For capital gains tax (CGT) events on or after 1 July 2027, the flat 50% CGT discount for individuals is replaced by CPI indexation of the cost base. This is enacted law, not a proposal — the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received royal assent on 26 June 2026. It changes how a taxable capital gain is worked out, not the rate the gain is ultimately taxed at.

The two mechanisms answer the same question — how much of your gain is taxed — in opposite ways:

Before 1 July 2027: discount the gain. An eligible individual halves the taxable capital gain (a 50% discount). From 1 July 2027: index the cost base. What the asset cost you is adjusted upwards for inflation, and tax applies to the remaining “real” gain.

Two carve-outs sit alongside that switch, covered in detail below: the 50% discount is kept for new residential dwellings and for qualifying affordable housing, and complying super funds keep their existing 33.33% discount. A separate minimum tax also applies from the same date. This guide works through what ends, what replaces it, and what is not yet settled.

What replaces the 50% CGT discount from 1 July 2027?

CPI indexation of the cost base is the headline replacement. Instead of taxing the full nominal gain and then discounting it, the new rules lift the cost base — broadly, what you paid plus certain costs of owning and improving the property — in line with inflation, so the part of your gain that is only inflation is stripped out before tax applies.

Indexation is not new to Australian tax. It was the cost base method that applied before the 50% discount replaced it, and the changes enacted in June 2026 bring a version of it back for CGT events on or after 1 July 2027. Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, indexation applies to most cost base elements, with the third element — certain ownership costs such as interest, rates and insurance — excluded from indexation.

There is a second moving part. A new Division 119 sets a minimum 30% tax on residential and non-residential capital gains, with new dwellings excluded. So for many investors the picture from 1 July 2027 is not simply “indexation instead of the discount” — it is an indexed gain that is also subject to a minimum-tax floor. The floor is its own topic; this guide stays on what replaces the discount itself.

How is the 50% discount treated for CGT events before 1 July 2027?

For a CGT event before 1 July 2027, the existing discount rules still apply. As at July 2026, the ATO’s CGT discount settings by owner type — for CGT events before 1 July 2027 — are:

Owner type	Discount (events before 1 July 2027)
Individual (Australian resident)	50%, if held at least 12 months
Trust	50%, under the same 12-month test
Company	No discount — full gain taxed
Super fund	33.33% for complying funds

The 12-month test excludes both the day you acquired the asset and the day of the CGT event. Capital losses are applied first, and the discount then applies to whatever gain remains. The event date is usually the contract date, not settlement — which is what decides whether a sale falls before or after 1 July 2027.

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

What is cost base indexation, and how does it differ from the discount?

A flat discount and indexation start from different ideas about what a “gain” is. The 50% discount is blunt and generous: it halves the whole taxable gain, whether that gain is real growth or just inflation. Indexation is narrower: it tries to tax only the increase in value above inflation, by revaluing your cost base in today’s dollars before subtracting it from the sale proceeds.

A simple way to picture it: if prices generally rose over the years you held the property, indexation raises the cost you subtract, which lowers the gain that gets taxed. The size of that adjustment depends on how much inflation there was over your holding period and on exactly how the index is applied.

The method itself is written into the amending Act — it does not wait on a separate instrument. Under the Act, the indexation rule (section 110-36(1A)) applies to CGT events on or after 1 July 2027 and lifts most cost base elements for inflation, “except the third element” — the third element being certain costs of owning the asset, such as interest, rates and insurance, which are not indexed. The adjustment runs forward from when each cost was actually incurred (sections 960-275(1B) and 960-275(1C)), rather than being frozen at a single base quarter the way the pre-1999 version was.

One piece genuinely cannot be reproduced here. The exact indexation factor — which quarterly CPI figures form the top and bottom of the calculation — is set out in the Act as a formula rendered as an image, which has not been transcribed. This guide does not restate or estimate it:

[needs-image-transcription: s960-275 factor formula]

So the concept, the elements it touches, and the holding condition are all stated from the enacted law; the one thing left out is the numeric factor itself. For the worked figures behind a specific sale, our companion explainer on how cost base indexation works, alongside a registered tax agent, is the place to confirm the numbers for your own holding period.

Does the 12-month holding period still matter?

Under the pre-2027 rules, the 50% discount was only available where an asset was held for at least 12 months. That holding test is central to the discount — hold for less than a year and, historically, no discount applied.

From 1 July 2027 the flat discount ends for individuals, trusts and partnerships, so the 12-month test as a gateway to the 50% discount ends with it. But a 12-month rule carries straight over to indexation. The Act only allows the cost base to be indexed where the holding requirement in Division 114 is met — section 114-10(1) requires that the asset was acquired at least 12 months before the CGT event. Hold for less than a year and no indexation applies, just as no discount applied before. So the 12-month line still matters after the changeover; it now gates access to indexation rather than to the discount.

Which discounts survive the change?

The switch is not total. The changes enacted in June 2026 keep the 50% discount for specific categories and leave the super concession untouched:

• New residential dwellings keep access to the 50% discount (a carve-out under the amended discount provisions).
• Qualifying affordable housing continues to attract discount treatment.
• Complying super funds keep their 33.33% discount — the super concession is not changed by this reform.

What counts as a “new residential dwelling” for the carve-out is the open question here. The definition is set to be fixed by a ministerial legislative instrument that had not been registered as at July 2026, so the precise boundary — what qualifies, and for how long a dwelling stays “new” — is not yet confirmed.

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.

Which rules apply to my sale — before or after 1 July 2027?

Which regime applies turns on one thing: when the CGT event occurs. A CGT event before 1 July 2027 falls under the old discount rules; one on or after that date falls under indexation and the new minimum tax. The event date is generally the contract date, not settlement.

For assets held across the changeover, the law provides a bridge. An asset held on 30 June 2027 is treated as sold and reacquired at its market value just before 1 July 2027 — or an apportioning method can be applied instead — so the gain built up before the changeover keeps its old treatment and only the later growth sits under the new rules. The detailed transition arithmetic, and when a physical valuation is needed, are their own topics in this cluster.

None of this points to a “right” time to act. Which rules apply is a fact about timing, not a prompt to bring a sale forward or hold it back; that decision depends on your own circumstances and is one for licensed advice, not a blog.

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

How does this affect Brix compared with a directly held property?

A directly held investment property and a Brix are different kinds of asset, and one of those answers is not yet published. A directly held property is a CGT asset in your hands, subject to the rules above. A Brix is a fractional economic interest in a property — a financial product under the Corporations Act, not ownership of the property itself — and the property owner remains the registered legal owner.

Here is the honest limit. The enacted settings above — the end of the 50% discount, the return of CPI indexation, and the new Division 119 minimum tax — are written for capital gains generally. As at July 2026, no ATO guidance and no registered legislative instrument spells out how those settings apply to fractional or indirect interests in residential property specifically. So this guide does not map the 2027 rules onto a Brix; how they apply to that kind of interest has not been published, and the Product Disclosure Statement together with a registered tax agent are the places to confirm your position.

Under the MyBrix Product Disclosure Statement current as at July 2026 (version 4.0), each property is divided into 10,000 Brix representing all of its economic benefits — future net sale proceeds and, where applicable, net rental proceeds. Under that PDS, investors pay no fee to open an account, no fees to purchase or hold Brix, and no stamp duty on purchase.

For the fundamentals behind all of this — how a capital gain is calculated, the cost base, and the main residence exemption — see our guide to capital gains tax on property in Australia, and our explainer on fractional property investment.