CGT Reform for Retirees: Pensioner Minimum-Tax Exemption + 30% Minimum Tax from 1 July 2027

General information only. This is not tax or financial advice. Consult a registered tax agent or financial adviser for advice specific to your situation, especially before any decision that touches your Centrelink entitlements.

The CGT reform is now law. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026) and its companion rates Act (No. 50 of 2026) passed Parliament on 25 June 2026 and received royal assent on 26 June 2026. From 1 July 2027, Australia’s 50% capital gains tax discount is abolished for individuals, trusts and partnerships and replaced with two new rules — CPI cost base indexation, plus a 30% minimum effective tax rate on real capital gains (new Division 119). For most retirees this is the worst possible combination of changes: most retirees sit on long-held appreciating assets (a rental property bought in the 1990s or early 2000s, an inherited share portfolio, a holiday house), and most retirees have a low marginal tax rate (often 16-19% effective, sometimes 0%) thanks to super pensions, SAPTO and low taxable income. Low marginal rates are precisely where the 30% minimum tax bites hardest.

The final legislation carves out one important — and widely misunderstood — exception. Section 119-15 exempts recipients of the Age Pension and a hard-coded list of other income-support payments from the 30% minimum tax only. That is a much narrower shield than the Budget-era commentary suggested. Welfare recipients still lose the 50% discount on post-reform gains, their gains still get CPI indexation like everyone else’s, and the indexed gain is still added to assessable income and taxed at their marginal rates — there is simply no 30% floor underneath. The reform engine in this site implements exactly that via its 'age-pensioner' flag: when set, the post-reform gain is taxed at marginal rates on the indexed amount, with the minimum-tax floor switched off. Nothing else changes.

That distinction matters enormously in practice:

• A self-funded retiree on $50k of super pension income with no Centrelink will pay at least 30% on the real post-reform gain — often well above their pre-reform effective rate on the same disposal.
• An Age Pensioner selling the same asset pays marginal rates on the same indexed gain — cheaper if the gain is small enough to stay in low brackets, but a large one-off gain pushes them into the 37-45% brackets where the exemption is worth little or nothing.
• Either way, a big sale can suspend the pension for a year under the income test.

This article walks through the two retiree archetypes, the specific timeline triggers retirees should pin to the wall, the math behind why the 30% minimum is so brutal at low MTRs, four worked examples that map the most common retiree scenarios, the means-test interaction with Centrelink, and the planning levers you can pull in the 12 months before 1 July 2027.

For the cross-asset overview, see the master article: 50% CGT Discount Reform: Cost Base Indexation + 30% Minimum Tax from 1 July 2027.

The short version: If you receive the Age Pension, Disability Support Pension, Carer Payment or another listed income-support payment, you are exempt from the 30% minimum tax — and nothing else. You still lose the 50% discount on gains accruing after 1 July 2027, your gains are still CPI-indexed, and the indexed gain is still taxed at your marginal rates. If you’re a self-funded retiree on super and investment income only (no Centrelink), the 30% minimum applies on top — and it can ratchet your CGT bill noticeably above what the old rules would have produced, because your marginal tax rate is usually well under 30%.

Translation: the exemption is real but narrow. It removes the punitive floor for pensioners with modest gains; it does NOT preserve the old 50% discount, and content or advice claiming pensioners “keep the legacy discount” is describing the May 2026 proposal, not the Act that passed.

Are you on income support?

Plain-English check: the exemption list is now hard-coded in the legislation (s 119-15) and covers: Age Pension, Disability Support Pension (DSP), JobSeeker Payment, Carer Payment, Parenting Payment, Youth Allowance, Austudy, Special Benefit, Double Orphan Pension, Family Tax Benefit, the stillborn baby payment, Farm Household Allowance, Parental Leave Pay, ABSTUDY living allowance, and specified DVA/MRCA payments. The Senate removed the proposed ministerial power to add payments by instrument — the list can only grow by amending the Act. Receiving the Commonwealth Seniors Health Card (CSHC) alone is NOT on the list — CSHC holders are self-funded retirees for this purpose and face the full minimum tax. Receiving the Work Bonus is fine — if you’re on the Age Pension and also working part-time, you’re still an Age Pension recipient and the minimum-tax exemption still applies.

If you receive any listed payment in the income year of the CGT event, the 30% floor is switched off for your post-reform gains. If you receive nothing — even if you applied for the pension and were knocked back on the assets test — the minimum tax applies in full.

