Australia’s proposed capital gains tax (CGT) changes could alter how trusts, managed investment funds and investors calculate gains from 1 July 2027. A new bill in Federal Parliament sets out how the reforms may apply to AMITs, housing gains, testamentary trusts and foreign residents.
The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 was introduced in Canberra on 14 October 2026. Its Schedule 4 contains further details about the CGT overhaul. As of 17 October, the bill is still before Parliament. The proposed rules are not yet law and may change as the legislative process continues.
This matters if you invest through a trust or fund, receive distributions from an attribution managed investment trust (AMIT), or hold Australian assets as a foreign or temporary resident. Preparing records now can make it easier to calculate and report gains correctly if the measures proceed.
Know what the proposed CGT changes mean
The broader CGT reform, enacted earlier in 2026, is scheduled to apply from 1 July 2027. It replaces the general 50% CGT discount for individuals and trusts with cost base indexation and introduces a 30% minimum tax on relevant capital gains.
Schedule 4 of the new bill builds on that framework. According to Reg-Follower’s analysis published on 16 October 2026, it clarifies how the proposed rules would apply to trust and fund structures, selected housing gains, certain beneficiaries, and foreign and temporary residents.
The schedule is part of a wider legislative package that also addresses negative gearing and transitional relief for Payday Superannuation. Keep the CGT measures distinct from other trust-tax proposals: this update concerns the treatment of capital gains under the CGT overhaul.
Check how the rules could affect AMITs
Schedule 4 proposes a transitional treatment for AMIT assets held before 1 July 2027. Those assets would generally be treated as sold and reacquired on 30 June 2027. The deemed reset is intended to separate gains accrued before the reform from gains arising under the new framework.
AMITs may calculate capital gains using cost base indexation at trust level. However, the indexation benefit would be reversed when gains are attributed to members. This is intended to ensure the member’s eligibility is considered when determining the treatment of an attributed gain.
For individual members, capital gains attributed by an AMIT would also count when calculating the individual’s 30% CGT minimum tax, if the proposed rules apply.
If you receive AMIT distributions, retain the annual statements and supporting information that explain the amount and character of each attributed gain. Matching those details to your own investment records will help support accurate reporting.
Record the trustee’s indexation position
The bill proposes an election allowing trustees, including trustees of managed investment trusts (MITs) and AMITs, not to apply cost base indexation for an income year. The election would only be available if no direct or indirect beneficiary or member is entitled to apply indexation.
That could include structures where all beneficiaries are companies, superannuation entities, or downstream trusts that have also opted out. Eligibility depends on the full beneficiary chain, not just the immediate recipients.
For compliance purposes, retain records of the trustee’s decision, the relevant income year, and the status of direct and indirect beneficiaries. Do not assume an election is available without checking the applicable conditions in the final law.
Identify gains that may retain the housing discount
The proposed rules preserve the 50% CGT discount for capital gains from new residential dwellings and affordable housing. The concession would apply at both trust and individual beneficiary levels, including for AMITs.
Trustees may choose between applying the 50% discount to eligible housing gains and using indexation alongside the 30% minimum-tax framework. The choice and its consequences will need to be assessed against the final legislation and the facts of the asset and beneficiaries.
Keep clear evidence of the relevant asset, its acquisition and disposal, and the basis for treating it as eligible housing. This will help substantiate the return position if the proposed concession applies.
Keep evidence for exempt beneficiaries and estates
Schedule 4 proposes that the CGT minimum tax exemption would cover genuine testamentary trusts, deceased estates, special disability trusts and specified vulnerable minor beneficiaries, including orphans and minors with disabilities.
The bill also proposes integrity rules. These would deny the exemption where assets are transferred into a testamentary trust or deceased estate after the relevant announcement date to avoid the minimum tax.
Maintain documents that show the origin and ownership history of assets, the relevant trust or estate arrangements, and the beneficiary’s circumstances where relevant. The proposed exemption depends on specific conditions; a trust’s name alone will not establish eligibility.
Track residency periods for direct gains
Foreign and temporary residents may still access CGT discounts and indexation on direct gains under the proposed rules. However, the benefit would be apportioned by reference to the days an individual was an Australian tax resident and was not a temporary resident during the asset’s holding period.
For gains arising after 1 July 2027, the bill provides a specific formula for calculating the eligible indexation benefit for the relevant resident period. You will therefore need reliable records of acquisition and disposal dates, as well as residency and temporary-residency periods.
Separately, new foreign-resident CGT rules took effect on 1 October 2026, including stricter notification requirements for high-value transactions. Check the ATO’s latest guidance on foreign resident CGT changes before a relevant disposal. Do not treat those current requirements as part of the proposed Schedule 4 measures; they are a separate change.
Start your compliance-readiness checklist
Use the period before 1 July 2027 to bring your records together. This will make future calculations and reporting easier to support.
- List the relevant assets. Record each asset’s acquisition date, cost base, ownership entity and disposal date, where applicable.
- Reconcile investment statements. Keep AMIT and MIT distribution statements alongside your own investment records.
- Map the beneficiary structure. Identify direct and indirect beneficiaries or members, including downstream trusts and entities.
- Document asset categories. Retain evidence for any asset that may qualify as a new residential dwelling or affordable housing.
- Track residency dates. Keep supporting records for periods of Australian tax residency and temporary-resident status.
- Monitor the bill’s progress. Review the Federal Parliament bill page for amendments and passage updates before applying the proposed rules.
For background on the related discretionary trust measures introduced in Parliament, see our earlier Australia tax update. Those proposals and the CGT changes discussed here are separate measures, so keep their requirements and commencement dates distinct in your records.
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FAQs
When do Australia’s new CGT rules start?
The changes are scheduled to start on 1 July 2027. The broader reform replaces the general 50% CGT discount for individuals and trusts with cost base indexation and introduces a 30% minimum tax on relevant capital gains. Schedule 4 is part of a bill that remains before Parliament as of 17 October 2026.
What happens to AMIT investments under the proposed rules?
Pre-1 July 2027 assets would generally be treated as sold and reacquired on 30 June 2027. An AMIT may calculate indexation at trust level, but the benefit would be reversed when gains are attributed to members. Attributed gains would count towards an individual member’s 30% CGT minimum tax where applicable.
Are housing gains still eligible for the 50% CGT discount?
Under the proposal, gains from new residential dwellings and affordable housing remain eligible at trust and individual beneficiary levels, including through AMITs.
Do foreign and temporary residents still get CGT discounts?
The proposed rules allow access to discounts and indexation on direct gains, but apportion the benefit according to the relevant days of Australian tax residency and non-temporary-resident status during the holding period.