How the 2027 CGT Reform Affects Australian Share Investors (ETFs, Stocks, and More)

Most of the headlines about the 2026-27 Budget CGT reform focus on property and for good reason, because the reform was framed in housing-affordability terms. But the new rules apply equally to shares, ETFs, managed funds and most other CGT assets. Australian share investors should not assume the changes leave them untouched. In fact, because shares typically have lower long-term capital growth than houses, many share investors will be slightly better off under the new rules.

This article explains exactly how CPI indexation and the 30% minimum effective tax rate apply to ASX shares, international shares held directly, exchange-traded funds (ETFs) and unlisted managed funds. It also covers the more technical interactions: dividend reinvestment plans (DRPs), cost base tracking, franking credits and the 30% floor.

Why shares are in scope

The 50% CGT discount was introduced in 1999 by the Howard government and applied uniformly to all CGT assets held more than 12 months property, shares, business assets and everything in between. The 2026-27 reform is similarly asset-neutral. Listed shares (ASX or international), unlisted shares, ETFs, listed investment companies (LICs), unit trusts and managed funds all fall within the new regime.

The principle behind including shares is consistency: taxing economically similar investments differently distorts capital allocation. If shares retained the 50% discount while property moved to indexation, investors would tilt toward shares not because of their fundamental merits but because of tax arbitrage. The Treasury factsheets make this point explicitly.

Effective tax rates on shares vs property

Treasury published a comparison table showing effective tax rates by asset class under the new rules, based on the past 20 years of average returns and 2.5% inflation:

At the same marginal rate, share investors pay a lower effective rate than house investors because shares grow more slowly in capital terms (most of the total share return comes through dividends, which are not affected by CGT changes). The new rules effectively reward income-producing assets and assets that hold value rather than appreciate sharply.

The Zoe example revisited

Treasury's own worked example for shares is Zoe who buys shares for $100 on 1 July 2027 and sells them for $125 five years later (4.6% annual return).

• Old 50% discount: $25 gain → $12.50 taxable.
• New indexed regime: Cost base indexed to $113. Gain = $12.

Zoe pays tax on $12 instead of $13 a small but real improvement. Multiply this across a $500,000 share portfolio compounding for ten years, and the savings become meaningful. The higher your marginal rate, the more the saving in absolute dollars.

ETFs and managed funds

ETFs and managed funds are themselves CGT assets when sold. Internally, however, they also realise gains within the fund and distribute them to unitholders. Three categories matter:

• Direct sale of ETF units your gain on disposal is a CGT event, treated like any share sale. The new rules apply to your gain.
• Distributed capital gains from the ETF these are passed through to you and have historically attracted the 50% discount via the trust. Treasury's draft guidance indicates trust-distributed gains will move to the indexed regime in line with direct holdings.
• Income distributions (interest, dividends, franked dividends) unchanged. The reform does not affect non-CGT income.

DRPs and cost base tracking

Dividend reinvestment plans complicate cost base tracking. Each parcel of shares acquired through a DRP has its own purchase price (the closing price on the reinvestment date) and its own holding period. Under the new rules, each parcel also has its own indexed cost base.

For investors with long DRP histories, this means many small parcels each with their own indexation calculation. Most brokers and accounting platforms will provide this automatically but you should verify your record-keeping system handles it. Sharesight, Stake and similar services have indicated they will update their CGT reporting to support the new regime.

Franking credits what changes (and doesn't)

Franking credits attach to dividends and are unaffected by the CGT reform. Dividend income continues to be taxed at your marginal rate with full franking credit offset (and refund if applicable). The only interaction is that a low-income investor with large franking refunds plus a large capital gain might find that the 30% minimum tax applies to the gain even though their franked-dividend income would have been refunded.

Low-income investors and the 30% floor

Retirees in pension phase of an SMSF pay 0% on capital gains the new rules do not touch SMSFs. But retirees who hold direct shares outside super are affected. A self-funded retiree living on tax-free super income who sells a $1 million share portfolio could trigger the 30% minimum floor.

If the same retiree receives even a part-Age-Pension in the year of sale, they areexempt from the 30% floor (see ourretirees guide). This makes timing the move onto Age Pension a meaningful planning lever.

Valuing your portfolio at 1 July 2027

For shares, valuing the portfolio at 1 July 2027 is essentially free. The closing price on 30 June 2027 (or first trading price 1 July 2027, depending on Treasury's final guidance) is the standard reference. ETFs use their iNAV or closing market price. Unlisted managed funds use the unit price published by the fund manager on 30 June 2027.

For unlisted shares (e.g. private company holdings or pre-IPO investments), a formal valuation will be necessary usually from a chartered accountant or valuation firm. Costs typically run $1,500 to $10,000 depending on complexity.

Practical record-keeping checklist

• Export full transaction history from your broker through 30 June 2027.
• Save 30 June 2027 closing prices for every holding (PDF or CSV).
• For DRP holdings, record reinvestment-date prices for each parcel.
• Keep dividend statements showing franked / unfranked split.
• Note any corporate actions (mergers, demergers, share splits) that affected cost base.

This article provides general information about the 2026-27 Federal Budget CGT reform measures announced for commencement on 1 July 2027 and is not financial, tax or legal advice. Tax outcomes depend on individual circumstances. Always consult a registered tax agent, financial adviser or the Australian Taxation Office before acting. Treasury factsheets and the official Budget Papers remain the authoritative source.