CGT Reform for SMSF and Super Funds: How the 1 July 2027 Changes Apply Inside Super

General information only. This is not tax or financial advice. Consult a registered tax agent or licensed financial adviser for advice specific to your situation.

The CGT reform is now law — passed 25 June 2026, royal assent 26 June 2026 (Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Act No. 49 of 2026, plus companion rates Act No. 50 of 2026). It replaces the 50% CGT discount for individuals, trusts and partnerships with cost base indexation plus a 30% minimum tax on real capital gains from 1 July 2027. The headlines focused on property investors and share traders — but Australia’s $4 trillion superannuation pool has always operated under a different tax framework to individuals. Super funds — both self-managed (SMSF) and APRA-regulated retail/industry funds — pay 15% on income in accumulation phase, an effective 10% on CGT-discounted gains, and 0% in pension phase up to the Transfer Balance Cap.

The final legislation settles the question that hung over super through the consultation period: complying superannuation funds are excluded from the new regime. The 1/3 CGT discount (33 1/3%), the 10% effective rate, and the pension-phase exemption all continue unchanged. That certainty matters for the roughly 600,000 SMSFs holding around $1 trillion of assets and for the ~15 million members of APRA funds. But the Act is not a complete non-event for SMSFs: a Greens amendment (Schedule 5) restricts new limited recourse borrowing arrangements (LRBAs) over real property to business real property from 10 August 2026 — the one super-specific change trustees must act on.

The short version: SMSF trustees and APRA-fund members — the final legislation keeps super’s 1/3 CGT discount and the pension-phase exemption. The famous 10% effective CGT rate on long-held accumulation-phase assets, and 0% in pension phase, both survive the reform, full stop. The 30% minimum tax and CPI indexation apply to individuals, trusts and partnerships only — not to complying super funds.

Translation: plan as if super CGT stays at ~10% on discounted gains and 0% in pension phase — because it does. The one new super rule to diarise: from 10 August 2026, a new SMSF borrowing (LRBA) over real property must be over business real property — no more geared residential property purchases inside new SMSF arrangements. Existing and refinanced arrangements are grandfathered.

For the cross-asset overview (individuals, trusts, partnerships) and Treasury’s source examples, see the master article: 50% CGT Discount Reform: Cost Base Indexation + 30% Minimum Tax from 1 July 2027.

How super funds got taxed before 1 July 2027

Before walking through what changes, here’s a quick refresher on how super tax works — because the rate structure is what makes the reform’s impact on super so different from its impact on individuals.

Super has three internal tax phases, and they apply per member, per account, not per fund:

The CGT discount inside super has always been 1/3, not 1/2 — that’s a deliberate Parliament setting because super already gets concessional 15% rates on income generally. The math: a $90,000 capital gain on shares held > 12 months in an SMSF accumulation account becomes $90,000 × (1 − 1/3) = $60,000 taxable, taxed at 15% = $9,000 tax. Effective rate on the nominal gain: 10%.

In pension phase the same disposal produces $0 tax. The asset is supporting a retirement income stream and the fund earnings supporting that stream are tax-exempt.

These are the rate settings the reform Acts do not touch. The reform changed CGT for individuals, trusts and partnerships — replacing the 50% discount with cost base indexation plus a 30% minimum tax — and the final legislation explicitly excludes complying super funds from the new regime. Super funds continue to operate under their own sections of the ITAA 1997 (mainly Division 295 and Subdivision 295-F for CGT events) with the 1/3 discount intact.

The Transfer Balance Cap remains the binding constraint on pension-phase tax exemption — $2.0m as of 1 July 2025 with indexation. Earnings on amounts above the TBC stay in accumulation phase at 15% / 10% CGT, with the additional Division 296 layer on member balances above $3m from 1 July 2026.

Timeline — what matters for super trustees and members

The dates below pin down which reform trigger points matter inside super, and when Division 296 (the separate $3m super tax) interacts with the fund’s CGT position.

The big takeaway: for CGT purposes, super is the asset location the reform left alone. The one date that demands trustee action is 10 August 2026 — the LRBA business-real-property restriction (covered in detail below).

