Capital Gains Tax (CGT) is an important consideration for Australian investors, property owners and business owners when making decisions about their assets.Changes proposed to Australia’s CGT framework from 1 July 2027 may influence how investors approach buying, holding and selling assets.
For many Australians, the decision is not simply about whether an asset has increased in value.
It is also about understanding:
- The tax consequences of selling
- The benefits of holding assets long term
- The impact of ownership structures
- Future investment and wealth planning goals
With potential changes ahead, reviewing your investment strategy early can help you make more informed decisions.
What Is Capital Gains Tax (CGT)?
Capital Gains Tax is the tax applied when you make a capital gain from disposing of an asset.
A capital gain generally occurs when:
- You sell an asset for more than its original cost
- You transfer ownership of an asset
- You dispose of an investment
Common assets that may be subject to CGT include:
- Investment properties
- Shares and managed funds
- Business assets
- Certain personal assets
The capital gain is generally calculated by comparing the asset’s cost base with the amount received when the asset is sold or disposed of.
What Are the Proposed CGT Changes From 1 July 2027?
The proposed CGT changes from 1 July 2027 may affect how some Australians plan their investments and asset ownership. For investors, the key consideration is not only the tax rate but also how future decisions may affect:
- Investment returns
- Asset ownership structures
- Retirement planning
- Estate planning outcomes
The impact will depend on individual circumstances, including:
- Type of asset held
- Length of ownership
- Ownership structure
- Future plans
Why CGT Planning Matters for Investors
Many investment decisions involve a balance between growth, income and tax outcomes. Selling an asset may create an immediate tax obligation, while holding an asset may continue providing:
- Capital growth potential
- Rental income
- Dividend income
- Long-term wealth accumulation
The right decision depends on your broader financial strategy rather than tax alone.
Should You Sell Your Investments Before 1 July 2027?
Selling an asset before a tax change is not automatically the right decision. While some investors may consider selling before a change takes effect, it is important to consider:
- Whether the asset is still suitable
- The current market conditions
- The tax consequences of selling
- Future investment opportunities
A decision made purely to avoid tax may not always create the best financial outcome.
Reasons Investors May Consider Selling
There may be situations where selling an asset before a CGT change could be appropriate. Examples include:
Taking Advantage of Existing Tax Rules
Some investors may consider whether selling before changes apply provides a more favourable tax outcome.
Rebalancing an Investment Portfolio
Selling may allow investors to:
- Reduce concentration risk
- Diversify investments
- Adjust their investment strategy
Changing Investment Objectives
Personal circumstances may change due to:
- Retirement
- Business changes
- Family circumstances
- Financial goals
Reasons Investors May Consider Holding Assets
Holding an investment may continue to provide benefits.
Long-term ownership can allow investors to benefit from:
- Potential capital growth
- Rental income
- Dividend income
- Compounding returns
Selling an asset also means losing future exposure to that investment. Before selling, consider whether the asset still aligns with your long-term strategy.
The Importance of Ownership Structure
The tax outcome of an investment decision can depend significantly on how an asset is owned.
Different ownership structures may include:
- Individual ownership
- Joint ownership
- Company ownership
- Trust ownership
- Superannuation ownership
Each structure has different tax implications. For example, an asset owned personally may have different CGT outcomes compared with an asset held through a company or trust.
Reviewing ownership structure before making changes can help avoid unexpected tax consequences.
CGT and Investment Property
Investment property is one of the most common assets affected by CGT.
Property owners should consider:
- Original purchase cost
- Improvements made to the property
- Holding period
- Rental income history
- Available CGT concessions
Selling an investment property can create a significant capital gain, particularly where the property has experienced substantial growth.
Before selling, property owners should understand the potential tax impact.
CGT and Business Owners
Business owners should also consider CGT when making decisions about:
- Selling a business
- Restructuring ownership
- Transferring assets
- Succession planning
A business sale can create significant capital gains depending on:
- Business structure
- Asset ownership
- Eligibility for concessions
- Timing of the transaction
Early planning can provide more opportunities to manage tax outcomes.
Should You Restructure Your Investments?
Restructuring may be considered by investors who want to improve:
- Tax efficiency
- Asset protection
- Succession planning
- Long-term wealth outcomes
However, restructuring existing assets can create tax and transaction costs.
Potential considerations include:
- CGT consequences
- Stamp duty
- Legal costs
- Administration costs
- Financing arrangements
Any restructuring decision should be carefully reviewed before implementation.
Common CGT Planning Mistakes
Selling Only Because of a Tax Change
Tax should be considered as part of the decision, not the only reason.
Ignoring Future Growth Potential
Selling an asset may remove future investment opportunities.
Failing to Review Ownership Structure
The way an asset is owned can significantly affect tax outcomes.
Leaving Planning Too Late
Complex investment decisions often require time and professional advice.
Not Considering Estate Planning
Investment decisions can also affect future wealth transfer outcomes.
How Should Investors Prepare for CGT Changes?
Investors should consider reviewing their position before any proposed changes take effect.
Important steps include:
- Reviewing investment portfolios
- Understanding potential CGT exposure
- Reviewing ownership structures
- Considering future investment goals
- Assessing retirement and estate planning outcomes
Preparation can help investors make decisions based on strategy rather than urgency.
The Role of Professional Advice
CGT planning can become complex, particularly when dealing with:
- Multiple investments
- Property portfolios
- Business assets
- Trust structures
- Significant capital gains
Professional advice can help investors understand:
- Available options
- Potential tax outcomes
- Timing considerations
- Long-term implications
Final Thoughts
The proposed CGT changes from 1 July 2027 highlight the importance of reviewing investment strategies early. There is no universal answer to whether investors should sell, hold or restructure their assets. The right decision depends on:
- Personal circumstances
- Investment objectives
- Tax position
- Long-term wealth goals
Rather than making decisions based only on tax changes, investors should consider how each option fits into their broader financial strategy.
Frequently Asked Questions
What is Capital Gains Tax (CGT)?
Capital Gains Tax is the tax that applies when you make a capital gain from disposing of an asset.
Are CGT changes happening from 1 July 2027?
Proposed CGT changes from 1 July 2027 may affect how investors approach asset sales, ownership structures and tax planning decisions.
Should I sell my investment before CGT changes?
Not necessarily. Selling should be based on your overall investment strategy, financial position and long-term objectives.
Will holding an investment avoid CGT?
Holding an asset generally delays the CGT event until the asset is disposed of, but future tax consequences should still be considered.
Does ownership structure affect CGT?
Yes. The tax outcome can vary depending on whether an asset is owned personally, jointly, through a company, trust or another structure.
Should I restructure my investments before CGT changes?
Restructuring may be beneficial in some situations, but it can also create tax and transaction costs. Professional advice should be obtained before making changes.
How Can We Help?
If you are concerned about how potential CGT changes may affect your investments, Camden Professionals can help review your current position and discuss possible strategies.
Our team can assist with:
- Capital gains tax planning
- Investment structure reviews
- Property and business tax considerations
- Long-term wealth planning
Contact Camden Professionals to discuss your requirements and understand your available options.
General Advice Warning
The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any person.
Any advice contained on this page and on this website is General Advice and does not consider any person’s particular investment objectives, financial situation and particular needs.
Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances.
The examples provided on this page and on this website are for illustrative purposes only.
Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability except for any liability which by law cannot be excluded, for any error, inaccuracy or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.
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