If you’ve been seeing headlines about the capital gains tax (CGT) discount, you’re not alone. Over the last couple of weeks, the treasurer has repeatedly declined to rule out changes, and media reporting says housing-related CGT reform is “not ruled out” ahead of the federal budget in May. Importantly, nothing has been legislated — at this stage it’s still discussion.
How the discount broadly works at present:
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- if you own a capital asset (generally not in a company), and
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- you’ve owned the asset for more than 12 months, and
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- you make a profit when you sell it (a capital gain)
Then, if you’re an individual (or a trust), you can generally reduce the gain by 50% before it’s taxed at your marginal rate (complying super funds generally get a 33⅓% discount — meaning two‑thirds of the gain is counted).
The result is that, for many taxpayers, the effective tax outcome on long‑held gains can be more favourable than earning the same amount as salary or wages.
It’s also worth remembering: the family home is generally exempt from CGT, and Labor ministers have said they are not looking to change that exemption. Also, capital assets includes shares and other investments, for which the discount can be applied – but the focus on most of the discussion is around property.
What’s being discussed:
The main discussion isn’t about whether CGT should exist, it’s about reducing the size of the discount. The most commonly mentioned idea is a cut from 50% to 25% (often with a phase‑in). There’s also plenty of talk about “grandfathering” – meaning assets you already own may keep the existing rules, and only future purchases would be affected. And some talk about applying changes only to some asset classes (i.e. property) and not others.
Why is this back on the agenda?
A Senate Select Committee is examining the CGT discount and is due to report by 17 March 2026, with public hearings scheduled for 23–25 February.
The Parliamentary Budget Office has also released numbers around it, revealing tax concessions relating to the CGT discount of around $22 billion for the 2025–26 financial year, or around $247 billion over 10 years to the 2035–36 year, with the benefit highly concentrated among higher‑income taxpayers.
What should you do now?
For most people, the best move is not a rushed move. Until we see legislation, treat this as uncertainty, not a decision point.
If you want to understand how it could impact your personal circumstances, contact us. Otherwise, sit it out until the detail is released.
– Ian Hogbin & Brad Sheaves
18.02.2026
This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.