The two retiree archetypes — pick yours first

Before the worked examples, work out which group you sit in. Under the final law the two groups face the same core regime — discount abolished, indexation in, deemed-sale transition — and differ on exactly one parameter: whether the 30% floor applies.

Archetype 1 — Income-support retiree (Age Pension recipient)

You receive any amount of Age Pension, DSP, Carer Payment or another listed income-support payment in the income year you sell the asset. Roughly 2.6 million Australians fit this bucket as of mid-2026.

Tax treatment under the reform: pre-1-July-2027 gains keep the 50% discount via the deemed-sale transition (see the bucket table below), the same as everyone. Post-reform gains are CPI-indexed and taxed at your marginal rates, with no 30% floor.

What’s still the same:

• Your gain is added to taxable income (discounted for the pre-reform portion, indexed for the post-reform portion).
• Age tax offsets (SAPTO, senior Australians offset) apply if eligible.
• The gain affects your Centrelink income test in the year of sale, the same as it always has — the exemption is from the minimum tax, not from Centrelink’s income test on the gain itself.

Why the exemption exists: without it, an Age Pensioner with a marginal tax rate of effectively 0-16% would be ratcheted to 30% on a one-off lifetime gain — typically the sale of an investment unit they bought in their 40s. Parliament’s answer was to let the ordinary marginal-rate scale do its work for income-support recipients, rather than preserving the old discount for them.

Archetype 2 — Self-funded retiree (no Centrelink income support)

You live on super pension income, account-based pensions, dividends, interest and rental income only. You don’t receive Age Pension or any other listed payment. Roughly 1.4 million Australians 65+ fit this bucket.

Tax treatment under the reform: identical to Archetype 1, plus the floor: the post-reform indexed gain is taxed at the greater of your marginal rate or 30%.

Why this is worse for you than for working-age earners: your marginal tax rate is usually low. Account-based super pensions are tax-free at age 60+. SAPTO eliminates tax on most income up to ~$33k single / ~$30k each for couples. If your only taxable income is, say, $40k of investment income and a small commuted super lump, your effective marginal rate sits around 16-19%. Under the old rules, a $200k gain after 50% discount would have been added to income and taxed largely at 16-30%. Under the new rules, the post-reform portion is taxed at a flat 30% on the real gain whenever your marginal rate falls short of it.

The reform doesn’t just remove a concession from this group. For low-income self-funded retirees it actively introduces a higher tax rate than they would otherwise pay on any other source of income.

Timeline — when each change hits a retiree’s tax bill

How time changes your tax bill — retiree-specific drivers

A retiree’s CGT outcome under the reform is shaped by four levers, on top of the standard timing-and-growth-rate sensitivities described in the master article:

1. Centrelink status at sale date — switches the 30% floor on or off for the post-reform portion.
2. Marginal tax rate band — low MTRs are exactly where the 30% minimum binds hardest. Most retirees sit between 0% and 24% MTR.
3. Market value at 1 July 2027 — long-held assets carry the largest pre-reform legacy share (preserved at the old 50% discount by the deemed sale), which softens the blow for everyone.
4. Asset growth rate — slow-growth defensives (older suburb units, balanced ETFs, infrastructure trusts) commonly held in retirement portfolios benefit most from indexation; high-growth assets (tech shares, capital-city apartments) benefit least.

Why the 30% minimum is so painful at retiree MTRs

This is the single most important number to internalise. At a 16% effective MTR (typical self-funded retiree on around $40k of taxable income post-SAPTO), the pre-reform CGT math was:

• $100,000 nominal gain × 50% discount = $50,000 taxable
• $50,000 × 16% = $8,000 CGT — an effective rate of 8% on the nominal gain.

Under the new rules, ignoring indexation for a moment, the same $100,000 nominal gain on a fully post-reform asset:

• $100,000 real gain × 30% (minimum) = $30,000 CGT — an effective rate of 30% on the gain.

That’s a 3.75× increase in tax on the same dollar of gain, before any indexation offset.

Indexation does help — if the asset has been held long enough at low growth, the real gain shrinks substantially. But the minimum 30% still applies to whatever’s left. Even after a 10-year hold at 2.5% inflation (28% cost-base uplift), if the asset grew at 5%/yr nominal, the real gain is still about 39% of the nominal gain, and 30% on that is 11.7% of the nominal gain — well above the 8% effective rate the old rules would have produced.

For an Age Pensioner, the same indexed gain is taxed at marginal rates instead. If the gain is small enough to sit in the 16% bracket, tax on the real gain is ~$6,240 — the exemption saves ~$5,460 against the floor. If the gain is big enough to stack into the 37-45% brackets, the marginal rate exceeds 30% anyway and the exemption saves nothing.