How the fund’s tax position moves over time

With the legislative scope now settled, super’s time-sensitive moving parts are the familiar ones — plus one comparison that has become newly interesting:

1. Accumulation vs pension phase timing — unchanged mechanics. If a fund switches to pension phase, the earnings supporting the pension become exempt; gains crystallised while still in accumulation are taxed at the 10% effective rate. The reform adds no new cliff at 1 July 2027 inside super.
2. The asset-location gap widens for individuals vs super. From 1 July 2027 an individual on a sub-30% marginal rate pays at least 30% on real post-reform gains, while the same asset inside accumulation-phase super pays an effective 10% on the nominal gain. The after-tax case for holding long-term growth assets inside super — always strong — gets structurally stronger.
3. No valuations, no split, no deemed sale inside super. Trustees do not need 1 July 2027 valuations for fund assets. The Subdiv 112-E deemed-sale machinery applies to individuals, trusts and partnerships only.

Sensitivity on a $200,000 SMSF gain — final law

Take a $200,000 nominal capital gain on a parcel held 10 years inside an SMSF:

The consultation-period fear — that the 30% minimum might bind on super’s 15% rate and double accumulation-phase CGT to ~20% effective — did not make it into the Act. Complying funds are excluded. The individual-vs-super comparison row shows why asset location now matters more than ever.

The three-bucket transition — not applicable inside super

The A/B/C transition framework in the master article applies to individuals, trusts and partnerships. Inside a complying super fund there is only one bucket: business as usual.

Pension phase remains 0% throughout — the pension-phase exemption sits in Subdivision 295-F ITAA 1997 and is untouched by the reform.

Worked example 1 — Bucket B SMSF accumulation phase sale (BHP shares)

The Patel SMSF, in accumulation phase for both members (Aarav, 52, and Priya, 49), holds 5,000 BHP shares purchased on 1 March 2020 at $44.00/share. Cost base: $220,000 + $50 brokerage = $220,050.

The trustees decide to rebalance and sell all 5,000 BHP on 1 March 2030 at $74.00/share. Sale proceeds: $370,000 − $50 brokerage = $369,950.

Capital gain: $369,950 − $220,050 = $149,900.

The parcel straddles 1 July 2027 — but because the asset sits inside a complying super fund, no split applies. The final legislation excludes super from the deemed-sale transition and the new regime entirely. The Patel SMSF applies the 1/3 discount across the whole gain, taxed at 15%:

• Full gain $149,900 × (1 − 1/3) = $99,933 taxable.
• Tax at 15% (SMSF rate): $14,990.
• Effective rate on nominal gain: 10.0%.

This is exactly what would have happened under the old rules. No 1 July 2027 valuation, no apportionment worksheet, no minimum-tax check.

For contrast: had the same parcel been held personally by Aarav at a 47% marginal rate, the deemed-sale split would apply — the pre-2027 gain discounted at 50% and the post-2027 real growth taxed at 47% — a bill several times the SMSF’s $14,990. And the consultation-period worst case (the 30% minimum binding inside super, which would have pushed this bill toward $22,000) did not become law.

Plain English: nothing changes for the Patel SMSF’s BHP sale — and that certainty is itself the news. Trustees who deferred rebalancing decisions pending the final legislation can now proceed on the confirmed status quo.

Worked example 2 — Pension phase exemption preserved (Nguyen SMSF)

The Nguyen SMSF has two members — Linh (61) and Quan (60). They both meet a condition of release in late 2027 and transition fully to pension phase on 1 July 2028, with both members’ balances within their respective Transfer Balance Caps ($2.0m each as of 1 July 2025, indexed).

The fund holds a portfolio of ASX 200 ETF units, originally bought between 2015 and 2024 with an aggregate cost base of $850,000. By 1 July 2032, that portfolio is worth $1.5m — a $650,000 unrealised gain.

On 1 July 2032, the trustees sell the entire ETF position to rebalance into income-producing assets (term deposits, infrastructure trusts).

Pension-phase tax on the gain: $0.

