Age Pensioners Escape 30% CGT Hike Under New Budget Rules, June 03

Australia’s 2026 Federal Budget proposes a 30% minimum capital gains tax starting July 2028, but age pensioners and other Centrelink income support recipients will be exempt. The exemption applies to anyone receiving age pension, disability support, carer payments, or JobSeeker at the time of asset sale. The changes are still subject to consultation and have not yet become law.

Who Gets the Exemption

Centrelink income support recipients are exempt from the 30% minimum tax rate when they sell assets. This includes age pensioners, people on disability support pensions, blind pensions, carer payments, and JobSeeker recipients. The exemption applies at the time of sale, not based on overall income level.

The exemption does not extend to holders of concession cards like the Commonwealth Seniors Health Card or Low Income Health Card. Treasurer Jim Chalmers announced the exemption as part of the Budget on 28 May 2026.

How the Tax Works Before and After

Until 30 June 2027, the current 50% capital gains discount applies to all taxpayers. If a pensioner sells an investment property before this date, 50% of the gross profit is included in taxable income and taxed at the person’s marginal rate. From 1 July 2027, an inflation-indexed calculation method replaces the 50% discount.

From 1 July 2028, the 30% minimum tax kicks in for most taxpayers. Centrelink recipients remain exempt from this minimum rate but still pay tax at their marginal rate if their total taxable income exceeds thresholds like AUD 32,773.

Why This Creates a Tax Planning Incentive

The exemption has sparked criticism because it may encourage higher-income earners to claim a part-pension to avoid the 30% minimum tax. Centrelink recipients are exempt from the minimum 30% tax, while foreign investors and superannuation funds often pay lower rates than local individuals.

Meanwhile, foreign investors and superannuation funds win out under the CGT changes, widening the tax gap between different investor types. The government framed the changes as supporting younger Australians and housing affordability.

Impact on Investment Decisions

The new tax rules are already changing how Australians view property investment. Some investors now consider shares and exchange-traded funds more attractive than rental properties, given the higher tax burden on property gains. Superannuation contributions have also become more appealing due to tax advantages, though contributions are capped at AUD 30,000 per financial year until 30 June 2026, rising to AUD 32,500 after.

The changes remain proposals and are not yet law. Consultation is ongoing before final implementation.

Final Thoughts

Age pensioners and Centrelink recipients dodge the 30% minimum CGT from July 2028, but the exemption may create tax planning incentives that work against the government’s stated goal of fairness. Investors should monitor consultation outcomes before making long-term asset decisions.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.