CGT Reform for ASX Share Investors: How the 1 July 2027 Changes Apply to Stocks

General information only. This is not tax or financial advice. CGT treatment depends on your specific parcels, holding dates, broker records and tax residency. Consult a registered tax agent before acting on anything in this article.

The retirement of the 50% capital gains tax discount — in place for individuals, trusts and partnerships since 1999 — is now law. Announced in Budget 2026 and legislated in June 2026 (Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Act No. 49 of 2026, plus companion rates Act No. 50 of 2026; royal assent 26 June 2026), the reform means that from 1 July 2027, gains accruing after that date will be taxed under two new rules: cost base indexation by CPI plus a 30% minimum tax on the real gain.

The short version: Bought your shares before 1 July 2027 and selling after? Your gain splits at the share’s market price on 1 July 2027 — growth up to that date keeps the 50% discount (locked in by a deemed sale, taxed when you actually sell), growth after gets inflation-adjusted but pays at least 30%.

For ASX share investors who buy and hold direct stocks for more than 12 months, the practical effects are sharper than the headline suggests. Which lot of shares you choose to sell becomes a tax-planning lever. Dividend reinvestment plan (DRP) holdings get sliced across the reform date. And long-term investors will need cleaner CHESS/broker records than they have ever kept.

This article walks through how the reform applies to listed shares specifically — what changes, what doesn’t, and four worked examples covering the most common situations.

Who’s affected: individual investors and family trusts holding ASX-listed shares for more than 12 months.

Companies are unaffected — corporate CGT has always been at the flat company rate with no 50% discount, so the reform doesn’t touch them. SMSFs in accumulation phase keep their existing two-thirds discount on >12-month gains (no change), and pension-phase SMSF income remains tax-exempt.

Timeline — when each change hits your share portfolio

The reform is fundamentally time-driven — which side of 1 July 2027 each parcel lands on determines its tax treatment for the rest of its life. Map the key dates against your own buy/sell plan before you act.

How time changes your tax bill

Share investors face a different timing equation than property holders. Most ASX share investors either: (a) hold 12+ months for the discount and exit when they feel like it, or (b) hold long-term for compounding — think iron-ore majors, big-four banks, ASX 200 broad-index plays. The reform changes the math for both.

Holding period split across 1 July 2027

For Bucket B parcels (bought before reform, sold after), the legacy share is set by the share’s market price at 1 July 2027 — the deemed-sale split — or, if you elect, the Minister-determined apportioning method. Assuming steady price growth (roughly what the apportioning election produces), a $50,000 nominal gain splits like this:

Plain-English: holding period determines whether reform or legacy rules dominate. The faster you sell after 1 July 2027, the more of the gain rides on legacy rules — UNLESS you bought close to the reform date.

Indexation by years past reform (at 2.5%/yr CPI)

For the reform portion, your cost base gets uplifted by CPI. Time is your friend on slow-growth shares, neutral on fast-growth:

Share growth-rate sensitivity — three scenarios

Sample on a $40,000 nominal gain over a 10-year hold (5 years pre-reform + 5 years post-reform), 39% marginal rate (37% MTR + 2% Medicare):

Plain-English: defensive and cyclical shares with moderate nominal growth tend to come out NEUTRAL or slightly better under the new rules — indexation eats most of the nominal gain. High-growth tech and small-caps get HIT — the indexation offset is small relative to nominal returns.

Specific to shares — high parcel churn amplifies timing pain

ASX investors using dividend reinvestment plans typically have 10–30 separate parcels per share line. Each parcel has its own buy-date and lands in its own bucket (A, B, or C). A 15-year DRP holder of CBA might have parcels acquired 2010–2026 (Bucket B, with varying legacy shares) AND parcels acquired 2027–2034 (Bucket C). Selling all in one go in 2034 means the broker or tax software must apportion EACH parcel individually. The longer you hold, the more parcel layers compound the complexity.

Specific to shares — capital losses matter MORE under reform

Old rules: a $10k loss offsets $10k of nominal gain → with the 50% discount, the loss saves you 50% × MTR.

Under reform: a $10k loss still offsets $10k of nominal gain — but since the post-reform gain no longer gets the 50% discount, the loss saves you 100% × max(MTR, 30%).

Losses become more valuable post-reform. Implication: harvesting losses in 2026-27 to lock them in against pre-reform gains is wasteful. Banking them for reform-era gains is more efficient — every dollar of loss offsets a dollar of fully-taxed reform gain, not a half-taxed legacy gain.

