INVESTING

Ask Paul: I invested in good faith, now the rules are changing

By Paul Clitheroe

July 1, 2026

Long-term investor Peter says he built his future around the existing tax rules. Is he right to feel disappointed by the proposed CGT changes?

Reader question

Hi Paul, I'd like to better understand the changes to CGT in the budget, specifically around shares and digital assets such as crypto.

Paul Clitheroe explains how proposed capital gains tax changes could affect shares and cryptocurrency investors.

I'm a long-term investor and my understanding is that after July 1, 2027, future capital gains will be subject to CGT indexation.

Does this mean that up to this date, capital gains will be calculated under the current CGT rules, then a separate calculation of indexation would be required from July 2027 (investments before this date are only partially grandfathered)?

While I support changes to negative gearing and CGT on housing, if that were the case as stated above, I find it disappointing that these other types of assets are not fully grandfathered too.

I have invested in good faith based on the current rules to invest in my future.

I think it would be helpful to explain the proposed changes as per my queries, with some calculations, as I'm sure it will be of interest to many readers. - Peter

Paul's response

There is rarely a dull moment in the world of money, Peter. There is always change, but right now it is a torrent!

The geopolitical uncertainty of the Middle East is rattling markets, AI tech companies are flying, local interest rates are up, day-to-day life costs have exploded and then we add the proposed tax changes.

I'm with you on negative gearing. I much prefer what most other countries do, which is to give tax breaks on the family home, but no negative gearing on investment properties.

The most valuable change, in my opinion, would be an increase in GST, but politically that is a disaster. It is a shame, but we'd need bipartisan political support to increase GST.

This is a progressive tax. Those who spend more, pay more. Compensating lower income earners, pensioners and so on is not terribly complex and we could get rid of a whole bunch of silly taxes, such as payroll tax.

Maybe our state governments could then also stop their unhealthy reliance on pokies tax. But I don't see higher GST happening and, like you, I am okay with the proposed changes on negative gearing on existing property.

With shares, crypto and other non-property assets, you are correct.

If the legislation goes through, then we'll all be valuing our assets on July 1, 2027, and that becomes our base number for the old CGT rules with the 50% discount.

From that July 1, 2027 base number, if we sell, the gain will be added to our taxable income, less inflation. But importantly, tax will be a minimum of 30% on our profits over inflation.

Interestingly, if we sell assets after July 1, 2027, we can also use the 'time apportionment' rule, where we can split the gain proportionally based on the number of years the asset was held under the old tax system and the new.

A bit of a sneaky one for us older investors is that any assets we held before September 20, 1985, which were exempt from CGT, will now lose that exemption on gains above inflation from July 1, 2027.

If you or any Money readers would like to model the impact of these changes, there are already calculators online, such as Stockspot's CGT change calculator.

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