Now lawMoney & Tax Introduced in the House of Representatives, 28 May 2026

Capital gains now face a 30 per cent minimum tax

This short law sets the rate for a new lowest tax on profits from selling shares, houses and other things you own. It hits people who sell in years when their income is low. People on payments like the Age Pension are left out.

Official name: Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026

Who it affects

• People who sell shares, property or other things they own: If your normal tax on the profit comes to under 30 per cent, you pay a top-up to bring it to 30 per cent.
• Retirees with savings who are not on a pension: Selling things after you stop work no longer lets you pay a very low rate on the profit.
• People on the Age Pension, JobSeeker and similar payments: If you get one of these payments at any time in the year, the new tax does not apply to you that year.
• People on a high income: Nothing extra. Your profit is already taxed at 30 per cent or more.
• Buyers of new homes and affordable housing to rent out: You can keep the old tax break and skip the new tax if you choose.

Asset profits taxed at half

Say you sell something for more than you paid. The profit is called a capital gain. Shares, houses you rent out and businesses are common examples. In Australia, that profit is added to your income and taxed.

Right now, most people can cut the profit they pay tax on in half. They must have held the thing for at least a year. This half-off tax break started in 1999.

The government says this deal mostly helps the richest people. Its notes on the bill say one third of all these profits go to the top 1 per cent of earners.

The notes also say the tax break pushes money into homes that already exist. That makes them dearer for people buying their first home.

In the 2026-27 Budget, the government's yearly plan for tax and spending, the Treasurer announced a set of tax changes. The Treasurer, Jim Chalmers, is the minister in charge of the economy. Most of them sit in a big partner law. Its name is the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026.

This article is about the small partner law. Its name is the Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026.

Why the rate needs law

The Constitution is Australia's founding rule book. It says a law that sets a tax rate must deal only with that tax. So the rate sits in a short bill of its own.

The Parliamentary Library helps all MPs and takes no side. It says this is done to follow the Constitution.

The big partner law says who must pay the new tax and how to work out the amount. This bill adds one new section to the Income Tax Rates Act 1986. That section sets the rate.

The two laws are tied together. The parts of the big law about the new tax only switch on once this bill has started. If this bill had failed, the new tax could not have been charged.

How the minimum works

The idea is simple. Profit from selling something after 1 July 2027 should be taxed at 30 per cent or more.

Many people sell things in a year when their income is low, such as just after they retire. Their normal tax rate that year can be well under 30 per cent. The government says this lets people time their sales to pay less tax.

So the law looks at two numbers. The first is 30 per cent of the profit. The second is the tax you would already pay on that profit at your normal rates.

If the first number is bigger, you pay the gap as extra tax.

This bill turns that gap into a rate. The rate is the gap divided by the profit. That rate is then charged on the profit. So the extra tax matches the gap exactly.

A worked example

The government's notes use a woman called Genevieve. In 2029 she sells shares and makes a $50,000 profit. Her other income that is taxed is $40,000.

Thirty per cent of $50,000 is $15,000. Her normal tax on the profit comes to $14,500. The gap is $500, so she pays $500 extra.

Under the sum in this bill, $500 divided by $50,000 is 1 per cent. A 1 per cent rate on her $50,000 profit gives the same $500.

Someone whose normal tax rate is already 30 per cent or higher would have no gap. They pay nothing extra.

Who does not pay

People who get some government payments at any time in the year are left out. The minister lists these payments in detailed rules written under the law.

The government says the list should include the Age Pension, Disability Support Pension, JobSeeker, Parenting Payment and Youth Allowance.

It also names Farm Household Allowance, a payment for farm families in money trouble, a living allowance for First Nations students called ABSTUDY, and some veterans' payments.

Say you are on the Age Pension and sell some shares you bought in 2028. You would not pay the new tax that year.

The new tax also leaves out profit built up before 1 July 2027. It does not touch new homes or cheap rental housing if the owner chooses to keep the old tax break.

Companies, people who live overseas and people living here for a short time keep their own separate rules.

What the companion law does

The bigger law makes several other changes. For profits made from 1 July 2027, it scraps the half-off tax break.

In its place, the price you paid is raised each year in line with rising prices. So you are only taxed on real growth.

It also changes a tax break for rental homes called negative gearing. That is when you make a loss on a rental and use it to cut the tax on your wages.

For homes bought after 7.30pm on 12 May 2026, this break will only apply to new homes.

It also brings in a tax cut for people who earn wages. And it gives workers a flat $1,000 off their taxed income for work costs. So they do not have to keep every receipt.

Start date

This bill was put to the House of Representatives, the larger house of Parliament, on 28 May 2026. The House passed it on 4 June 2026. The Senate, the second house of Parliament, passed it on 25 June 2026.

The Governor-General, the King's stand-in, signed it into law on 26 June 2026. It is now Act No. 50 of 2026. It starts on the first day of the next three-month period after that.

The new tax only bites on things sold on or after 1 July 2027. It applies to the tax year that includes that date and every year after.

How they voted

Its journey through Parliament

Official sources

• Bill page on aph.gov.au
• Text of the bill
• Explanatory memorandum
• Bills Digest

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