Budget 2026 CGT Reforms: HNW Planning for Indexation, 30% Tax and Pre-CGT Assets

Budget 2026 has changed the HNW CGT conversation

The 2026-27 Federal Budget has introduced the most material change to Australian capital gains tax planning since the 50% CGT discount commenced. For accountants advising high net worth individuals with diversified portfolios, the centrepiece is not a rate change in isolation. It is a structural redesign of how long-held wealth is measured, taxed and documented.

From 1 July 2027, the 50% CGT discount removal takes effect for individuals, partnerships and trusts. It is replaced by cost base indexation, using CPI in a manner broadly similar to the 1985-1999 regime, plus a 30% minimum tax floor. The new regime applies to assets held for more than 12 months. The Budget also captures future gains on pre-CGT assets acquired before 19 September 1985, although gains accrued up to 1 July 2027 remain exempt.

For HNW clients holding listed shares, private company shares, investment properties, farms, collectibles, business assets and trust portfolios, the advisory task is now valuation-led. Accountants need to identify which gains should be realised before 1 July 2027, which assets require urgent valuation, and where holding through the transition may still be the superior wealth planning outcome.

What changes from 1 July 2027?

1. The 50% CGT discount is replaced

From 1 July 2027, the familiar 50% discount for individuals and trusts is replaced by CPI-based indexation and a 30% minimum tax floor for individuals, partnerships and trusts. In practical terms, advisers should stop modelling post-2027 disposals using a simple half-gain taxable approach.

For assets held more than 12 months, the taxpayer will instead calculate the gain using an indexed cost base. The policy intent is to tax real gains after inflation, but with a floor that prevents very low effective tax outcomes.

2. A 30% minimum tax floor applies

The 30% minimum tax is particularly important for HNW retirees, semi-retired founders and family members with low taxable income. Under current planning, advisers often time capital gains into years when the client has little other income, spreading gains across spouses, adult children or low-income years. From 1 July 2027, that strategy will not reduce tax below the statutory floor for affected taxpayers.

The Budget materials also preserve an exemption from the minimum tax for income support recipients. Advisers should not assume this assists typical HNW clients without verifying the client’s actual income support status and eligibility at the time of disposal.

3. Pre-CGT assets are no longer fully outside the system

Historically, assets acquired before 19 September 1985 have been fully exempt from CGT. From 1 July 2027, capital gains arising after that date on pre-CGT assets become taxable. Gains accrued up to 1 July 2027 remain exempt.

This is a major shift for old family holdings, including farms acquired in the 1960s or 1970s, original family homes later converted to investments, founder shares in private companies, family-owned commercial premises, artworks and long-held parcels of listed shares.

The transitional split: valuation now matters more than time

Early reporting suggested that transitional gains would be split on a time-based pro rata basis. Revised guidance points instead to a valuation at 1 July 2027, with the split determined when the asset is sold and taxpayers choosing the valuation approach.

For accountants, this changes the immediate priority. The core question is no longer simply how long the asset has been held. It is whether the client can support a defensible market value at 1 July 2027.

For assets held at 1 July 2027 and sold later, the gain should be segmented into:

• Pre-1 July 2027 gain: generally eligible for the existing treatment, including the 50% discount where applicable, or exemption for pre-CGT assets.
• Post-1 July 2027 gain: subject to the new cost base indexation rules and the 30% minimum tax floor.

This valuation approach will be straightforward for ASX-listed shares but more complex for private companies, family trusts, development land, farms, commercial property, collectibles and assets with embedded goodwill.

Worked example: HNW share portfolio with gains split across the transition

Assume an HNW client holds a diversified share portfolio with a current market value of $5 million and an original cost base of $1 million. The unrealised capital gain is $4 million. Based on valuation evidence, 80% of the gain is accrued by 30 June 2027 and 20% arises after 1 July 2027.

• Total unrealised gain: $4,000,000
• Pre-1 July 2027 component: $3,200,000
• Post-1 July 2027 component: $800,000

If the portfolio is sold after 1 July 2027, the $3.2 million pre-commencement gain is expected to receive the 50% CGT discount, producing a taxable capital gain of $1.6 million before losses and other adjustments. The $800,000 post-commencement gain is then calculated under the new indexation model, with the final tax outcome subject to the 30% minimum tax floor.

For example, if CPI indexation reduces the post-commencement taxable gain from $800,000 to $700,000, the minimum tax on that component would be $210,000 at a 30% floor, subject to final legislation and interaction rules. This is why HNW modelling should now be component-based rather than asset-based.

Pre-CGT asset capture: the largest documentation risk

The most exposed clients are often the least prepared. Families with pre-CGT assets may have no contemporaneous cost records, valuation reports, purchase documents or formal asset registers. For many, the asset has been treated as permanently outside the CGT system for four decades.

From an advisory perspective, the 1 July 2027 valuation becomes the de facto starting point for future taxable gains on pre-CGT assets. Consider a family farm acquired in 1978. If it is worth $12 million on 1 July 2027 and sold for $15 million in 2029, the historical uplift to $12 million remains exempt, but the $3 million post-1 July 2027 gain enters the new CGT regime.