This is unchanged by the reform. Subdivision 295-F ITAA 1997 exempts earnings on assets supporting a retirement income stream, including capital gains on disposal. The legislated reform restructures CGT for individuals, trusts and partnerships — it does not touch the pension-phase exemption.

The Transfer Balance Cap interaction. If either member’s balance exceeded their personal TBC at any point in the lead-up to disposal, the excess would have been forced back into accumulation phase, where it would attract 15% income tax and (depending on the reform’s scope) 10% or higher CGT. Because the Nguyens stayed within their caps, the entire portfolio operated in pension phase and the gain is fully exempt.

Plain English: the timing of pension-phase transition still matters — but for the same reason it always has, not because of the reform. Gains crystallised in accumulation are taxed at the 10% effective rate; gains crystallised while the assets support a pension are tax-free. The 1 July 2027 reform date adds no extra cliff inside super.

Planning callout: for members aged 60+ with a condition of release met (e.g. retirement, ceasing employment after 60), the account-based pension remains the most tax-effective disposal environment in the system — 0% on gains, unchanged by the reform. The TBC ($2.0m as of 1 July 2025) is the upper limit on how much can sit in this tax-free zone per member. For couples both at preservation age, that’s $4.0m combined — enough for many SMSFs to shelter most of the unrealised gain pool.

Worked example 3 — Bucket C: SMSF buys a new asset in the reform era (CSL shares)

The Smith SMSF — in accumulation phase (both members aged 45 and 43) — buys 200 CSL shares on 1 September 2028 (well after the reform start date) at $290.15/share. Cost base: $58,030 + $50 brokerage = $58,080.

The trustees sell on 1 September 2033 at $410.00/share. Sale proceeds: $82,000 − $50 = $81,950.

Capital gain: $81,950 − $58,080 = $23,870.

The asset is acquired and disposed entirely in the reform era — but inside super, that changes nothing.

The legislated treatment — super CGT continues as today

• Hold > 12 months: 1/3 discount applies. $23,870 × 2/3 = $15,913 taxable.
• Tax at 15%: $2,387.
• Effective rate on nominal gain: 10.0%.

The comparison that now matters: the same trade held personally

Had one of the Smiths bought the same CSL parcel in their own name (say at a 37% marginal rate), the post-reform individual rules would apply in full:

• Indexation uplift on cost base. Five years, CPI at 2.5%/yr: 1.131× uplift. Indexed cost base: $58,080 × 1.131 = $65,688.
• Real gain: $81,950 − $65,688 = $16,262.
• Tax at max(37%, 30% minimum): $16,262 × 37% = $6,017 — an effective ~25% of the nominal gain.

The SMSF pays $2,387 on the same trade — less than half. Before the reform, the individual comparison figure would have been $23,870 × 50% × 37% = $4,416; the reform widens the super advantage on high-growth assets from roughly 1.8× to 2.5×.

Plain English: the reform makes accumulation-phase super an even better location for long-term growth assets relative to personal holdings — especially high-growth equity where indexation offers individuals little shelter. Contribution caps, preservation rules and liquidity needs still constrain how much can move inside; this is an allocation conversation with an adviser, not a loophole.

Worked example 4 — Division 296 interaction (large SMSF balance)

Anand, 58, has an SMSF balance of $3.5 million as of 30 June 2030. His balance has been over the $3m Division 296 threshold for two FYs already. He’s still in accumulation phase (won’t meet preservation age until 60).

In 2030-31 his SMSF realises a $200,000 capital gain on an ASX share parcel held since 2018. The parcel crosses 1 July 2027, but inside super that’s irrelevant — no split applies. The same fund earns $100,000 in dividends and interest. Total taxable earnings before discount: roughly $300,000 (rough — actual SMSF taxable income calculation involves more line items).

CGT events inside Anand’s super have two calculations working in parallel:

Layer 1 — SMSF-level CGT

The $200k gain is taxed at the confirmed status quo: 1/3 discount, 15% rate — 10% effective = $20,000 SMSF tax on the gain alone.