Bottom-line summary for share investors

• Long-held shares (10+ years pre-reform), selling within 5 years after 2027: legacy dominates, reform impact small.
• Recent purchases (2024–2026), selling 2032–2034: reform dominates, high-growth tech shares pay most.
• Buy-and-hold post-2027 broad-index portfolio: indexation may shelter much of the gain over a 15+ year hold.
• Active DRP holders: parcel-by-parcel apportionment makes manual calculation impractical — tax software essential.

The three-bucket transition applied to shares

The Act structures the transition into three buckets. For ASX shares, parcel acquisition date and disposal date together determine which bucket each parcel falls into.

The 12-month holding rule carries over from current law in all three buckets. Selling inside 12 months still strips you of any discount or split treatment and taxes the full nominal gain at marginal rates.

For Bucket B, your gain splits at the parcel’s market value on 1 July 2027 — trivially observable for listed shares (the quoted price) — with an optional election into a Minister-determined apportioning method (broadly a time-based spread). The reform engine that powers our CGT calculator implements this in calculateCgtReform(): supply the 1 July 2027 value and it uses the valuation split; leave it out and it falls back to hold-period apportionment, approximating the election.

Which lot of shares you sell matters more than ever

CHESS-sponsored holdings and broker custody both track shares as discrete lots — also called parcels — with their own buy-dates and cost bases. When you sell, you pick which lots are being disposed of. The ATO accepts FIFO (first-in-first-out — sell oldest first), LIFO (last-in-first-out — sell newest first), or specific identification (you nominate which lots to sell), as long as you apply the method consistently and your records support the match.

Before reform, the choice of which lot to sell mainly affected the size of the gain — older lots usually have a lower cost base, which means a bigger gain, but the 50% discount cushions it. After reform, the choice also drives which bucket each sold lot falls into.

Consider an investor holding two lots of the same stock:

• Lot #1: 200 BHP bought 1 March 2020 at $30 (cost base $6,000).
• Lot #2: 200 BHP bought 1 March 2028 at $48 (cost base $9,600).

On 1 June 2032 BHP is trading at $60. The investor wants to sell 200 shares for $12,000 to fund a deposit.

• Sell Lot #1 (FIFO — oldest first): $12,000 − $6,000 = $6,000 nominal gain, Bucket B. If BHP was trading at $52 on 1 July 2027, the deemed-sale split makes $4,400 of it legacy gain (~73%) riding the 50% discount, with only the post-2027 growth under the new rules.
• Sell Lot #2 (LIFO / specific identification — newest first): $12,000 − $9,600 = $2,400 nominal gain, fully Bucket C (indexed + 30% minimum). Smaller gain, but every dollar is taxed under reform rules.

Neither is universally better — it depends on your marginal rate, CPI assumptions, and whether you have capital losses to harvest elsewhere. The point is that the choice now has more tax dimensions than it used to. Modelling both options in the CGT calculator before clicking sell on your broker is a habit worth forming from 1 July 2027.

Worked example 1: Anna’s NAB shares — last train to the old rules (Bucket A)

Anna is a marketing manager on a 37% marginal rate (excluding Medicare). On 3 March 2022 she bought 1,000 NAB shares at $32.50 per share, paying $25 in brokerage. Her cost base is $32,525.

On 28 June 2027 — two trading days before the reform date — she sells the entire holding at $44 per share for proceeds of $44,000, less $30 brokerage = $43,970.

Nominal capital gain: $43,970 − $32,525 = $11,445.

Both the buy and the sell happen before 1 July 2027, so this is pure Bucket A. The 50% CGT discount applies in full, with no apportionment and no 30% minimum:

What this means for you: Anna’s after-tax proceeds are $43,970 − $2,117 = $41,853. If she had waited until, say, 5 July 2027 to sell (just one week later), she would have crossed into Bucket B — the deemed sale would lock the 50% discount onto everything the shares had gained up to 1 July 2027, with only the final week’s price movement falling under the new rules. Holding across the line doesn’t forfeit accrued discount, but it does add the split-calculation paperwork. The 1 July 2027 line is exact: for on-market sales the CGT event date is the trade date, so if you want a disposal wholly inside 2026-27, trade before the cutover and keep the contract note.

Worked example 2: Tom’s CBA shares — straddling the line (Bucket B split treatment)

Tom is a senior software engineer on a 45% marginal rate (excluding Medicare). On 15 August 2017 he bought 500 CBA shares at $82.50 per share, paying $30 in brokerage. His cost base is $41,280.

On 20 September 2029 he sells all 500 shares at $145 per share for proceeds of $72,500, less $35 brokerage = $72,465.

