What is the 30% minimum tax on capital gains from 1 July 2027?

From 1 July 2027, a new Division 119 sets a minimum 30% rate of tax — a floor, not a flat tax — on certain residential and non-residential capital gains made by Australian-resident individuals. It is part of the tax changes enacted in June 2026 — the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026), which received royal assent on 26 June 2026 and applies to CGT events on or after 1 July 2027.

“Minimum” is the key word. Division 119 does not tax every covered gain at a flat 30%. It works as a top-up: where the covered gains would otherwise be taxed, before offsets, at less than 30%, the rule adds extra income tax to bring the effective rate up to 30% (section 119-1). Where those gains are already taxed at 30% or more at a person’s marginal tax rate (the rate on the highest slice of their income), it adds nothing. New residential dwellings and several other cases sit outside it.

Tax outcomes depend on your circumstances — speak with a registered tax agent before acting.

Here is what the enacted Act settles, as at July 2026:

Settled by the enacted Act (Division 119)	Where in the Act
A 30% floor — a top-up, not a flat tax	s119-1
Applies to Australian-resident individuals	s119-10(1)
Covers residential and non-residential gains	s119-5(2)
Floor applies after indexation; 50% discount gone for these gains	s102-5(1)
Excludes new dwellings, affordable housing, some payment recipients	s115-102, s115-125, s119-15
Applies to CGT events from 1 July 2027	Act No. 49 of 2026

The one detail the Act leaves to a later instrument is the precise boundary of the “new residential dwelling” carve-out — covered under “Who does it apply to?” below.

Where does the 30% minimum tax come from?

The 30% minimum tax is one piece of a larger reform. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 reshapes how capital gains are taxed for CGT events on or after 1 July 2027. A “CGT event” is the trigger for capital gains tax — most commonly the sale of an asset — and its date decides which set of rules applies.

Alongside the new Division 119 minimum tax, two other changes sit in the same package (as at July 2026):

• The 50% CGT discount ends for individuals, trusts and partnerships. Investors who buy new builds can choose either the 50% CGT discount or indexation and the minimum tax when they sell. The existing 60% CGT discount for qualifying affordable housing is fully retained. Complying superannuation funds retain their 33.33% CGT discount (as at July 2026, per the ATO’s CGT discount guidance, QC 66019).
• CPI (consumer price index) indexation of the cost base returns. Indexation lifts most parts of the original cost base in line with inflation, so tax is generally applied to the “real” gain; certain ownership costs (the third cost base element) are excluded from indexation.

The ATO’s overview of the reform is the primary plain-language reference while detailed guidance is being developed.

What is a tax “floor” or minimum effective rate?

A tax “floor”, or minimum tax, is a rule that sets a lower limit on the tax applied to an amount — so the amount cannot end up taxed below a set rate, whatever other adjustments would otherwise reduce it. Division 119 applies a floor of this kind to capital gains, and the Act sets it out directly.

Under section 119-1, an Australian-resident individual “may have to pay extra income tax” on certain capital gains “to ensure, before applying offsets, a rate of tax of 30%” on the gains that remain after the exclusions in section 119-5. In plain terms: the covered gains are taxed at whatever the ordinary rules produce; if that works out below 30% before offsets, Division 119 charges extra tax to lift the effective rate to 30%. It is a minimum — not a ceiling, and not a second flat tax layered on top.

The amount it bites on is defined in section 119-5 as your “minimum tax capital gain” — the residential and non-residential capital gains the Division covers that remain after step 6 of the standard capital gains method in section 102-5(1), reduced (but not below nil) by certain gift and conservation-covenant deductions. Section 119-10 then multiplies that figure by 30%, and the extra tax is the gap between that result and the tax otherwise attributable to those gains.

How a specific figure lands still depends on the individual — their marginal rate and the indexed cost base of the particular asset — so this guide describes the mechanism rather than a single worked number. A registered tax agent can apply it to a specific gain.

How does the 30% minimum tax interact with indexation and marginal rates?

The same reform that introduces the 30% floor also brings back CPI indexation of the cost base. The two changes work in sequence, not against each other.