Layer 2 — Division 296 individual top-up

Division 296 applies an extra 15% tax on the share of earnings attributable to balances above $3m. The earnings for Division 296 purposes include unrealised gains plus realised gains plus income — and the share is computed on an opening/closing balance methodology.

If Anand’s fund had $2.5m of unrealised growth + $300k taxable earnings + (this year) a realised $200k gain, his Division 296 “earnings” attributable to the over-$3m portion of his balance might be approximately:

• Total earnings concept (Div 296): ~$500k (mix of realised, unrealised, income).
• Proportion of balance over $3m: ($3.5m − $3m) / $3.5m = ~14.3%.
• Div 296 taxable earnings: $500k × 14.3% = $71,500.
• Div 296 tax (extra 15%): $10,725 — paid by Anand personally (he can elect to have his super fund release the cash to pay it).

Total CGT-related impost on Anand: $20,000 SMSF-level + $10,725 Division 296 = $30,725 on a nominal $200k gain. Effective combined rate: 15.4% on the nominal gain.

Plain English: Division 296 is unchanged by the CGT reform — but it sits on top of the SMSF-level CGT outcome. Members with balances over $3m face two tax layers on the same gain: the fund’s 10% effective CGT, then Division 296’s slice of the earnings attributable to the over-$3m portion. Even with both layers, the combined ~15% effective rate remains well below what the same gain would now attract in personal hands post-reform.

For more on Division 296 mechanics, see the Division 296 Super Tax Calculator.

APRA fund members vs SMSF trustees

About 14 million Australians are in APRA-regulated retail and industry super funds (AustralianSuper, Aware Super, ART, HostPlus, REST, UniSuper and many more). These funds also pay 15% on income and an effective 10% on CGT-discounted gains — same rate framework as SMSFs. The reform affects their internal calculations the same way as SMSFs.

The practical difference: APRA-fund members don’t see CGT events directly. The fund’s internal investment activities (rebalancing equity positions, harvesting losses, switching managers) generate CGT events at the fund level. Most members see the result indirectly — via slight changes in unit price (“crediting rate”) or member-level statements showing a small “tax provision” reduction in net returns.

What this means for APRA-fund members:

• No personal action needed for the CGT reform itself. Your fund’s investment team handles the parcel-level math.
• Watch the fund’s annual member report and Product Disclosure Statement post-1 July 2027 — funds may flag whether they expect CGT efficiency to change, especially actively-managed equity options that turn over assets frequently.
• Switching investment options inside an APRA fund typically doesn’t trigger member-level CGT because the fund is the legal owner. It triggers fund-level CGT only when the underlying assets are sold to rebalance, and that cost is socialised across all members.
• Pension-phase products (account-based pensions held inside an APRA fund) still pay 0% on CGT and income — same as SMSFs.

The reform’s impact on APRA-fund net returns is essentially nil — the funds’ CGT framework is unchanged. Expect fund disclosures from 2027-28 to confirm as much in their tax-efficiency commentary.

What the final law settled

The June 2026 Acts answered every question SMSF advisers were watching through the consultation period:

1. Does the 30% minimum tax apply to super funds? No. Complying superannuation funds are excluded from the new Division 119 minimum tax. The 15% accumulation rate and 10% effective CGT rate continue.
2. Does cost-base indexation apply inside super? No — and it isn’t needed. The 1/3 SMSF discount continues unchanged; indexation is the individuals/trusts/partnerships replacement for the 50% discount they lost.
3. Do trustees need 1 July 2027 valuations for fund assets? No. The Subdiv 112-E deemed-sale transition does not apply to complying super funds. (Trustees still do routine annual market valuations for SMSF financial statements — that obligation is unchanged, but there is no special CGT valuation requirement at 1 July 2027.)
4. Trust distributions to SMSFs. The reform’s new rules for trusts apply at the trust level from 1 July 2027 alongside everyone else — there is no separate 2028 trust phase in the final law. Distributions received by an SMSF continue to be taxed under the fund’s own framework.
5. The one new super rule: the LRBA restriction (Schedule 5). Covered next — this is where trustees actually need to act.