Nominal capital gain: $72,465 − $41,280 = $31,185.

The parcel was bought before 1 July 2027 and sold after — pure Bucket B, deemed-sale split treatment applies.

The split at the 1 July 2027 price

CBA closed at $132 on 30 June 2027 (assumed), so the deemed sale values Tom’s 500 shares at $66,000.

Legacy portion (pre-1 Jul 2027 gain — 50% discount, deferred to sale)

Reform portion (post-1 Jul 2027 growth — indexation + 30% min)

CPI assumption: ~2.5% per year for 2.3 years between 1 Jul 2027 and 20 Sep 2029 ≈ 5.8% cumulative inflation. cpiRatio ≈ 1.058.

Total

What this means for you: Tom comes out roughly square — in fact slightly ahead — because his CBA grew only ~4.8%/yr after the changeover, barely above CPI, so indexation on the big reacquired cost base sheltered nearly all of the post-2027 growth. Don’t extrapolate to every stock: a parcel compounding at 10%+/yr post-2027 has mostly real growth, indexation barely dents it, and the lost discount costs real money (see Liam below). The growth rate, not the calendar, decides who wins. The CGT calculator reproduces these numbers using the same calculateCgtReform() engine — supply your parcel’s 1 July 2027 value for the exact split.

Worked example 3: Liam’s BHP shares — fully under new rules (Bucket C)

Liam is a graduate engineer who started investing after the reform. On 12 August 2028 he buys 200 BHP shares at $46 per share, paying $15 in brokerage. His cost base is $9,215.

On 20 May 2034 — nearly 6 years later — Liam sells all 200 shares at $72 per share for proceeds of $14,400, less $20 brokerage = $14,380. By 2034 he has progressed in his career and is on the 37% marginal rate (excluding Medicare).

Both buy and sell happen after 1 July 2027, so this is pure Bucket C — no legacy portion, no 50% discount, full new rules.

Step 1: Nominal capital gain.

$14,380 − $9,215 = $5,165 nominal gain.

Step 2: Apply cost base indexation.

Assume CPI ran at roughly 2.5% per year over the 5.77-year holding period. Cumulative inflation:

Indexation has stripped about $1,392 of pure inflation out of the gain. That’s the whole point of the reform — tax the real, inflation-adjusted profit rather than the nominal headline number.

Step 3: Apply the 30% minimum tax check.

Liam’s marginal rate (37%) is higher than the 30% minimum, so the minimum doesn’t bind — he pays at his marginal rate on the real gain:

Compare against the old 50% discount system (had it survived): $5,165 × 50% × 37% = $956. The reform costs Liam about $440 more — roughly 46% extra tax — on this single trade.

What this means for you: for shares bought after 1 July 2027, there is no 50% discount cushion at all. Indexation softens the blow when inflation is high, but the headline tax bill on real growth is materially higher than the old system. Long-term hold-for-discount strategies need to be re-evaluated; the after-tax compounding maths has shifted.

Worked example 4: Priya — low-income holder and the 30% minimum

The 30% minimum is the part of the reform that hurts low-income investors the most.

Consider Priya, a part-time worker on a $40,000 income — her marginal tax rate is around 16%, and with the 2% Medicare levy her effective rate on ordinary income sits at about 18%. She inherited a small CBA parcel from her grandmother in June 2019 and finally decides to sell it in August 2030 to fund a car deposit.

Cost base (market value at her grandmother’s death, plus brokerage): $8,000. Sale proceeds: $14,000. Nominal gain: $6,000.

This is a Bucket B parcel (bought before reform, sold after). The deemed-sale split at the CBA price on 1 July 2027 values the parcel at $12,300 then:

• Deferred legacy gain: $12,300 − $8,000 = $4,300.
• Reform-period growth: everything above $12,300 at sale.

Legacy portion (50% discount applies at her 18% effective rate): $4,300 × 50% × 18% = $387.

Reform portion (indexation + 30% minimum):

Total CGT: $387 + $218 = $605.

Compare to a counterfactual where the 30% minimum did NOT exist and Priya just paid her 18% marginal on the indexed real reform gain: $728 × 18% = $131. The 30% minimum ratchets her tax up by about $87 on this small parcel — a two-thirds surcharge on the reform-portion tax.

