Will the 2027 CGT changes hurt your retirement?
From 1 July 2027 the 50% capital gains tax discount is abolished. We modelled it: for whether your money lasts, the effect is minimal — though a large estate does take a real trim.
In the 2026-27 Federal Budget the government announced it will abolish the 50% capital gains tax discount from 1 July 2027, replacing it with CPI cost-base indexation and a 30% minimum tax on realised gains. The main-residence exemption is untouched, and assets you already hold keep the discount for the gains built up before that date. Naturally, every investor is asking: does this wreck my retirement plan?
We can answer it directly, because our engine already treats the CGT discount as a dial. Below is the same set of plans run under today's 50% discount and again with the discount switched off — a fair proxy for the post-2027 world.
How to read this. Our engine works in today's dollars, so taxing the whole real gain (no discount) closely mirrors the new indexation regime. It doesn't yet add the 30% floor — which can actually raise tax for a low-income retiree whose rate was below 30% — so treat these as a close, honest estimate rather than the exact post-2027 figure. Success = the share of market scenarios (real 1928–2025 sequencing) where the money reaches age 90.
1. Will your money still last? — barely a flicker
Chance the money reaches 90, under the 50% discount (now) vs no discount (post-2027).
| Plan | Now (50%) | Post-2027 (0%) | Change |
|---|---|---|---|
| Retire 45 · $40k on $1M | 81% | 81% | — |
| Retire 45 · $80k on $2M | 54% | 53% | -1 pts |
| Retire 52 · $70k on $1.9M | 86% | 86% | — |
| Retire 60 · $55k on $1M | 87% | 87% | — |
Why so small? A retiree's tax is dominated by the dividend yield, which is taxed either way; the market runs that actually threaten a plan (early crashes) leave little capital gain to tax; and modest retirees sit under the tax-free threshold regardless.
2. But a large estate does take a trim
The tax bill is real — it just isn't what decides whether you run out. Lifetime outside-super tax and the wealth left at 90 (today's dollars, central projection).
| Portfolio | Lifetime tax: now → post | Wealth at 90: now → post |
|---|---|---|
| $1.5M portfolio, retire 52 | $101,399 → $153,114(+51%) | $2.17M → $2.08M(-4%) |
| $4M portfolio, $180k/yr | $711,766 → $874,822(+23%) | $3.25M → $2.96M(-9%) |
So the honest picture: a high-net-worth portfolio pays meaningfully more tax and leaves a smaller estate — but it was never at risk of running out, so the change is a wealth-transfer, not a threat to the retirement.
The takeaway
If your question is “will I run out of money?”, the 2027 CGT change barely moves the needle — dividends drive a retiree's tax, and the bad markets that actually sink a plan don't generate the gains being taxed. If your question is “how big an estate will I leave?”, a large personal portfolio takes a real ~4–10% haircut. Two more things worth knowing: your home stays exempt, and assets you already hold are largely grandfathered on the gains built up before July 2027. Property investors face a bigger, separate story (negative gearing changes too).
General information only — not financial or tax advice. Figures are estimates in today's dollars from the stated assumptions, model the discount removal as a proxy for the full (indexation + 30%) regime, and are not a guarantee of future outcomes.
Sources: Budget 2026-27 — Tax reform; ATO — CGT & negative gearing reform; Treasury Laws Amendment (Tax Reform No.1) Bill 2026.