New: SMSF borrowing restricted to business real property from 10 August 2026

The Greens’ price for passage included a super-specific measure that has nothing to do with the CGT discount but lands squarely on SMSF property strategies. Schedule 5 of Act No. 49 of 2026 provides:

• From 10 August 2026 (45 days after royal assent), a new limited recourse borrowing arrangement (LRBA) over real property may only be made if the property is business real property — broadly, property used wholly and exclusively in one or more businesses (the same definition SMSF trustees already know from the related-party acquisition rules).
• Residential investment property can no longer be purchased under a new LRBA. The classic geared-residential-apartment-in-an-SMSF strategy is closed for new arrangements.
• Existing LRBAs are grandfathered, and refinancing an existing arrangement does not breach the restriction — trustees with current loans can refinance for a better rate without losing grandfathered status.
• Ungeared purchases are unaffected: an SMSF that buys residential property without borrowing remains subject only to the ordinary SIS Act rules (sole purpose test, in-house asset limits, no acquisition of residential property from related parties).

Who needs to act:

• Trustees mid-way through a geared residential purchase — the arrangement must be in place before 10 August 2026. Talk to your lender and lawyer about whether your contract and loan documentation will be executed in time; a purchase that misses the deadline cannot proceed under an LRBA.
• Trustees planning future geared property inside super — the pipeline is now business real property only (commercial premises, farms, the business owner’s own premises leased back to the business at market rent).
• Small-business owners — the classic “SMSF buys the business premises under an LRBA, leases it to the business” strategy is explicitly preserved. Business real property remains eligible.

Trusts note — the 30% minimum applies to trusts from day one

A quiet correction to earlier commentary: the final law applies the new regime to trusts and partnerships from 1 July 2027, the same start date as individuals — not via a delayed 2028 trust-distribution phase. If your SMSF sits alongside a family trust in your structure, the trust’s CGT position changes on 1 July 2027 while the SMSF’s does not. That asymmetry is worth a structural review with your adviser.

Planning levers for SMSF trustees

With the legislation settled, there are six planning levers worth considering.

Lever 1 — Don’t crystallise SMSF gains because of the reform

The final law confirms the reform targets individual, trust and partnership CGT — not super. Crystallising a long-held SMSF gain before 30 June 2027 to “lock in” the current treatment achieves nothing: the same 10% effective rate applies after the date. Sell when the investment case says sell.

Lever 2 — Plan pension-phase transitions on their own merits

If a member is at or near preservation age (60) with a condition of release in sight, transitioning to pension phase moves the supporting assets to 0% tax — the same powerful lever it has always been. The reform adds no deadline pressure: there is nothing reform-related to beat by 1 July 2027 inside super. The date that DOES carry deadline pressure is 10 August 2026 for any planned geared residential property purchase (see the LRBA section above).

For members with balances near the Transfer Balance Cap ($2.0m as of 1 July 2025), respect the cap — pushing more than the TBC into pension phase generates an excess transfer balance with its own tax consequences. Most member balances comfortably fit within their personal TBC, so this isn’t usually the binding constraint.

Lever 3 — Consider contribution timing

Concessional and non-concessional contributions are tax-treated at the time of contribution, not at later disposal. They aren’t affected by the CGT reform. What HAS changed is the relative attractiveness of the destination: from 1 July 2027, assets held personally face indexation + 30% minimum while the same assets inside accumulation-phase super keep the 10% effective CGT rate. For members with contribution-cap headroom and long horizons, the asset-location argument for super strengthened.

Practical: contribution caps didn’t change. Use the Superannuation Calculator to model the long-term effect of different contribution levels. The cap interactions (concessional $30k/yr; non-concessional $120k/yr or $360k bring-forward in 2025-26) are unaffected.

Lever 4 — Review concentrated positions on investment merits, not reform fear

If your SMSF holds a single asset that has appreciated dramatically — a long-held BHP/CBA parcel, an early CSL position, a property bought before 2010 — the reform gives no new tax reason to sell or hold it. The 10% effective rate on disposal is confirmed. Assess the position on concentration risk alone.

