What are the proposed changes to the Australian capital gains tax (CGT) regime?

The Australian Government introduced legislation on 28 May to replace the existing 50 per cent capital gains tax discount with an inflation indexation model starting in July 2027.

Why is the Australian Government changing the capital gains tax rules?

Prime Minister Anthony Albanese stated the changes aim to increase the integrity of the tax system and close loopholes that allow for tax minimisation.

How will the new CGT indexation model impact wealthy Australians?

Treasury analysis reveals that the top 1 per cent of income earners would have paid an average of $400,000 extra in tax over their lifetimes if these rules had been active for the past 25 years.

Will small businesses and start-ups get an exemption from the new CGT rules?

Exemptions will be highly limited. Treasurer Jim Chalmers signalled that carve-outs will be strictly confined to certain small and start-up businesses where inflation indexation is applied to a low or zero cost base, disappointing broader business groups lobbying for wider exclusions.

How might the CGT changes affect productive investment and business risk-taking?

Business groups argue the policy will hurt productive investment, but Treasury Secretary Jenny Wilkinson rejected this criticism. Citing OECD research, Wilkinson stated there is no clear evidence that favourable capital gains treatment promotes investment beyond simply compensating investors for the eroded value of inflation.

What are the key political risks to the passage of this tax legislation?

The bill's passing relies entirely on the Greens in the Senate, who have stated they want to push for even tougher tax measures on the ultra-wealthy. Meanwhile, the Coalition and business groups are fiercely opposing the changes, demanding an extensive inquiry into the economic fallout for non-housing assets.

Image for illustrative purposes only. Not a real photo.

Albanese dashes business hopes for CGT carve-outs

Written by Liezl GambePublished May. 28 2026Last Updated May. 28 2026

Prime Minister Anthony Albanese has dismissed business expectations for significant capital gains tax carve-outs, declaring that the current system merely entrenches privilege.

Under the government's proposed legislation, introduced into Parliament on May 28, the existing 50% CGT discount will be replaced from July 2027 with an inflation indexation model.

Defending the widely criticised federal budget, Treasury Secretary Jenny Wilkinson revealed analysis showing the top 1% of income earners would have paid an extra $400,000 in tax over their lifetimes had these integrity measures been active for the last 25 years.

Wilkinson rejected claims that the policy would deter productive investment, citing OECD research that supports taxing only above-inflation gains.

While Treasurer Jim Chalmers signalled that exemptions would be strictly confined to certain small and start-up enterprises, the political showdown has intensified.

The Coalition and business groups are demanding an extensive enquiry into the economic fallout, particularly regarding non-housing assets.

Tempers flared during Question Time, with Opposition Leader Angus Taylor reportedly labelling the Prime Minister an "arrogant prick" during a heated exchange over projected election losses.

Meanwhile, Nationals leader Matt Canavan has demanded an immediate election, labelling the reforms a broken promise.

To stem the political blowback, the government intends to ram the legislation through the Senate by July 2.

However, the bill's fate ultimately rests with the Greens; Treasury spokesman Nick McKim indicated the minor party will use an upcoming fast-tracked Senate enquiry to push for even tougher measures on the ultra-wealthy.