Capital Gains on Pre-CGT Assets

2026 Budget Series Part 1

Pre-1985 assets will no longer be entirely outside the CGT system.

One of the most notable parts of the proposed CGT transition rules is that they will also apply to legacy assets, including those acquired before 1985. These assets have historically been exempt from capital gains tax because they were purchased before the introduction of CGT.

Under the new transitional approach, that exemption will still apply — but only to gains that accrued before 1 July 2027. In other words, any increase in value on a pre-1985 asset up to that date will remain tax-free.

However, if the asset is held beyond 1 July 2027 and sold later, any gains that accrue after that date will fall under the new CGT rules. going forward; instead, they will effectively move into the new regime from 1 July 2027 onward.

To work this out, taxpayers will need to determine the asset’s value at 1 July 2027, either through a valuation (suggested*) or an ATO-approved formula (yet to be announced). That value will then serve as the starting point for calculating any taxable gain in the future.

If you, a family member or associate are holding an asset from before CGT was introduced, especially if it produces income - we can guide you on what this change could mean.