Sensitivity table — retiree MTRs vs CGT outcome on a $100k nominal gain

Assume a fully post-reform asset held 10 years at 5%/yr nominal growth, 2.5% CPI — real (indexed) gain roughly $39,000:

Plain English: the reform is worst for self-funded retirees on $30-60k of income — the band where the 30% minimum binds most aggressively against a low marginal rate. Higher-income retirees (over ~$80k taxable) actually benefit slightly because indexation shelters part of the gain and the minimum doesn’t bind. Age Pension recipients with modest gains can come out ahead of the old rules — the indexed gain is smaller than the old discounted gain for slow-growth assets, and no floor applies — but they are NOT exempt from tax: the indexed gain still lands in their return at marginal rates, and a large gain climbs the brackets like anyone else’s.

Where indexation helps retirees most

The flip side: retirees often hold the types of assets that benefit most from indexation. Slow-growth assets are common in retirement portfolios because they pay reliable income and have low capital volatility. Examples:

• Regional residential rental property (Wagga, Mount Gambier, Albury) — often 3-4%/yr nominal growth. Heavy CPI shelter under indexation.
• Infrastructure trusts (Spark, Transurban, AusNet) — typically 4-5%/yr capital growth. Meaningful CPI shelter.
• Balanced ETFs (VAS, VAP, VDHG) — 5-7%/yr nominal. Modest CPI shelter, some real gain remains.
• Bond funds (VAF, VGB) — often 2-3%/yr nominal. Indexation almost entirely wipes out real gain.

If your portfolio is concentrated in defensives, the indexation half of the reform is genuinely good news. The 30% minimum just limits how much that benefit can compound for low-income holders — unless you’re on the exemption list, in which case the indexation benefit flows through at your marginal rate uncapped from below.

Three-bucket transition for retirees

The transition works through the Subdivision 112-E deemed sale: every CGT asset you hold at 30 June 2027 is deemed disposed of just before 1 July 2027 and reacquired. The notional pre-reform gain is calculated under the OLD law — 50% discount preserved — and deferred until you actually sell. Post-1-July-2027 growth is taxed under the new rules. The split uses market valuation at 1 July 2027 (or a Minister-determined apportioning method you can elect instead).

Most retirees who sell after 1 July 2027 will be in Bucket B (an asset bought decades ago, sold to fund retirement spending). The good news for everyone — pensioner or not — is that holding past 1 July 2027 does not forfeit the discount on growth already accrued: the deemed sale locks it in. The pensioner exemption then only changes the treatment of the post-2027 slice.

Worked example 1 — Age Pension recipient selling investment property

Margaret is 72 years old, widowed three years ago, and receives the full single Age Pension plus a small Commonwealth Super Scheme defined-benefit pension that puts her total taxable income at $28,000/year. She bought a one-bedroom unit in Glenelg (SA) as an investment in March 2005 for $290,000. After acquisition costs the cost base settled at $305,000. Over the hold she’s added $25,000 in capital improvements (bathroom renovation, balcony tiling), bringing her cost base to $330,000 after depreciation adjustments. She sells the unit on 15 March 2030 for $780,000 to move into a retirement village and free up capital.

Nominal gain: $780,000 − $330,000 = $450,000.

Step 1 — The deemed-sale split

Margaret held the unit at 30 June 2027, so Subdiv 112-E deems her to have sold and reacquired it just before 1 July 2027. Say her 1 July 2027 valuation (which she sensibly obtained and filed away) came in at $690,000.

• Deferred pre-reform gain: $690,000 − $330,000 = $360,000, calculated under old law — 50% discount — and brought to account now, at sale: $180,000 assessable.
• Post-reform gain: reacquired cost base $690,000, indexed by CPI from July 2027 to March 2030 (×1.069) = $737,600. Real post-reform gain: $780,000 − $737,600 = $42,400.

Step 2 — The pensioner exemption applies (to the floor only)

Margaret receives the Age Pension in the 2029-30 income year, so s 119-15 switches off the 30% minimum tax on her $42,400 post-reform gain. It does not restore the 50% discount on that slice — the $42,400 enters her assessable income in full (indexed), taxed at marginal rates.

• Assessable from the sale: $180,000 + $42,400 = $222,400.
• Added to her $28,000 base income, total taxable income for 2029-30 = $250,400.

