Age Pension and the new 30% CGT rule:
who's exempt from 2027

What is the 2027 CGT change?

Announced in the 12 May 2026 Budget, the change is now law: the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026) passed Parliament on 25 June 2026 and received Royal Assent on 26 June 2026. For Australian resident individuals it does two things to capital gains accruing on or after 1 July 2027:

• The 50% discount is replaced by indexation. The cost base is indexed for inflation for the period the asset is held from 1 July 2027 (s 110-36(1A)), and the real gain is taxed in full at ordinary rates. Investors in eligible new residential builds can choose the 50% discount instead.
• A 30% minimum tax applies to the gain. If ordinary tax on the gain comes to less than 30% of it, extra income tax tops it up to 30% (Division 119). New residential builds and affordable housing are outside the minimum tax.

Assets held on 30 June 2027 are treated as sold just before, and reacquired on, 1 July 2027. The gain up to that date is worked out under the old rules, including the 50% discount, and is deferred until the asset is actually sold.

Sources: Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Schedule 1, Division 119 and Subdivision 112-E); ATO — Reforming negative gearing and capital gains tax ("These measures are now law").

What is the income-support (Centrelink) exemption?

Section 119-15 switches the 30% minimum tax off for anyone who receives a listed payment at any time during the income year in which the gain is made. The payment does not have to be current on the day of sale, and the Act sets no minimum amount, so a small part-pension received during the year qualifies. The listed payments are:

• Social Security Act 1991: Age Pension, Austudy, Carer Payment, Disability Support Pension, Double Orphan Pension, JobSeeker Payment, Parenting Payment, Special Benefit, Youth Allowance.
• Other social support: Family Tax Benefit, Stillborn Baby Payment, Farm Household Allowance, Parental Leave Pay, ABSTUDY living allowance.
• Veterans: age service pension, carer service pension, income support supplement, invalidity and partner service pensions, veteran payment, certain disability pensions under the Veterans' Entitlements Act, and the Special Rate Disability Pension and related payments under the MRCA.

The exemption removes only the 30% minimum. The gain is still taxed at ordinary rates, and for gains accruing from 1 July 2027 that means the indexed gain in full, without the 50% discount.

Source: Treasury Laws Amendment (Tax Reform No. 1) Act 2026, s 119-15 (inserted into the ITAA 1997); Services Australia's Age Pension page for eligibility.

The sharp divide — pensioner vs self-funded retiree

Two Australians with identical assets can face different tax outcomes purely based on whether they receive a listed payment during the income year of the sale. The table below illustrates how each path applies to gains accruing from 1 July 2027 — population estimates are from publicly reported Department of Social Services figures. In practice the gap is widest for someone with little other taxable income — such as a self-funded retiree whose income is a tax-free super pension — selling an asset with a modest gain. On large gains, ordinary rates on the gain already exceed 30%, and the two paths end up close or identical.

Illustrative comparison of how the rules apply. Individual outcomes depend on circumstances — verify with a registered tax agent.

Am I likely on the exempt or exposed side?

The exemption depends on whether someone receives a listed payment at any time during the income year in which the gain is made. For the Age Pension specifically, the eligibility factors are:

• Age — at least 67 (the qualifying age has been set at 67 since 1 July 2023).
• Residency — Australian resident and physically in Australia on the day of claim; 10 years of residency (with at least 5 of those continuous) in most cases.
• Income test — assessable income from work, financial assets, and other sources, deemed where applicable.
• Assets test — assets other than the principal home (which is exempt).

Thresholds for the income and assets tests are indexed quarterly. Current figures are published at Services Australia — Age Pension eligibility.

These eligibility factors describe how the system determines an outcome. They do not constitute advice on what to do.

See how the paths compare for your situation

The illustrator below shows the directional difference between the two paths for a hypothetical asset sale. The output is an illustrative range based on the inputs chosen, not a calculation of actual tax owed.

What this does not change — and two things it does

• Main residence exemption preserved. The principal place of residence remains exempt from CGT under the standard ATO rules. That matters most when a home is sold to pay for an aged care home: the sale is CGT-free, but the proceeds then count in full in the aged care means test, where the unsold home counted only up to a cap. The aged care fees calculator shows both cases.
• Gains accrued before 1 July 2027 keep the old rules. Assets held on 30 June 2027 are treated as sold and reacquired on 1 July 2027. The gain up to then keeps the 50% discount, and is taxed only when the asset is actually sold.
• Deeming rates context. Deeming rates rose on 20 March 2026 to 1.25% (lower) and 3.25% (upper), and rose again on 20 September 2026 to 1.75% and 3.75% (announced 20 August 2026). Deeming affects the Age Pension income test but is separate from the CGT change.
• Changed — the 50% discount. For gains accruing from 1 July 2027 it is replaced by cost base indexation for individuals, trusts and partnerships, whether or not the owner is exempt from the 30% minimum. Eligible new residential builds can still choose the discount.
• Changed — pre-CGT assets. Assets acquired before 20 September 1985 are brought into the system from 1 July 2027: the gain up to 30 June 2027 is disregarded, but growth from 1 July 2027 is taxable when the asset is sold (s 112-175).

Sources & further reading

• Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026, Royal Assent 26 June 2026) — primary source for the 30% minimum tax, the s 119-15 exempt payments, indexation and the 1 July 2027 transition.
• ATO — Reforming negative gearing and capital gains tax (status and start date).
• Treasury — Budget Papers (the 12 May 2026 announcement).
• ATO — Capital Gains Tax (current CGT rules and the main residence exemption).
• Services Australia — Age Pension (eligibility, income and assets tests, current thresholds).
• Services Australia — Income support payments (what each listed payment is and who can get it).

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