halving the capital gains tax discount and phasing it in over five years to include all investments would generate $6.5bn a year for the budget.
• Welcome back to your weekly federal politics update, where Courtney Gould gets you up to speed on the happenings from Parliament House.
• Searches spiking right now: Limiting capital gains tax changes to new investments would ‘severely delay’ budget reforms, Deloitte says, 2026 federal Budget preview: go big or go home, Budget bombshell: Labor set to reform negative gearing, CGT overhaul, CGT, negative gearing changes needed for social cohesion: PM.