Step 3 — Tax at her marginal rates

Under the assumed 2029-30 brackets (post-Stage 3 scale held stable):

• First $18,200: nil
• $18,201 – $45,000 at 16%: $4,288
• $45,001 – $135,000 at 30%: $27,000
• $135,001 – $190,000 at 37%: $20,350
• $190,001 – $250,400 at 45%: $27,180

Total income tax ≈ $78,800 before offsets; the tax she’d have paid on $28,000 alone is roughly nil after SAPTO, so effectively all of it is CGT attributable to the sale — about 17.5% of the nominal gain.

What difference did the exemption make?

Here’s the honest answer: almost none, for a gain this size. Margaret’s post-reform slice ($42,400 real) stacks on top of $208,000 of other income, so her marginal rate on it is 45% — well above the 30% floor. A self-funded twin would pay the same tax on this sale. And against the old-rules counterfactual (50% discount on the whole $450,000 → $225,000 assessable → ~$79,900 tax), she lands within about $1,100 — the indexation on the small post-2027 slice roughly replaces the discount she lost on it, because she sold early in the reform period when most of the gain was pre-reform and protected by the deemed sale.

Where the exemption genuinely earns its keep: small disposals. If Margaret instead sold a $60,000-gain share parcel with a $25,000 indexed post-reform component and stayed under the $45,000 bracket line, the floor would have taken 30% where her marginal rate is 16% — the exemption saves ~$3,500 on that one parcel. The exemption protects pensioners’ modest, regular realisations; it does not neutralise a big one-off property sale.

Worked example 2 — Self-funded retiree, 30% minimum binds

Brian is 70, self-funded, no Centrelink. He draws $48,000/year from an account-based super pension (tax-free in his hands at his age) and another $12,000/year of unfranked dividends and interest from inherited shares. After SAPTO his effective marginal tax rate sits around 16%. He inherited a share portfolio from his sister in 2024 and bought additional parcels in 2015 to top up the portfolio.

In June 2030 Brian sells two parcels of CBA shares:

• Parcel A — acquired 15 April 2015 for $42,000 cost base. Sells for $122,000. Nominal gain $80,000.
• Parcel B — acquired 2 October 2024 for $58,000 cost base. Sells for $88,000. Nominal gain $30,000.

Total nominal gain: $110,000.

Step 1 — Split each parcel at the 1 July 2027 valuation

Both parcels were held at 30 June 2027, so each gets the deemed-sale split. For listed shares the 1 July 2027 market value is simply the quoted price — no valuer needed. Say:

Parcel A (acquired April 2015): worth $95,000 at 1 July 2027.

• Deferred pre-reform gain: $95,000 − $42,000 = $53,000 (old law, 50% discount, deferred to sale).
• Post-reform: cost base $95,000 indexed ×1.077 (CPI, July 2027 → June 2030) = $102,300. Real gain: $122,000 − $102,300 = $19,700.

Parcel B (acquired October 2024): worth $68,000 at 1 July 2027.

• Deferred pre-reform gain: $68,000 − $58,000 = $10,000 (old law, 50% discount).
• Post-reform: cost base $68,000 indexed ×1.077 = $73,200. Real gain: $88,000 − $73,200 = $14,800.

Step 2 — Tax the deferred pre-reform portions under old rules

Combined deferred gain: $53,000 + $10,000 = $63,000.

• $63,000 × 50% discount = $31,500 taxable.
• Added to his $12,000 of taxable base income (super pension is tax-free in his hands), income so far = $43,500.
• Income tax on the stacked slice ≈ $4,050; tax he’d have paid on $12,000 alone (with SAPTO): roughly $0.

Step 3 — Tax the post-reform portions under new rules

Combined real post-reform gain: $19,700 + $14,800 = $34,500.

Brian’s marginal rate on this slice (stacking from $43,500) averages well under 30% — so the 30% minimum binds:

• $34,500 × 30% = $10,350 CGT on the post-reform portion.

Step 4 — Total and compare

The reform costs Brian roughly $3,500 more than the unreformed pre-Budget rules would have, on a single year’s disposals — and being on the exemption list would have clawed back about $2,400 of that. Over the rest of his retirement, if he liquidates the portfolio similarly, the cumulative reform impact compounds: the post-reform share of every gain grows each year, and the 30% floor is almost double his effective marginal rate. His main levers are realising gains before 30 June 2027 where a sale was already planned, and sequencing disposals to keep each year’s income low — though the floor blunts the second lever badly.