What this means for you: if your marginal rate is below 30% (part-time workers, self-funded retirees, full-time students with casual income), every dollar of post-1 July 2027 reform gain is taxed at 30% — not at your normal marginal rate. The minimum binds in your case. It doesn’t apply to legacy (pre-reform) gain — the 50% discount still works as before via the deemed sale — only to the reform portion. One important exception the Senate wrote into the final law: recipients of a listed income-support payment (Age Pension, DSP, JobSeeker, Carer Payment, Youth Allowance, Parenting Payment and the other payments hard-coded in s 119-15) are exempt from the 30% minimum — they pay ordinary marginal rates on the indexed gain instead. The exemption removes the floor only; it does not restore the discount. If Priya were on Youth Allowance in the year of sale, she’d pay the $131 marginal amount on the reform slice, not $218.

DRPs: many small lots straddling 1 July 2027

Dividend reinvestment plans (DRPs) create a fresh lot of shares every time a dividend is reinvested — typically twice a year for ordinary CBA/BHP/NAB/Woolworths-style stocks, sometimes quarterly. An investor with a 20-year DRP history could be sitting on 40+ lots per stock, each with its own buy-date and per-share cost base derived from the DRP reinvestment price on that date.

Heads up — DRPs are messy: Every dividend reinvestment is a separate purchase with its own buy-date. If you’ve DRP’d for 10 years, you have 10+ separate parcels — and the ATO has to work out which ones are in Bucket A, B, or C.

Two practical implications:

1. The 1 July 2027 line cuts through DRP histories. Every DRP lot issued before that date is a Bucket A or B lot; every lot issued after is Bucket C. When you eventually sell, each lot needs its own gain calculation, with its own buy-date driving the split.
2. Broker and share-registry record quality matters more than ever. CHESS-sponsored brokers and the major share registries (Computershare, Link, Boardroom) all track DRP lot-level history, but the quality of CSV exports varies wildly. Download your full DRP transaction history now and store it offline — re-creating the data from scratch in 2035 if a registry changes hands or your broker goes bust is painful.

With the legislation now passed, expect CHESS providers and registries to enrich lot exports with a “pre/post 1 July 2027” flag and the 1 July 2027 closing price well before the start date. Until they do, keep your own ledger.

Off-market share buybacks

An off-market share buyback (when a company buys back its own shares directly from you rather than on the ASX) historically combines a fully franked dividend component with a small capital component. The ATO’s anti-avoidance rules around discounted-element buybacks remain in force under the reform.

• Franked dividend component: unchanged. Treated as ordinary dividend income, grossed up for franking credits, with refund/offset depending on the holder’s tax position.
• Capital component: falls under CGT and is subject to the reform rules from 1 July 2027. For shares held more than 12 months that the holder tenders into a post-1 July 2027 buyback, the capital portion will receive Bucket B split treatment (if originally bought pre-reform) or Bucket C treatment (if bought post-reform).

The economics of these buybacks for low-marginal-rate holders are largely unchanged — the franking-refund arbitrage is still the main driver. For high-marginal-rate holders, the capital-component leg is now taxed slightly less favourably than under the old 50% discount; modelling each buyback offer through the franking credits calculator and the CGT calculator becomes more important.

Employee share scheme (ESS) interaction

ESS interests — RSUs, options, performance rights, and SPP/ESPP shares — have a separate cost-base step-up at the date the shares become yours for tax purposes (the taxing point), when the assessable discount is taxed as ordinary income. After that date, the shares enter the normal CGT system with their cost base reset to market value as at the taxing-point date.

For CGT purposes under the reform:

• Acquisition date for indexation and bucket allocation is generally the taxing-point date (the date the shares become yours for tax purposes), not the original grant date.
• ESS shares whose taxing point falls before 1 July 2027 behave like any other pre-reform lot — Bucket A if sold by 30 June 2027, Bucket B if sold later.
• ESS shares whose taxing point falls on or after 1 July 2027 are pure Bucket C — fully indexed + 30% minimum on disposal.

The Share Purchase Plan (SPP) Tax Treatment article covers the underlying ESS mechanics in detail. If you have a deferred-scheme RSU vesting in 2028 or later, your eventual CGT bill on disposal will sit fully under reform rules.

Franking credits are unchanged

The reform touches the capital gains side of share investing only. It does not change:

• Franking credit attachment on franked dividends.
• Refundability of excess franking credits for low-marginal-rate holders (retirees, SMSFs in pension phase, etc.).
• The 45-day holding rule for franking entitlements.
• The small shareholder exemption ($5,000 franking credits cap).

If your investing strategy was built around fully franked yield (banks, miners, supermarkets) rather than capital growth, the reform’s impact on you is muted — your dividend stream keeps its existing franking treatment. But hold-to-discount strategies that explicitly relied on the 50% CGT discount to convert growth into half-rate income should be re-modelled. The break-even hold period and required after-tax return both shift under indexation + 30% minimum.