That valuation must be supportable. For farms, private businesses and development sites, advisers should engage qualified valuers early. The FY27 valuation market is likely to be congested, particularly around June and July 2027. A rushed valuation prepared years later at audit or review stage will carry greater dispute risk.

Carve-outs that remain relevant for HNW planning

The Budget preserves several important carve-outs. Accountants should map these before recommending any realisation strategy:

• Main residence exemption: preserved, subject to existing eligibility and partial exemption rules.
• Small business CGT concessions: preserved, including the 15-year exemption, 50% active asset reduction, retirement exemption and rollover, subject to ordinary conditions.
• 60% affordable housing discount: preserved.
• Superannuation CGT discount: preserved.
• Income support recipients: exempt from the 30% minimum tax floor.
• New residential property: investors may elect between the 50% discount or indexation plus the 30% floor at disposal, adding flexibility for some post-Budget acquisitions.

For HNW clients, the small business CGT concessions and main residence exemption may still dominate the analysis. However, advisers should avoid assuming a preserved concession applies without retesting active asset status, affiliate and connected entity rules, maximum net asset value, significant individual requirements and trust distribution history.

Decision framework for accountants advising HNW clients

Step 1: Build a complete asset inventory

Every HNW client should have a portfolio inventory completed well before 30 June 2027. Tag each asset by asset class, owner, acquisition date, current market value, estimated unrealised gain, expected sale horizon and concession eligibility.

Separate assets into at least four categories: pre-CGT assets acquired before 19 September 1985; assets acquired after 19 September 1985 and held before 1 July 2027; new residential property with election flexibility; and trust-held assets exposed to the later discretionary trust minimum tax.

Step 2: Identify sales already likely within 24 months

Where a sale is already commercially planned within 24 months, accountants should model bringing the disposal forward before 1 July 2027. This can lock in the full 50% discount on eligible assets and avoid the post-2027 minimum tax floor.

However, do not recommend premature realisation solely because the discount is being removed. Selling a high-quality growth asset too early may create reinvestment risk, transaction costs, stamp duty exposure on replacement property, and loss of compounding. In higher inflation periods, indexation may produce an effective outcome closer to the current discount than clients initially expect.

Step 3: Prioritise valuation engagements

Pre-1985 assets need urgent attention. So do private companies, unit trusts, farms, commercial properties, development sites and collectibles. These assets require professional valuation evidence at 1 July 2027, not just accountant estimates.

For listed securities, retain broker reports or registry evidence around 30 June and 1 July 2027. For private assets, agree the valuation basis, instructions and documentation trail before the market becomes capacity constrained.

Step 4: Stress-test low-income year planning

For asset-rich, income-low retirees, the 30% floor is a trap. Timing a large capital gain into a year with minimal pension, dividend or trust income may no longer produce a low marginal-rate outcome. The floor means the minimum tax impost can be material even where the client has little ordinary income.

Step 5: Review trust structures before 1 July 2028

Trust-held HNW portfolios face a combined issue: the new CGT regime from 1 July 2027 and the 30% discretionary trust minimum tax from 1 July 2028. Expanded rollover relief is available from 1 July 2027 to 30 June 2030 for trust restructures, creating a defined planning window.

Accountants should identify whether investment trusts still serve their purpose after the reforms. Asset protection, succession and control may remain compelling, but tax deferral and streaming strategies need to be retested.

Three traps to brief partners on now

• No valuation file for pre-CGT assets: families may assume old assets remain exempt. They do not, for post-1 July 2027 gains. The 1 July 2027 valuation will be central evidence.
• Retiree zero-tax strategies fail: the 30% minimum tax can override low-income year planning for HNW clients.
• Trusts face sequential reforms: trust-held portfolios must contend with the CGT changes first, then the 30% discretionary trust minimum tax from 1 July 2028.

For firms managing large HNW review programs, tools like Fedix can help organise client records, source documents and working papers so advisers can focus on valuation, tax modelling and client decisions rather than manual file reconstruction.

Practitioner action items before 30 June 2027

• Run a portfolio inventory for every HNW client and tag each asset by acquisition date, owner and unrealised gain estimate.
• Engage valuers early for pre-CGT assets, private businesses, farms, collectibles and commercial property.
• Model disposals already planned within 24 months to determine whether pre-1 July 2027 realisation is preferable.
• Compare the current 50% discount outcome against indexation plus the 30% minimum tax floor.
• Review trust-held portfolios before 1 July 2028 and assess whether rollover relief from 1 July 2027 to 30 June 2030 is relevant.
• Prepare client briefing notes explaining that pre-CGT does not mean permanently tax-free after 1 July 2027.

The Budget 2026 CGT reforms make one point clear: HNW wealth planning is moving from discount-based tax planning to evidence-based valuation planning. Firms that start the asset inventory and valuation process now will be better placed to protect clients from rushed decisions, valuation disputes and avoidable tax leakage.

Disclaimer: This article is for general informational purposes only and does not constitute professional financial or tax advice. Always consult a qualified accountant or tax professional for advice specific to your situation. Fedix.ai provides tools to assist accounting professionals but does not replace professional judgement.