Worked example 3 — Retiree who moves onto Age Pension partway through the holding period

David is 67 in mid-2026 and has been self-funded for the past five years. His super pension and modest investment income put him at the assets-test ceiling — about $50k taxable per year. He owns an investment property in Adelaide bought 1 March 2018 for $480,000 with $20,000 of costs (cost base $500,000). In July 2028 David turns 70, draws down his super balance to fund a major home renovation, and the lower asset base brings him below the Centrelink assets-test threshold. He starts receiving a part Age Pension from 1 July 2028 onwards (about $9,000/year, plus the rest of his super pension and investment income).

In February 2032 David sells the Adelaide property for $820,000 to fund moving into a smaller villa.

Nominal gain: $820,000 − $500,000 = $320,000.

What does the exemption do for him?

David received the Age Pension in the 2031-32 income year (the year of the CGT event), so the s 119-15 exemption applies to this disposal — but remember what it covers: the 30% floor comes off his post-reform gain. The deemed-sale split, indexation and marginal-rate taxation all still apply.

Say his 1 July 2027 valuation was $650,000:

• Deferred pre-reform gain: $650,000 − $500,000 = $150,000 → 50% discount → $75,000 assessable.
• Post-reform gain: cost base $650,000 indexed ×1.120 (CPI to Feb 2032) = $728,000. Real gain: $820,000 − $728,000 = $92,000, taxed at marginal rates with no floor.
• Assessable from the sale: $75,000 + $92,000 = $167,000, on top of ~$20,000 base income → taxable income ≈ $187,000.
• Tax ≈ $50,500 attributable to the sale.

What if David hadn’t qualified?

Run the same numbers with the 30% floor: the minimum tax on the $92,000 real gain is $27,600 — but David’s marginal tax on that slice (stacking from $95,000 to $187,000, through the 30% and 37% brackets) is about $31,200, which is higher than the floor. The floor never binds. A self-funded David pays the same ~$50,500.

The exemption saves David approximately nothing on this sale. That is the single biggest reversal from the Budget-era version of this analysis, which modelled a full carve-out preserving the 50% discount and projected a ~$29,500 saving from being on the pension at sale date. Under the Act as passed, a gain this large lifts a pensioner’s marginal rate above 30% anyway, and the exemption is worth $0.

The practical lesson

Pension status at the CGT event date still controls whether the exemption applies — but the exemption is now a minor parameter, not a planning lever worth reorganising your retirement around:

• Do not defer a sale for years just to get onto the Age Pension first. For large one-off gains the exemption saves little or nothing, because the gain itself pushes your marginal rate above 30%.
• The exemption matters for modest, repeated realisations — a pensioner drip-feeding share parcels at $20-40k of gain a year keeps each year’s marginal rate at 16-30% and avoids the floor entirely. A self-funded retiree doing the same thing pays 30% on every real dollar.
• The pension itself, and the income test, remain the real timing considerations — see the means-test section below.

Worked example 4 — Downsizer scenario, main residence + super contribution

Patricia and Michael are both 66 and have owned their family home in Brighton (VIC) since 1995. Original purchase price was $385,000. Current value: $2.85 million. They sell on 10 September 2028 to downsize into a small unit in the same suburb for $1.4 million.

The reform is not relevant to their main residence — the main residence exemption is preserved at 100%. The full $2.465 million gain on the family home is tax-free, the same as it would have been under the old rules.

After settlement they contribute $300,000 each into their respective super accounts under the downsizer contribution rules:

• Both are over 55 (the age threshold was lowered from 60 to 55 in 2023).
• They’ve owned the home for more than 10 years.
• The contribution is made within 90 days of settlement.
• It doesn’t count against the non-concessional cap, doesn’t trigger the bring-forward rules, doesn’t count toward the $2.1m transfer balance cap, and doesn’t affect their work test.

Total super contribution: $600,000 combined, added to their existing accumulation or pension accounts.

What the reform does and doesn’t change for downsizers

• Main residence exemption: unchanged. 100% exempt regardless of when the home was bought or sold.
• Downsizer contribution: unchanged. Eligibility, $300k cap per person, 90-day window, age 55+ — all the same.
• The contribution’s impact on Centrelink assets test: unchanged. A downsizer contribution above their pension age (66+ for both) is counted as a financial asset under the means tests. If Patricia and Michael are below the assets test threshold they’ll still be eligible for Age Pension; if they’re above, the contribution adds to their assessable assets.
• The new home they buy: unchanged. It’s their new main residence and will be exempt on a future sale.

