Last reviewed: 30 August 2026. Corrected on this date: this page previously described the rate mechanics as awaiting ATO guidance. They are not — the Act sets out the calculation in full. What is genuinely still open is narrower, and named where it arises. General information only, not tax advice.
The structure — settled#
Where this comes from. The reform is two Acts, both given royal assent on 26 June 2026:
| Act | Short title | What it does |
|---|---|---|
| No. 49 of 2026 | Treasury Laws Amendment (Tax Reform No. 1) Act 2026 | The machinery — amends the Income Tax Assessment Act 1997 and others to set up the two-layer calculation, cost base indexation and the minimum-rate test |
| No. 50 of 2026 | Income Tax Rates Amendment (Tax Reform No. 1) Act 2026 | Amends the Income Tax Rates Act 1986 — this is where the 30% minimum rate itself is imposed |
Most commentary names only Act 49. The rate everyone quotes is in Act 50, which is why both are cited here.
For property held on 30 June 2027 (individuals, trusts, partnerships), a future sale is split into two layers:
| Layer | Rule |
|---|---|
| Gain up to the 1 July 2027 value | Old rules — including the 50% discount where it applied |
| Gain after 1 July 2027 | New rules — cost base indexed to CPI, and a minimum 30% tax rate on net capital gains (new Division 119) |
The 1 July 2027 market value is the hinge between the layers — which is why the valuation vs the free formula choice matters.
What indexation does — a legitimate illustration#
Indexation itself is simple arithmetic: the cost base rises with CPI, so only real (above-inflation) growth is taxed.
Illustration (hypothetical CPI). Reset value $1,000,000 on 1 July 2027. Sold three years later for $1,300,000. If CPI rose 9% across those years, the indexed cost base is $1,090,000 — so the taxable gain is $210,000, not $300,000. Inflation’s share of the growth is not taxed.
That much is the mechanism working as described. What we cannot yet tell you is the tax bill on that $210,000 — that depends on the pending rate mechanics.
The scenarios — and what each one is waiting on#
These are the situations readers ask about. Most of what this page used to list as pending is settled by the Act itself, and is set out below. What remains genuinely open is smaller and is named as such. Your own numbers still need a registered tax professional.
| Scenario | What’s settled | What’s pending |
|---|---|---|
| Retiree, low taxable income, selling an investment unit | The floor is a top-up, not a replacement rate: s 119-10(2) works out 30% of the gain, subtracts the tax marginal rates already collect on it, and charges the difference as extra income tax. And s 119-15 may switch it off entirely — it does not apply to anyone who receives an age pension, disability support pension, carer payment, jobseeker, parenting payment, austudy, youth allowance or family tax benefit at any time in the income year | Whether you receive a listed payment in the year of sale — a question about your circumstances, not about the law |
| Mid-bracket worker (32.5-37%) selling a rental | Marginal rates apply as normal; the gain stacks with salary income in the ordinary way. The floor adds tax only where marginal rates collect less than 30% of the gain | Nothing on the mechanism. Your bracket in the year of sale is the variable |
| High-bracket owner (45%) | Not a cap — settled. Step 5 subtracts the tax marginal rates already collect from 30% of the gain, so once marginal tax exceeds 30% the result is nil and no extra tax is payable | Medicare levy treatment |
| Trust distributing a gain to beneficiaries | Trusts are inside the new indexation settings, but the 30% floor is not applied at trustee level: s 119-10(1)(a) requires that you are an individual. It bites once the gain is attributed to an individual beneficiary | How a particular trust deed and streaming choices land the gain |
| Owner with carried-forward capital losses | Settled, not pending. The Act replaces the net-capital-gain method in s 102-5(1): current-year losses apply at step 1, carried-forward losses at step 2, the discount at step 5 — so losses come off before the discount. The 30% floor then operates on what remains after step 6 (s 119-5(1)(a)) | Nothing on ordering. Your own figures still need a tax professional |
Worked dollar examples are the obvious next step, and the mechanics no longer stand in the
way — s 119-10(2) is arithmetic we can follow. What they still require is a stated set of
assumptions about your marginal rate and Medicare treatment, which is a choice about how to
present them rather than a gap in the law.
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Why we won’t guess#
A worked example built on assumed mechanics looks helpful and is worse than nothing: if the assumption is wrong, every number on the page is wrong, and readers may have planned around it.
That principle stands. Its premise did not. This page described the rate mechanics as awaiting
ATO guidance; they have been set out in s 119-10(2) since royal assent, and this page has been
corrected accordingly. Declining to answer is not automatically the careful choice. Telling
a reader carrying capital losses that the ordering was unknowable, or a pensioner that the
floor’s effect on them was unsettled, sends both away without an answer the law already gives.
What remains genuinely unsettled is narrower — Medicare levy treatment, and the ATO’s tools for the apportioning method — and is named where it arises rather than used as a blanket.
Common questions#
Will I pay exactly 30% on my capital gains after 1 July 2027?
s 119-10(2) you pay tax on the gain at your ordinary marginal rates; the Division then works out 30% of the gain, subtracts what those marginal rates already collected, and charges any shortfall as extra income tax. If your marginal rates already take 30% or more, there is nothing extra to pay — so it is not a cap either. s 119-15 switches the whole thing off for people receiving certain payments, including the age pension. Your own figures still need a registered tax professional.Does the 30% minimum apply to my whole gain?
Do capital losses still work?
When will you publish the worked examples?
s 119-10 sets out a seven-step calculation — so the earlier answer that we were waiting on ATO guidance was wrong, and this page has been corrected. What a worked example still needs is an explicit set of assumptions about the marginal rate and Medicare treatment behind each figure. We would rather state those openly than imply a precision the example does not have.▶ Watch: these questions explained#
Important#
This page is general education only — not tax, financial, legal or valuation advice. The scenario table deliberately leaves tax amounts blank where the law’s mechanics await ATO guidance. Confirm your position with a registered tax professional.