The 30% minimum tax on capital gains: who pays it, who's exempt and what it costs

Who pays the 30% minimum tax?

Australian resident individuals pay the 30% minimum tax when the normal income tax on their capital gains from 1 July 2027 comes to less than 30% of those gains. In practice that means people whose other taxable income (before the gain) is under $45,000in the year they sell, and who don't receive an exempting payment such as the Age Pension that year.

A capital gain is the profit when you sell an investment — shares, ETF units, crypto or an investment property — for more than you paid. Until now, gains on investments held for over 12 months were halved before tax (the 50% CGT discount). Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, gains made from 1 July 2027 instead have their cost base raised for inflation (indexation), and then this minimum tax applies.

Why under $45,000? In 2027–28 the first $18,200 of income is tax-free and the next dollars up to $45,000 are taxed at 14%. Above $45,000 every dollar is taxed at 30% or more, so a gain sitting there already meets the floor. The groups this catches are people with a low-income year:

• →Early retirees (FIRE) living off investments outside super before age 60
• →People on an unpaid career break or sabbatical
• →Students and part-year workers, such as someone who starts work in March
• →Self-funded retirees whose taxable income is low because super pension income is tax-free

Only individuals pay it. Super funds (an effective 10% or 15% on gains) and companies are unchanged. Capital gains passed on by a trust — including the capital gains part of ETF distributions — count for the person who receives them.

How is the top-up worked out?

The top-up is 30% of your capital gains from 1 July 2027, minus the normal income tax those gains add to your bill, rounded down to the dollar. If the result is zero or less, there is no top-up. The comparison uses tax at the normal rates only — before tax offsets and without the Medicare levy.

Worked example (2027–28 rates). Mia stopped full-time work at 44. In 2027–28 her taxable income from dividends and interest is $20,000. She sells ETF units with a $45,000 gain made after 1 July 2027 (after indexation). She receives no Centrelink payments.

Mia's tax on the gain becomes $13,500 instead of $9,500 — exactly 30%. The Medicare levy is charged on top as usual. If she had received even one JobSeeker payment during 2027–28, the top-up would not apply that year.

How much top-up at different incomes?

At 2027–28 rates the top-up ranges from $0 to $9,748 a year. It is largest for someone with no other income and shrinks as other income rises, reaching $0 once other taxable income is $45,000 or more. The table shows the extra tax for three sizes of post-1 July 2027 gain.

Assumes Australian residency, no exempting payment, no gains from before 1 July 2027 and no deductible gifts. "Other taxable income" is everything else on the tax return — wages, dividends (including franking credits), interest and rent. Above $45,000 the top-up is $0 at every gain size.

Notice the cap: with no other income, a $45,000 gain and a $100,000 gain both attract $9,748. That figure is 30% of the tax-free $18,200 plus the gap between 30% and 14% on the rest of the income up to $45,000. Every gain dollar beyond that is already taxed at 30% or more.

Which payments make you exempt?

You are exempt from the 30% minimum tax for a whole income year if you receive a listed government payment at any time in that year. The list in section 119-15 of the Act includes the Age Pension, JobSeeker, Disability Support Pension, Carer Payment, Parenting Payment, Youth Allowance, Austudy, Family Tax Benefit, Parental Leave Pay and some veterans' pensions.

Concession cards on their own — such as the Commonwealth Seniors Health Card — are not on the list. The exemption only switches off the top-up; normal tax on the gain still applies.

Does it touch gains made before July 2027?

No. For investments you already own, the law treats them as sold just before 1 July 2027 and bought back on that day. The gain up to then — the deferred pre-2027 gain — keeps the 50% discount (if held for 12 months by then) whenever you sell, and it is left out of the 30% minimum tax entirely.

So if you bought ETF units in 2020 and sell them in 2030, only the growth from 1 July 2027 onwards is measured against the 30% floor. The pre-2027 part is still added to your taxable income in the year you sell, though, which can lift your normal tax rate on the post-2027 part — and a higher normal rate means a smaller top-up. How the split is worked out is covered in the 30 June 2027 CGT cut-off guide.

What does it mean for early retirement and selling ETFs?

For gains made from 1 July 2027, a low-income year no longer means near-zero tax on them. Before the change, someone with no other income could realise about $36,400 of long-held gains tax-free, because only half was taxed. From 2027, a post-2027 gain of that size with no other income attracts a top-up of $8,372.

Facts that shape the numbers for people drawing down a portfolio outside super:

For a FIRE plan, that can mean a little more tax in the years between leaving work and reaching super at 60. The FIRE number calculator shows how withdrawals and savings add up; the CGT 2027 calculator shows the tax on a particular sale. A registered tax agent can confirm how the rules apply to you.