The deemed sale at 30 June 2027
The law treats every share and ETF unit you hold on 30 June 2027 as sold just before 1 July 2027 at its market value, and bought straight back. Nothing is payable then. When you actually sell, two gains are counted in that year's return: the deferred gain up to 30 June 2027, which keeps the 50% discount, and the gain since, worked out on a cost base indexed to inflation and subject to the 30% minimum tax.
A worked example
From the Explanatory Memorandum: Otis buys shares in January 2020 for $100,000. They're worth $120,000 just before 1 July 2027, and he sells them on 1 March 2029 for $160,000. His deferred gain is $20,000, half of which is taxed. His later gain is $40,000 before indexation; indexing his $120,000 cost by 1.042 at 2.5% inflation brings it to $34,960. Both are taxed in the year he sells.
Losses and short holdings
Capital losses are never indexed, and the law now uses them against the oldest gains first: deferred gains from before July 2027 come before later gains. Shares held for less than 12 months get neither the discount nor indexation.
Questions people ask
How do the 2027 CGT changes affect shares I already own?+
Shares you hold on 30 June 2027 are treated as sold and bought back at their market value just before 1 July 2027. The gain up to then keeps the 50% discount. The gain after that is worked out on a cost indexed for inflation, with no discount, and a 30% minimum tax applies to it. Nothing is taxed on 1 July 2027: both parts are taxed when you actually sell.
What value is used for listed shares at 30 June 2027?+
Their market value just before 1 July 2027, which for listed shares and ETFs means the closing price. The apportioning formula Treasury designed for property can't be used for them: the draft instrument covers only real property and assets without a readily ascertainable market value, and says listed shares aren't covered.
Should I sell my shares before 1 July 2027?+
Not just for the discount. Growth up to 30 June 2027 keeps the 50% discount even if you sell years later, so selling early only brings the tax forward and adds brokerage. And the ATO's wash sale ruling (TR 2008/1) warns that selling and buying back mainly to get a tax benefit can be caught by the anti-avoidance rules.
Are capital losses indexed?+
No. Losses are worked out on the reduced cost base, which has never been indexed and still isn't.
Which gains do my capital losses offset first?+
The older ones. Current-year and carried-forward losses reduce deferred gains from before July 2027 first, then later gains. Because deferred gains are later halved by the discount, a dollar of loss used there saves less tax than one used against an indexed gain.
Do the changes apply to shares held in super or a company?+
No. Super funds and companies keep their existing CGT treatment and aren't affected by indexation or the minimum tax. Shares held through a family trust are covered for the trust's resident individual beneficiaries.
Can temporary or foreign residents index their cost base?+
No. Indexation and the deemed sale at 30 June 2027 are only for Australian residents.
Sources