The downsizer pathway is completely insulated from the CGT reform because none of the moving parts (main residence exemption, downsizer contribution rules, super contribution caps) were touched by Acts 49 and 50. For retirees considering downsizing as their main retirement-funding lever, the reform changes nothing.

The CGT reform only matters to downsizers when the family home is not their main residence at the time of sale — for example, if they moved out years ago and rented it. In that case the main residence partial exemption applies for the period they lived in it, and the rest is subject to the reform under the standard B/C rules.

The 30% minimum tax and why it falls hardest on low-income retirees

A working-age earner on, say, $90k salary paying 30% marginal already meets the 30% minimum at their marginal rate — the floor never bites. For higher earners on 37% or 45%, the reform is more painful than the old discount but proportional. For retirees on a 16-19% effective marginal rate, the 30% minimum is a step change, not a marginal one. Pre-reform, the effective rate on a gain was MTR × 50% — so a 16% MTR meant 8% effective. Post-reform, the effective rate on the post-reform portion is 30%. That’s a 3.75× jump.

The arithmetic generalises: if your marginal rate is $r$ and the pre-reform (deemed-sale-protected) share is $L$, the reform-portion effective rate uplift is:

$$ \text{Uplift} = (1 - L) \times (0.30 - 0.5r) $$

For a fully post-reform asset ($L = 0$) with $r = 0.16$: uplift = $0.30 - 0.08 = 0.22$, or 22 cents per dollar of real gain. A $200,000 real gain costs an extra $44,000 in tax. For $r = 0.45$ the uplift is negative, meaning the reform is actually less punishing for high earners than for low earners (in proportional terms, not absolute).

This is the design tension at the heart of the 30% minimum: it’s intended to prevent tax-arbitrage timing of capital gains into low-MTR years (parental leave, sabbaticals, retirement). But it disproportionately catches self-funded retirees who realise gains for non-tax reasons — funding aged care, paying off remaining debt, supporting children — and who have no easy way to spread the gain across income years. The s 119-15 exemption is Parliament’s concession to this concern, but it only reaches retirees who are already on income support, and it only removes the floor.

Why “stretching” the sale doesn’t work (unless you’re on the list)

A common pre-reform tactic was to time a large CGT event in a year with no salary or pension income — for retirees, often the year before they triggered an account-based pension. Under the new rules:

• For self-funded retirees, the 30% minimum applies regardless of base income level. Spreading a sale across multiple years (e.g. selling shares in tranches) doesn’t reduce the minimum-rate impact.
• For income-support recipients, marginal-rate timing works again: with no floor, keeping each year’s realisations small keeps the rate at 16-30%.
• The other escapes are the small-business CGT concessions and the main residence exemption (always exempt). New residential dwellings also retain the 50% discount (buyer’s choice of discount or indexation) — relevant to downsizers buying brand-new stock as an investment.

For self-funded retirees with a single high-value investment property, the “save up for a low-income year” tactic is dead.

Age Pension means test interaction — the exemption doesn’t solve the income test problem

The s 119-15 exemption is about the 30% floor. It does not shield the gain from the Centrelink income test. This is a subtle but very important distinction.

How CGT events are assessed under the income test

Centrelink’s income test counts the assessable capital gain as income in the year of the CGT event. This was true before the reform and remains true after. What changes is the size of the assessable amount: for post-reform gains it’s the indexed real gain in full (no 50% discount), while deferred pre-reform gains still come through discounted. For long-held assets sold early in the reform period, the totals are similar; over time, the undiscounted post-reform component grows.

Threshold sensitivity

For 2025-26, the single Age Pension income test allows up to $204/fortnight ($5,304/year) before pension starts tapering at 50 cents in the dollar. The pension cuts out entirely at around $2,440/fortnight ($63,440/year).

If Margaret’s $450,000 nominal gain in worked example 1 hits her in a single income year, the $222,400 assessable amount blows past the cutout by a wide margin. Practical consequence:

• Margaret’s Age Pension is suspended for the income year of the sale (or substantially reduced under the means-test taper).
• Her exemption status is preserved for the CGT calculation because she was an Age Pension recipient in the income year the CGT event occurred.
• Pension resumes the following income year once the assessable income drops back.

One-year pension loss for Margaret: roughly $26,000 (full single pension annualised), on top of the ~$78,800 CGT she pays.

The lesson

The exemption is about which tax rate applies to the post-reform slice, not whether the gain affects Centrelink. A pensioner selling a large investment asset can still expect to lose a year of pension entitlement. Smaller dispositions that keep total assessable income below the pension cutout don’t trigger the suspension — and, conveniently, those are exactly the dispositions where the minimum-tax exemption saves real money.

