Australia reverses 27 years of capital gains tax policy, ditching flat discount for inflation indexing

From July 1, 2027, Australia will scrap the 50% capital gains discount introduced in 1999 and replace it with inflation-indexed cost-base accounting. A 30% minimum tax will floor the benefit of indexation. Assets sold before the deadline retain the old discount. The shift reverses a design choice made under the Howard government, driven by longstanding critique that the flat discount inflated asset prices and widened the tax gap between labour and investment income.