By Amit Aggarwal | FCPA · SSA® · Life Beyond Numbers · July 2026
The 50% CGT discount is being replaced. Here’s what that actually does to the numbers, and why indexation might not be the villain everyone thinks it is.
The 30-second version
From 1 July 2027, the 50% CGT discount is replaced by an indexation method. From 1 July 2028, discretionary trusts pay a 30% minimum tax on income, with a credit passed to beneficiaries.
Indexation is not automatically worse. On my numbers, if inflation runs at roughly 3.5% to 4% or higher, you can end up better off than under the 50% discount.
The reform only really bites when a beneficiary’s tax rate sits below 30%. Distribute differently and the difference can disappear entirely.
Nothing changes today. There is time to review, run the numbers and restructure if it makes sense.
Want to know where you sit? Book a call and we’ll do the maths on your actual position.
I’ve had a run of calls over the last few weeks, and they all land in the same place: “Amit, how does this actually impact me?”
Property in a trust. The rules just changed. There is a lot of noise out there and plenty of people telling you how bad it is, so let’s walk through what’s actually changed, when it lands, and what the numbers really look like.
The short version, before we go further: a trust is still a solid structure. It just stopped being a tax shortcut.
Why property in a trust was the go-to structure
Before we get to what changed, it’s worth remembering why so many people bought property inside a trust in the first place. Four reasons, in roughly the order clients cared about them:
- Income splitting. Distribute to family members on lower tax rates.
- The 50% CGT discount. It flowed through to beneficiaries on sale.
- Asset protection. Strong, and still strong.
- Succession and estate planning. Still relevant for a lot of families.
A lot of people went into a trust thinking they could distribute to dependants below the tax-free threshold. That shortcut has gone away. Everything else about a trust still works.
What’s changing for trust CGT, and when
This is the bit worth getting straight, because the dates are doing a lot of work and most of the panic I’m hearing comes from people getting them wrong.
Today
Nothing changes
Current rules still apply. No action is forced on you right now.
1 July 2027
CGT discount replaced by indexation
The 50% discount gives way to an indexation method, with a 30% minimum tax on gains distributed to beneficiaries.
1 July 2028
30% minimum tax on discretionary trusts
Trusts pay 30% and beneficiaries receive a credit. If your rate is below 30%, you lose the benefit of that credit.
The 12 May 2026 rule: who still has a choice
This is the detail almost nobody has picked up, and it changes your options completely depending on which side of it you sit.
- Bought before 12 May 2026? You keep a choice. From 1 July 2027 you can use either the 50% CGT discount or the indexation method, whichever suits.
- Bought after 12 May 2026? No choice. From 1 July 2027, indexation is the only method available to you for calculating capital gains.
If you already hold property in a trust, that optionality is genuinely valuable. It’s worth knowing you have it before anyone talks you into unwinding a structure.
Is the indexation method worse than the 50% CGT discount?
Here’s where most of the commentary gets it wrong. Everyone hears “the 50% discount is going” and assumes the tax bill doubles. It doesn’t work like that.
Indexation lifts your cost base in line with inflation. So the higher inflation runs, the more of your gain gets treated as inflation rather than profit, and the less of it is taxable.
I’ve run the numbers. At a high level, if indexation is running at around 4% or more, you can end up better off under indexation than you were under the 50% CGT discount.
That’s not a promise, and there’s a lot more to any individual story. But it should stop you from assuming the worst before you’ve done the maths. I covered the wider reform in 50% CGT discount changes: what property investors need to know, which is worth reading alongside this.
Trust CGT example 1: the same property, two different tax bills
Let’s make this concrete. (If you want the fundamentals first, start with what capital gains tax actually is.) Buy a residential investment property for $500,000 in 2020, hold it in a discretionary family trust, sell it for $900,000 in 2032. Split the gain 50/50 between two beneficiaries.
| Old rules (sold before Jul 2027) | New rules (sold 2032) |
|---|---|
| Gain: $400,000 50% CGT discount → $200,000 taxable Split $100,000 each Spouse on 20%: $100k × 20% = $20,000 |
Sale price: $900,000 Indexed cost base at 1 Jul 2027: $700,000 Taxable gain: $200,000 Split $100,000 each Spouse on 20%, floored at 30%: $30,000 |
| $55,000 total tax | $65,000 total tax |
$10,000 more tax under the new rules. Notice what’s doing the damage though. Indexation actually produced exactly the same $200,000 taxable gain as the 50% discount did. The entire extra cost comes from one place: the spouse on a 20% rate being pushed up to the 30% floor.