Loss harvesting before 30 June 2027

Capital losses still offset capital gains under both old and new rules, and losses still carry forward indefinitely until used. But the 2026-27 financial year is the last full year in which a realised gain receives the unbroken 50% discount.

Two harvesting moves worth considering before 30 June 2027:

1. Realise gains on >12-month parcels you would have sold soon anyway to lock in the 50% discount on the entire gain — especially if you also have unrealised losses you can use to offset.
2. Realise embedded capital losses if you have a current-year gain or a strong expectation of future gains in 2027-28 onwards. Carried-forward losses are more valuable under the new rules, not less — they offset 100¢-on-the-dollar of nominal gain whether that gain is taxed at 50%-discounted or fully-indexed rates.

Don’t churn purely for tax outcomes. Brokerage, bid-ask spreads, and the wash-sale anti-avoidance rules in TR 2008/1 still apply. The CGT harvest calculator ranks loss-harvest candidates against unrealised gains.

Should you sell before 1 July 2027?

The honest answer for most long-term ASX investors: only if a sale makes sense regardless of tax.

Locking in the 50% discount on a stock you would otherwise hold for another 5–10 years means surrendering the after-tax compounding on that capital plus paying brokerage. Under reform, a typical 5%-real-return ASX parcel held 10 years still produces an effective tax rate well below the top marginal rate (~22–27% range depending on inflation path) — not as good as the old 50% discount, but not catastrophic either.

The sale is worth considering when:

• You were already planning to rebalance, retire, or fund a major purchase in the next 1–2 years.
• Your marginal rate in 2026-27 is materially lower than your expected 2030+ marginal rate (e.g. you’re taking parental leave in 2026-27).
• You have unused capital losses about to expire usefulness (they don’t expire, but the offset is most valuable against a 50%-discounted gain in 2026-27 vs an indexed gain later).

The sale is rarely worth it when:

• You’d be holding the same stock anyway and just resetting cost base to a higher number for no after-tax benefit.
• Brokerage, spread, and CGT bill exceed the marginal saving from the discount.
• You’re at the top bracket and the gain is large enough to push you into Division 293 / loss-of-LITO / private health rebate clawback territory.

Run both scenarios in the Sell This Year vs Next Year and Hold vs Sell tools before making the call.

Companies are not affected

A reminder that bears repeating: the reform applies to individuals, trusts, and partnerships only. Companies — including private investment companies (bucket companies, “Pty Ltd” share-trading entities) — have never received the 50% CGT discount and continue to pay company tax (currently 30% for base-rate-entity-failing companies, 25% for base-rate entities) on the full nominal gain.

For high-income individuals running personal share portfolios through bucket companies, the company-vs-trust-vs-individual structuring calculus barely changes: individual still wins on small gains via the 50% discount through 30 June 2027, then loses some ground from 1 July 2027 onwards. Trust distributions to a 25%-tax bucket company beneficiary remain a viable structure for after-tax compounding — but discuss with a tax agent because Division 7A, present-entitlement timing, and the trust streaming rules complicate it.

Calculators that handle ASX shares

• Capital Gains Tax Calculator — model individual parcel disposals across all three buckets, with the legislated reform engine integrated. Supports FIFO, LIFO and specific identification.
• CGT Harvest Calculator — rank a list of unrealised positions for loss-harvesting before 30 June 2027 or any future year-end.
• Franking Credits Calculator — work out gross-up, refundability, and net dividend yield. Useful when evaluating off-market buyback economics.
• Sell This Year vs Next Year and Hold vs Sell — scenario comparisons across financial years and reform/non-reform years.

Sources

• Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026) — incl. the Subdiv 112-E deemed-sale transition and new Div 119 minimum tax — and Income Tax Rates Amendment (Tax Reform No. 1) Act 2026 (Act No. 50 of 2026). Passed 25 June 2026; royal assent 26 June 2026.
• Parliament of Australia — bill homepage and Senate amendments: aph.gov.au.
• 50% CGT Discount Reform: Cost Base Indexation + 30% Minimum Tax from 1 July 2027 — master article covering the full policy, valuation methods, exemptions, and Treasury cameos.

Related reading

• Share Purchase Plan (SPP) Tax Treatment — ESS taxing-point mechanics that determine your CGT acquisition date.
• Franking Credits Refund Rules — dividend side of share investing, unchanged by the reform.
• Budget 2026 Explained: Winners and Losers — full Budget breakdown.