The CGT law has passed. That does not make it good policy

Parliament has settled the law, but it has not settled the argument. With the reforms not due to commence until 1 July 2027, the Government still has time to reconsider their effect on individual investors, direct share ownership, and productive investment. 

Preparation should not be mistaken for acceptance. Passing legislation provides certainty about what the law says, but it does not prove that the law is fair, efficient, or good for Australia’s investment future. 

For investors, the changes also show the value of having an independent organisation in their corner. Australian Shareholders’ Association members receive plain-English education, investor updates, webinars, company-monitoring insights, member events, and a stronger collective voice. Membership does not replace personal advice, but it can help investors understand change and make more informed decisions. 

What is changing? 

From 1 July 2027, the existing 50% capital gains tax discount will generally be replaced by inflation-based cost-base indexation for eligible assets held for at least 12 months. A 30% minimum tax will also apply to real capital gains, subject to exemptions and special rules. 

The Government argues that indexation will ensure investors are taxed on gains after inflation and align the taxation of capital gains more closely with tax paid on employment income. 

Although announced alongside housing measures, the reforms extend to listed shares, growing businesses, exchange-traded funds, and other assets held outside superannuation. 

Recipients of prescribed income-support payments are exempt from the 30% minimum tax, with official material identifying the Age Pension as one of the intended exemptions. However, the replacement of the 50% discount with indexation may still be relevant. 

This matters for seniors. Some retirees receive the Age Pension, while others are self-funded or move in and out of eligibility as their circumstances change. Being retired does not automatically mean the minimum tax will not apply. 

This is not only a debate about how much tax investors should pay. It is also a question of whether the tax system will influence where, when, and how Australians invest. 

Investors are considering changing their behaviour 

ASA’s Investor Sentiment Survey received 1,112 responses. It reflects the views of engaged investors rather than every Australian investor, but it provides an important warning about possible behavioural effects. 

Nearly 70% of respondents said the changes would make them less confident about investing outside superannuation. Just over half said they may consider selling assets before 1 July 2027, while 51.5%t said they may favour income-producing investments over growth investments. 

More than half expected to need paid advice and more than 70% wanted guidance and worked examples. The findings do not predict that every investor will sell, but they show that uncertainty may influence investors in different ways. 

Some may bring forward sales. Others may delay selling or rebalancing in the hope that a future government changes the law. 

Both responses are concerning. Whether investors sell earlier or retain an asset longer than they believe is appropriate, tax considerations may begin to override decisions that should primarily be based on performance, risk, diversification, suitability, and long-term prospects. 

Tax should not determine the investment structure 

Tax settings should not push investors towards particular assets or structures for tax reasons rather than investment merit. Investors should be able to compare direct shares, exchange-traded funds, listed investment companies, and managed funds according to performance, costs, risks, and suitability. 

Differences in how indexation and the minimum-tax mechanism operate may make those comparisons more complex. Tax treatment should not create an artificial incentive to favour one structure over another. 

The same principle applies when investors choose between assets producing income today and companies reinvesting earnings to support future growth. 

A tax system that makes investors less willing to hold growth assets or invest outside superannuation could affect capital flows to smaller companies, biotechnology, technology, and other businesses that depend on patient investment. 

It is not necessary to predict the exact size of that effect to recognise the risk.

Direct ownership also matters

Direct shareholders contribute more than capital. They vote, attend company meetings, question boards, and hold directors accountable. 

An engaged retail shareholder base strengthens the connection between listed companies and the Australians whose savings help fund them. A tax-driven movement away from direct ownership and towards pooled structures could reduce that participation, particularly among smaller listed companies. 

The issue is broader than the tax payable when an asset is sold. It concerns the kind of investor participation Australia wants to encourage. 

Preparation, not panic 

The legislation contains important transitional protection. Broadly, gains accruing up to 30 June 2027 retain access to the existing 50% discount treatment, even if the asset is sold later, while the new arrangements apply to gains accruing from 1 July 2027. 

That is an important reason investors should not rush to sell solely because the commencement date is approaching. It is equally important not to retain an investment solely in the hope that a future election results in another change to the law. 

“Sell everything before the rules change” is not an investment strategy. Neither is “hold everything until the rules change”. 

Selling may crystallise tax earlier, incur transaction costs, and leave an investor searching for a replacement for a sound holding. Conversely, postponing a sale may prevent sensible rebalancing or keep capital tied to an investment that no longer meets the investor’s needs. 

The appropriate decision will depend on the investment, the investor’s circumstances and how the transitional provisions apply. Significant changes may require tax advice, while licensed financial advice may be appropriate where decisions involve diversification, retirement planning, or broader objectives. 

The Government must provide clear guidance on how gains arising before and after 1 July 2027 will be separated. Investors need practical examples covering valuations, apportionment methods, capital losses and the treatment of shares, ETFs, listed investment companies, and managed funds. 

The Government should reconsider the law before commencement 

The Government should not wait until after 1 July 2027 to determine whether the reforms have discouraged investment outside superannuation, direct share ownership,or investment in growth assets. Monitoring after commencement will be necessary, but it is not a substitute for reconsidering the design now. 

Before commencement, the Government should reconsider removing the existing discount from non-property investments and amend the law to avoid discouraging direct and productive investment. It should also publish modelling of the likely effects on different asset classes, investor groups, and structures. 

That modelling should examine both investors bringing forward sales and delaying later sales for tax reasons. It should consider the effects on portfolio rebalancing, market participation, compliance costs, and the efficient allocation of capital. 

The Government should also release examples, calculators and administrative guidance well before investors need to make decisions. The period before commencement should be used to listen to investors, companies, fund managers, and professional bodies and address unintended consequences. 

Passing legislation should not end the debate. The real test is whether Australians remain willing to invest according to the merits of an opportunity, rather than being pushed towards a particular asset, structure, or timing decision by the tax system. 

Special offer for National Seniors readers 

National Seniors Australia readers are invited to join the Australian Shareholders’ Association at the Queensland Investor Summit, held at The Langham, Gold Coast, on Monday 14 and Tuesday 15 September 2026. 

Future Fortunes. Human Edge. Investing in the Age of AI. Speakers include Woodside CEO and Managing Director, Liz Westcott; Flight Centre founder and CEO, Graham Turner; and Duncan West, Chair of Suncorp Group and Challenger. Investors will also hear from senior leaders representing NAB, HUB24, Data#3, Vulcan Energy Resources, and Starpharma, alongside an economist, fund managers, and investment specialists. 

The program directly addresses many of the issues raised in this article. Stockspot founder and CEO, Chris Brycki, will present “How Will Investing Strategies Change Under the New Tax Regime?”, exploring what the changes could mean for portfolio construction, diversification, income and growth investments, and long-term financial planning. 

Other sessions will examine the economic outlook, AI and robotics, company leadership and governance, ETFs, SMSFs, resources, demographic change. and practical approaches to deciding when to hold, trim. or sell an investment. 

National Seniors Australia readers can attend the two-day Summit for $592. The offer includes a 12-month ASA individual membership, normally valued at $172, providing ongoing access to investor education, advocacy, member resources, events and a national community of individual investors. 

Discounted accommodation is available at The Langham, Gold Coast, subject to availability. Use the code QLDSEN26 when registering before 20 August 2026. 

This article contains general information only and does not constitute personal financial, tax, or legal advice.