Lever 5 — Compare asset location for new investments

For NEW money, the reform reshapes the personal-vs-super comparison by asset type. High-growth assets held personally are hit hardest (indexation shelters little; minimum tax floors the rate), so the super wrapper’s advantage is biggest there. Slow-growth defensive assets fare tolerably under personal indexation, so location matters less. Model both locations before defaulting to personal holdings.

Lever 6 — Run side-by-side calculator scenarios before any major rebalance

Before a >$50k CGT event, compare the in-fund outcome against the personal-holding counterfactual:

• SMSF: use the Capital Gains Tax Calculator with the SMSF effective rate (10% on discounted gains, 15% on undiscounted).
• Personal: run the same disposal through the reform engine at your marginal rate to see the deemed-sale split, indexation and minimum-tax outcome.

The gap quantifies what the super wrapper is worth on that asset — useful for future contribution and structuring decisions.

Linked calculators

Hero — model your super balance and projected tax: Superannuation Calculator — projects your SMSF or APRA-fund balance over time with accumulation- and pension-phase tax modelling.

Model individual CGT under the reform (with SMSF rates): Capital Gains Tax Calculator — supports the marginal rate input that you can set to 15% to approximate SMSF accumulation-phase outcomes.

Model the Division 296 tax on balances above $3m: Division 296 Super Tax Calculator — for members with balances at or near $3m, the Division 296 layer compounds with any CGT reform impact.

What is unchanged

These super tax settings are NOT affected by the legislated CGT reform:

• The 1/3 CGT discount (33 1/3%) for complying super funds — retained in the final law; the 10% effective rate on accumulation-phase gains held > 12 months continues.
• Pension-phase exemption — earnings on assets supporting a retirement income stream remain 0%-taxed up to the Transfer Balance Cap. Both income and capital gains.
• Transfer Balance Cap ($2.0m as of 1 July 2025, indexed) — unchanged.
• 15% income tax rate on accumulation phase — unchanged.
• Concessional and non-concessional contribution caps — $30k and $120k respectively for 2025-26, unchanged by this reform.
• Division 293 high-income contribution tax ($250k threshold) — unchanged.
• Division 296 large-balance tax ($3m threshold, extra 15%) — unchanged; sits on top of any SMSF-level CGT outcome.
• Preservation age rules — unchanged. Age 60 for everyone born from 1 July 1964 onwards.
• In-house asset rules and prudential restrictions on SMSF investments — unchanged, with one exception: the new Schedule 5 restriction of new real-property LRBAs to business real property from 10 August 2026.

Sources

• Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026) — CGT reform for individuals, trusts and partnerships (super funds excluded) and Schedule 5 SMSF LRBA business-real-property restriction — and Income Tax Rates Amendment (Tax Reform No. 1) Act 2026 (Act No. 50 of 2026). Passed 25 June 2026; royal assent 26 June 2026.
• Parliament of Australia — bill homepage and Senate amendments (Government sheet AU131; Greens sheet 3886): aph.gov.au.
• Income Tax Assessment Act 1997, Division 295 (taxation of superannuation entities), Subdivision 295-F (pension-phase exemption), section 115-100 (1/3 SMSF discount).
• Income Tax Assessment Act 1997, Part 3-1 (capital gains and losses) — the framework the reform amends for individual taxpayers.

Related reading

• 50% CGT Discount Reform: Cost Base Indexation + 30% Minimum Tax from 1 July 2027 — master article covering the reform across all asset classes for individuals.
• CGT Reform for Property Investors — investment property, new-dwelling discount choice.
• CGT Reform for ASX Share Investors — parcel matching, DRPs, ESS shares.
• CGT Reform for ETFs and Managed Funds — AMIT cost-base adjustments, distributed gains.
• CGT Reform for Crypto — Bitcoin/ETH parcel matching, staking rewards.
• Small Business CGT Concessions After 2027 — retained 15-year exemption, retirement exemption, active asset reduction.
• Budget 2026 Explained: Winners and Losers — full Budget breakdown.