For pensioners considering a major sale, a registered financial adviser specialising in Centrelink can model the combined CGT + means-test impact across different timing strategies. The Aged Pension Calculator gives a baseline for income and assets test impact.

Self-funded retirees considering applying for the Age Pension

The pre-reform incentive to qualify for Age Pension was largely about the pension itself (~$26-29k a year for a single, ~$39-44k for a couple) plus concession card benefits. Post-reform there is a second, smaller incentive: the minimum-tax exemption on disposals in the income years when you receive the pension.

Be realistic about its size. The exemption’s value on a disposal is at most (30% − your marginal rate) × the post-reform real gain — and it shrinks to zero as the gain pushes you into the 37-45% brackets:

• On a $30,000 post-reform real gain kept inside the 16% bracket: worth ~$4,200.
• On a $92,000 post-reform real gain stacked on other income (David, worked example 3): worth ~$0.

So:

• Drawing down assets (spending savings on a renovation, gifting within the deeming rules, transferring excess super into a younger spouse’s account) to qualify for the pension is still mostly about the pension. The CGT exemption adds a few thousand dollars a year of value for retirees who drip-feed realisations — not a reason on its own.
• Do not defer a major sale for years purely to sell as a pensioner. The exemption won’t rescue a large one-off gain, and mistiming can cost you both pension (income-test suspension) and market risk.

Centrelink assets test gifting rules — don’t try to fake it

Gifting away assets to fall under the assets-test threshold is heavily restricted. The $10,000 in 12 months / $30,000 in 5 years gifting limit applies. Excess gifts are still counted as your assets under the deeming rules for 5 years post-gift. You can’t simply transfer the family home into the kids’ names six months before retirement to qualify for the exemption.

Legitimate drawdowns (paying off the mortgage, doing a renovation, taking a cruise) do reduce assessable assets and are effective. Aggressive gifting strategies are not.

Inherited assets and the death rollover

For retirees inheriting assets from deceased parents or spouses, the CGT death rollover is unchanged by the reform. Key mechanics:

• When you inherit a CGT asset (other than the main residence sold within 2 years), you inherit it at the deceased’s cost base and acquisition date.
• You take over the deceased’s holding period for the 12-month eligibility tests.
• If the deceased bought pre-1985 (genuine pre-CGT), you inherit a cost base based on the asset’s market value at the date of death.

The reform overlay:

• For an asset the deceased bought between 20 September 1985 and 30 June 2027, you inherit their cost base and acquisition date. The deemed-sale split applies as normal: the pre-1-July-2027 notional gain keeps the 50% discount (deferred), and post-reform growth is indexed from the 1 July 2027 value.
• For an asset the deceased bought before 20 September 1985 (pre-CGT): under the reform, gains accruing after 1 July 2027 become taxable — the 1 July 2027 market value anchors the taxable portion, and pre-July-2027 accruals stay exempt. If the death occurred before 1 July 2027, the existing rule (market value at date of death becomes your cost base) applies first.
• If you are an income-support recipient when you eventually sell, the 30% floor is off for your post-reform gain — determined by your status at the CGT event date, not the deceased’s.

Planning levers for retirees in the next 12 months

If you’re an Age Pension recipient already

• You are not insulated from the reform — the discount is gone for your post-2027 growth too. What you have is marginal-rate treatment with no 30% floor.
• Get a 1 July 2027 valuation (or keep contemporaneous price evidence) for every significant asset. This locks in the discount-protected pre-reform gain via the deemed sale.
• Prefer smaller, spread-out realisations post-2027: keeping each year’s gain inside the lower brackets is where your exemption has real value — and it helps with the Centrelink income test too.
• A big one-off sale will be taxed much like a self-funded retiree’s, and can suspend your pension for the year.

If you’re a self-funded retiree (no Centrelink)

• Audit your portfolio. List every asset with significant unrealised gain. Estimate the gain on each, your cost base, and the date acquired.
• Identify pre-reform sales worth bringing forward. Anything you were already planning to sell by 2028-29 anyway may be better sold before 30 June 2027 — that keeps the entire gain, including what the asset would earn between now and sale, under the old rules. But don’t panic-sell: growth accrued to 30 June 2027 keeps its discount via the deemed sale even if you hold.
• Get the 1 July 2027 valuation. For property, a formal valuation or appraisal; for listed securities, the quoted price does the job. This document determines your split forever.
• Don’t pre-pay CGT. Capital losses, depreciation, transaction costs, and timing of other income still matter. A registered tax agent or accountant can model your specific position.
• Watch the new-dwelling option. New residential dwellings retain the 50% discount under the final law (your choice of the discount or indexation, per asset). If you’re considering buying a brand-new investment property post-2027 as part of a downsizing pivot, that asset class keeps the old treatment.

