If you own an investment property, hold assets in a family trust, or are thinking about buying a rental, this week matters. Treasury's consultation on the second tranche of draft law for the Budget's capital gains tax and negative gearing reforms closes this Friday, 21 August.

A quick recap

In this year's Budget the Government announced changes to start on 1 July 2027. As Treasury describes them, the reforms will limit negative gearing to new residential properties, bring back indexation of the CGT cost base, and apply a 30 per cent minimum tax on real capital gains. The Treasurer opened consultation on the next package of draft legislation, the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026, on 4 August.

What this tranche covers

This round is about the detail and the edge cases. According to Treasury, it deals with:

  • Death and relationship breakdown. Keeping the existing tax treatment when a property passes to a spouse or changes hands because of a separation.
  • What counts as a "new" home. The draft treats a dwelling as new where it is acquired within 24 months of its occupancy certificate. Accountants Daily reports this is longer than the 12 months first proposed.
  • Exemptions for some affordable and social housing, NDIS housing, public housing and build-to-rent projects.
  • Splitting gains across 1 July 2027. For assets held before and after the start date, owners could either pay for a formal valuation or use a set apportionment method that assumes even growth over the ownership period.
  • Trusts and estates, including managed investment trusts, testamentary trusts and deceased estates, plus people who are Australian residents for only part of a year.

Treasury has flagged that more tranches are still to come, covering CGT rollovers, foreign and temporary residents, and tax consolidated groups.

Why business owners should care

Many small business owners hold property or shares personally or through a trust, and many plan to fund retirement by selling an asset that has grown in value. The way a gain is split around 1 July 2027 could make a real difference to the final tax bill, particularly where growth has been uneven. Some in the profession have been critical of the pace. The Tax Institute has said publicly that this is not how good tax policy should be made.

What to do

  • Do not rush to sell or restructure. This is draft law and it can change.
  • Get your records in order. Find purchase contracts, cost base records and details of improvements for every investment asset.
  • Think about valuations. If your asset has grown unevenly, a valuation around the start date may be worth discussing with your adviser once the law is settled.
  • Make a submission through the Treasury consultation hub by 21 August if the draft affects you.

This article is general information only and does not take your personal circumstances into account.