Indexation applies first, inside the ordinary capital gains calculation in section 102-5(1): it lifts most of the cost base in line with inflation, which reduces the taxable gain. The 30% floor then applies to what remains — the “minimum tax capital gain” measured after step 6 of that same method. So the order is settled by the Act: reduce the gain by indexation, then measure the 30% floor against what is left.

Two further points follow. The 50% CGT discount, which used to halve many individual gains, is abolished for the gains Division 119 covers, so it no longer sits in this calculation. And because the floor is a minimum, a person’s marginal rate still matters: where that rate already taxes the remaining gain at 30% or more before offsets, the floor adds nothing; where it would tax it below 30%, the floor tops it up. The exact indexation factor is set out in the Act as a formula tied to CPI quarters and is not reproduced here — how it and a person’s marginal rate combine for a specific gain is a calculation for a registered tax agent.

Who does the 30% minimum tax apply to?

Division 119 applies to individuals who are Australian residents at some time during the income year, and only where the year produces a “minimum tax gap amount” — broadly, where the covered gains would otherwise be taxed below the 30% floor (section 119-10(1)). It reaches residential and non-residential capital gains (section 119-5).

The Act also names who and what it excludes:

• New residential dwellings — the 50% discount is retained for them (via section 115-102), so they sit outside the floor. The precise boundary of what counts as a “new residential dwelling” depends on a determination the Minister must make by legislative instrument under section 26-160(4), which has not yet been made. As at July 2026, no such instrument has been registered on the Federal Register of Legislation, so the detailed definition is not yet knowable — check the Register before relying on it.
• Qualifying affordable housing — excluded via section 115-125.
• Recipients of certain government payments — under section 119-15, the floor does not apply to a person who receives, at any time in the income year, a payment in the listed categories: social security, family assistance, farm household support, paid parental leave, ABSTUDY, veterans’ entitlements, and military rehabilitation and compensation.
• Foreign and temporary residents — the rule keys on Australian-resident individuals, so it does not reach them.

Which set of rules applies to a gain still comes down to timing. CGT events up to 30 June 2027 fall under the current settings; CGT events on or after 1 July 2027 fall under the reform. That is a matter of dates, not a prompt to time a sale.

Does the 30% minimum tax apply to Brix or fractional interests?

Not in any way the ATO or the legislation has yet published. As at July 2026, no ATO guidance and no registered legislative instrument maps the 2027 settings — the end of the 50% discount, the return of CPI indexation, or the new Division 119 minimum tax — onto fractional or indirect interests in residential property, such as units in a property scheme or a fractional economic interest.

A Brix is a fractional economic interest in a property — a financial product under Chapter 7 of the Corporations Act 2001, not ownership of the property and not a loan. Each property is divided into 10,000 Brix representing all of its economic benefits, and the owner remains the registered legal owner. Because a Brix is a financial product rather than a direct interest in the land, how the 2027 capital gains settings apply to it is one of the things the published material does not resolve — in either direction. This guide does not state that such a gain is caught by the 30% minimum tax, nor that it sits outside it; neither has been published.

The reliable path is to confirm a specific position against the MyBrix Product Disclosure Statement and with a registered tax agent, rather than reading the general settings as though they map neatly onto a fractional interest.

What can investors take from this?

Two practical points hold.

First, which rules apply to a sale depends on when the CGT event occurs, so the same asset can sit under different settings depending on the year of the event. That is a factual matter of dates — not a reason to rush or delay a decision, which is a question for you and your adviser.

Second, good records make any calculation easier. The ATO requires property CGT records to be kept for the whole period you own the asset, plus at least 5 years after you dispose of it — a clear record of what an asset cost and what it was worth leaves you ready to apply the rules, including the returning indexation of the cost base, to a specific gain.

Beyond that, the sensible step for a specific holding is professional. A registered tax agent can apply Division 119, the returning indexation and the exclusions to your circumstances — and track the one piece still outstanding, the new-dwelling definition under section 26-160(4), as it is registered. Tax outcomes depend on your circumstances — speak with a registered tax agent before acting.

For the fundamentals underneath all of this, see our guide to capital gains tax on property in Australia.