Squiz Today Squiz Shortcuts: Rethinking the Capital Gains Tax
Mar 5, 2026
A rundown of proposed changes to the capital gains tax and why it is back on the federal agenda. Short takes on the 50% CGT discount, its history and who benefits. Discussion of possible reductions to the discount and how Treasury modelling shapes options. Brief explainer of negative gearing and political hurdles around passing tax reform.
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How Capital Gains Tax Actually Works
- Capital gains tax (CGT) is not a separate tax but part of your income tax when you sell an asset for a profit.
- CGT applies only to the gain, not the sale price, and excludes your main home but covers investment property, shares and crypto.
The 50 Percent CGT Discount And Its Impact
- Australians who hold an asset for at least a year may get a 50% CGT discount, halving the taxable gain added to income.
- That discount can drastically reduce tax on large gains like investment property profits, amplifying benefits for wealthier investors.
Who Benefits From The CGT Discount
- The 1999 CGT discount aimed to encourage investment but now returns mostly to the top earners and costs about $20 billion a year.
- Think tanks estimate roughly 86% of the discount's benefits go to the top 10% of earners, raising distributional concerns.