Trust CGT example 2: change the distribution, and the difference vanishes
Same property. Same purchase price, same sale price, same trust. The only thing we change is how we distribute. This time the spouse earns a $95,000 salary and receives 65% of the gain. The other beneficiary receives 35%.
| Old rules (sold before Jul 2027) | New rules (sold 2032) |
|---|---|
| Gain $400k, 50% discount → $200k taxable
Spouse gets 65% = $130,000 Other gets 35% = $70k × 35% = $24,500 |
Indexed cost base: $700k → $200k taxable
Spouse gets 65% = $130,000 Other gets 35% = $70k × 35% = $24,500 |
| $75,200 total tax | $75,200 total tax |
Zero difference.
Indexation produced the same $200,000 taxable gain as the old 50% discount. The spouse is already comfortably above the 30% floor, so the floor never triggers and the new rules add nothing. Calculated on 2026-27 resident rates plus the 2% Medicare Levy.
There are assumptions baked into both examples, and your situation will differ. But the point stands: the reform only bites when a beneficiary’s effective rate is below 30%. How you distribute matters more now than it ever did.
When do you need a property valuation? 30 June 2027
There’s a misconception doing the rounds that valuations were due this past 30 June, or are due at the next one. They’re not.
Any gain built up to 30 June 2027 keeps the old rules. That applies even to property bought after 12 May 2026. Which means 30 June 2027 is the date your properties or businesses need to be valued, so you can establish the cost base going forward.
Nothing you already hold gets clawed back. And there is three years of rollover relief from 2027 to restructure if it turns out that makes sense for you.
What hasn’t changed for family trusts
Just as important as the changes, and much less discussed:
- Asset protection still works. And honestly, I still believe asset protection matters more than tax planning in a lot of situations.
- Succession and estate planning still work.
- The family home exemption is untouched.
- Super’s tax treatment is unchanged.
If you set your trust up for protection or succession rather than for the tax shortcut, very little about your world has actually changed.
Should you restructure your trust? Review, don’t panic
I’ve had a steady stream of clients calling to ask whether they should restructure. My first question back is always the same: why?
Not because the question is silly, but because the answer lives in your numbers, not in a headline. Let’s look at your position. Let’s understand what happens when you actually go to sell. Let’s put real figures in and see what falls out. There’s maths to be done before anybody makes a call.
- If you hold property in a trust, or you were planning to, the maths has changed.
- Nothing is urgent. The changes land in 2027 and 2028.
- New structuring decisions should be made with the new rules in mind, not on instinct.
There are a lot of gurus out there telling you what’s happened and how terrible it is. Sit down and do your numbers. Numbers tell the reality.
One last thing: once-a-year tax planning is over
The pace of legislative change has picked up sharply, and we’re now seeing rules move multiple times a year. Seeing your accountant once, in June, with a shoebox of receipts, is no longer a viable strategy. If you’re using trusts as structures, or you’re trying to do more with your money, you need to be having these conversations with your professionals through the year, not at the end of it.
Want to talk through what this means for you?
This is a review conversation, not a panic. We look at your structure honestly, run the numbers, and if a trust still fits, I’ll tell you.
Frequently asked questions
When does the 50% CGT discount actually end?
From 1 July 2027 the 50% CGT discount is replaced by an indexation method for assets held in trusts. Nothing changes before then, and gains built up to 30 June 2027 keep the old rules.
Is indexation worse than the 50% CGT discount?
Not necessarily. Indexation lifts your cost base in line with inflation. At a high level, if indexation runs at roughly 4% or more, you can end up better off than under the 50% discount. It depends on your holding period, your inflation environment and how you distribute.
What’s significant about 12 May 2026?
If you bought your property before 12 May 2026, from 1 July 2027 you can choose between the 50% CGT discount and the indexation method. If you bought after 12 May 2026, indexation is your only option.
When do I need to get my property valued?
30 June 2027. There’s a common misconception that valuations were needed this past 30 June. They weren’t. Gains up to 30 June 2027 keep the old rules, so that’s the date at which you establish value going forward.
What is the 30% minimum tax on trusts?
From 1 July 2028, discretionary trusts pay 30% tax and beneficiaries receive a credit. If your personal tax rate is below 30%, you lose the benefit of that credit. This is what removes the income-splitting advantage for lower-rate beneficiaries.
Should I restructure out of my trust?
Not on instinct. The reform only bites when a beneficiary’s effective tax rate is below 30%. In many cases, changing how you distribute removes the difference entirely. Run the numbers on your actual position first. There is also three years of rollover relief from 2027 if restructuring does make sense.
Do these changes affect my family home?
No. The family home exemption is untouched, asset protection still works, succession and estate planning still work, and super’s tax treatment is unchanged.
