Under the legislated reforms, capital gains realised on or after 1 July 2027 may be subject to a 30% minimum tax rate. The government stated purpose is to reduce incentives to defer capital gains into low marginal tax rate years, such as retirement.
This matters for property investors because it may fundamentally change selling strategies that have been common for decades. Under the current rules, an investor who retires and sells their investment property in a year with low other income may pay CGT at an effective rate significantly below 30%. Under the legislated minimum tax model, that outcome may no longer be available regardless of the investor taxable income in the year of sale.
This matters most for long-term investors who planned to sell in retirement, investors holding property in their own name, investors using trusts to distribute capital gains to low-income beneficiaries, and investors in partnerships where income splits were designed around timing.
What Koste can help with is ensuring investors have the right property information before their accountant calculates the CGT outcome. The most consistent gap we see is the cost base file. Many investors have been holding for 10 to 20 years and simply do not have their original purchase records, renovation invoices, or depreciation schedules organised. Under a 30% minimum tax model, those missing records translate directly into a higher assessed gain.
Companies are not subject to CGT discount treatment at all and pay at their corporate tax rate. SMSFs in accumulation phase pay 15% on capital gains with a one-third discount for assets held over 12 months. SMSFs in pension phase may pay no tax. These structures are not directly affected by the minimum tax in the same way individuals and trusts are.
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