Proposed CGT Changes

The Federal Government has launched a number of proposed tax changes set out in its latest budget, which has implications for the farming and agribusiness community. Following is a quick summary of the most relevant of the proposed changes with respect to capital gains tax (CGT).

For individuals. trusts and partnerships, who hold assets for more than 12 months:

  • the 50% CGT discount will be replaced with an inflation-indexed cost base, meaning that only gains above CPI will be taxed

  • the tax rate will be a minimum of 30%

  • any pre-CGT assets (bought before 20 September 1985) will be brought into this new tax regime for any gains made from 1 July 2027

What will NOT change

  • The main residence exemption and the 4 small business CGT concessions are not changing

  • Companies are not impacted by the above changes. The 50% CGT discount is not available to companies 

Dates of purchase and sale are relevant

The tax treatment will depend on when an asset is acquired and disposed of. In summary:

  • Assets bought and sold before 1 July 2027: Current tax regime applies

  • Pre-CGT Assets sold from 1 July 2027: No tax for gains prior to 1 July 2027: New tax regime applies to gains from that date

  • Post CGT Assets sold from 1 July 2027: Gains to be apportioned between the pre-1 July 2027 gains (old tax regime) and the gains from 1 July 2027 (new tax regime)

  • Assets bought from 1 July 2027: New tax regime for all gains

Tina Cooper