If you’re approaching Age Pension eligibility (mid-60s, close to 67)

• The minimum-tax exemption is a modest bonus of pension eligibility, valuable mainly for spread-out realisations. Don’t restructure a major sale around it.
• Be careful about the income test in the sale year — the gain counts as assessable income and may suspend your pension for that year.
• Don’t sell shortly before applying for the pension unless you need the capital — the gain inflates your taxable and Centrelink-assessable income at the worst possible time.

Transition To Retirement (TTR) interaction

If you’re 60-64 and using a TTR pension, the reform doesn’t change your super treatment but does change how you think about asset sales. Investments held inside super are taxed at super rates (15% accumulation, 0% pension phase) and are not affected by the reform — complying super funds keep the existing 33 1/3% discount and are excluded from the new regime. The reform only affects assets held outside super. Consolidating investment property into super before retirement isn’t simple (in-specie contributions face strict rules and SMSF complexity) but the after-tax case for keeping high-growth assets inside super has strengthened.

Capital loss carry-forwards become more valuable

A retiree sitting on $50,000 of unused capital losses from prior years can offset future gains regardless of whether those gains are taxed under the old or new rules. The after-tax saving from a $1 of loss carryforward is higher under the reform because the rate it offsets is higher (30% minimum on real gain for self-funded retirees vs effective 8-15% on discounted gain pre-reform).

If you have unused capital losses from past property or share sales (including losses you may have forgotten about from the 2008 GFC or 2020 COVID period), find them — they offset future gains at the reform-portion rate. The CGT Harvest Calculator ranks loss-realisation candidates if you’re sitting on underperforming assets.

What’s unchanged for retirees

For clarity, here’s what the reform does not touch:

• Main residence exemption — 100% retained. Family home stays tax-free.
• 6-year absence rule — unchanged. Move out of your main residence, rent it for up to 6 years, still 100% exempt.
• Death rollover — unchanged. Heirs inherit cost base and acquisition date.
• Inherited main residence sold within 2 years — unchanged. 100% exempt.
• Small business CGT concessions — all four retained (15-year exemption, 50% active asset, retirement exemption, rollover). Retiree-owners of small businesses keep the full set — and the 50% active-asset reduction’s turnover threshold rises from $2m to $10m from 2027-28.
• Downsizer contribution rules — unchanged. $300k per person, age 55+, owned home 10+ years.
• Account-based super pension tax-free status (age 60+) — unchanged.
• Complying super funds’ 33 1/3% CGT discount — unchanged; super is excluded from the new regime.
• SAPTO and senior offsets — unchanged.

Linked calculators

• Capital Gains Tax Calculator — model a specific disposal under old vs new rules; the calculator’s 'age-pensioner' toggle models the final-law exemption exactly: it removes the 30% minimum-tax floor and taxes the indexed post-reform gain at marginal rates.
• Aged Pension Calculator — model income/assets test impact of a sale year on your pension entitlement.
• Superannuation Calculator — project your super balance and pension drawdown to inform asset-sale timing decisions.

Sources

• Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026), incl. new Division 119 and the s 119-15 income-support minimum-tax exemption; Income Tax Rates Amendment (Tax Reform No. 1) Act 2026 (Act No. 50 of 2026). Royal assent 26 June 2026.
• Parliament of Australia — bill homepage and Senate amendments (Government sheet AU131; Greens sheet 3886): aph.gov.au.
• Master article: 50% CGT Discount Reform: Cost Base Indexation + 30% Minimum Tax from 1 July 2027 — cross-asset overview and transition framework.
• Services Australia: Age Pension income test and assets test thresholds (2025-26 schedule).

Related reading

• CGT Reform for Property Investors — overlapping for retirees who hold an investment property.
• CGT Reform for ASX Share Investors — for retirees with inherited or long-held share portfolios.
• CGT Reform for ETFs and Managed Funds — defensive portfolios common in retirement.
• Small Business CGT Concessions After 2027 — for retiring small-business owners.
• Negative Gearing Reform Budget 2026: What Changed by Purchase Date — paired property reform.
• Budget 2026 Explained: Winners and Losers — full Budget breakdown.