July 8, 2026 – 5:01 am
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My wife does not need to file a tax return because her annual income is less than $10,000 and consists entirely of bank interest and stock dividends. We are not eligible for superannuation due to my taxable defined benefit pension. Under the proposed capital gains tax changes, am I correct in thinking that if she sells the shares after June 30, 2027, she may have to pay the new 30 percent minimum capital gains tax even though her income is so low? This hardly seems fair.
You’re right. This is unfair and is another example of unintended consequences arising from the budget. Because your defined benefit pension disqualifies you from the superannuation, your wife misses out on the pension relief offered, even though she has almost no taxable income.
Some pensioners may be receiving a surprise visit from the taxman following the introduction of new CGT laws.Simon Letch
As a result, she could still pay the new 30 percent minimum tax on capital gains made after June 30, 2027, effectively losing the benefits of both the tax-free threshold and the 16 percent tax bracket.
If she held the shares for many years, the profits will be distributed between the periods before and after June 30, 2027, but the calculation will be much more complicated. It would be wise to seek advice on whether to sell before then.
If either of you are under 75, you can also contribute to Super as a non-concessional contribution, with future earnings and profits typically falling outside the proposed rules.
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I have an investment property that I bought in 2004 for $250,000. If I value it on June 30, 2027 at $850,000 to determine the cost basis, and then sell it in 2028 for $850,000 or even $800,000, what happens? This seems like a realistic possibility as property prices are currently falling. The capital gain accrued by June 30, 2027 would be approximately $600,000, meaning taxable income after applying the 50 percent discount would be approximately $300,000.
However, from 1 July 2027, taxable income will be based on the increase in the index. But if the sale price is not higher than the June 30, 2027 valuation, there will be no profit or capital gain after July 1, 2027, and there may even be a loss. In such circumstances, how will real estate be taxed from 1 July 2027?
BDO’s Mark Molesworth says you have two calculations for capital gains tax. The first is profit until June 30, 2027. As you note, this results in ‘deferred profit’ at that date of $600,000 before the CGT discount is applied.
You then make a further calculation of profit or loss from 1 July 2027 to the date of sale. In this case, assuming a lower potential sale price of $800,000, there would be a capital loss of $50,000 over that time period.
Both of these results are considered received in the year you sign the contract to sell the property. So you will have a profit of $600,000 and a loss of $50,000.
Assuming this is the only CGT-impacted asset sold this year, the $50,000 loss after 30 June would reduce the $600,000 profit up to 30 June. This will result in a discounted profit of $550,000 after losses are applied and a taxable profit of $275,000 after the CGT discount is applied.
You’ll pay marginal tax on that $275,000 profit. There is no profit component after June 30, so the 30 percent minimum tax rate rule will not apply.
I am a 75-year-old pensioner who lives alone in my own home and receives a full age pension. My house is worth $1.2 to $1.3 million and I have a $265,000 retirement certificate. I have three children: a 42-year-old son who is about to get married, a 38-year-old daughter who has a partner and a three-year-old child, and an only daughter who is 36 years old.
My 38 year old daughter has offered to demolish my house and rebuild it into a multi-generational home so her family can live with me and help take care of me as I grow older. I like this idea, but I also want my property to be divided equally among my three children and am concerned that such an arrangement may create problems or create a feeling of unfairness. I was also thinking about building a duplex or giving some of the land to my daughter so she could help finance the project. Before I do anything, what issues should I consider, particularly in relation to the superannuation, taxation, ownership, estate planning and ensuring all three children are treated fairly?
Demolition of a family home and rebuilding it can create many problems.Natalie Boog
My first reaction: don’t do it. Based on the information you provided, this proposal creates many more problems than it solves. It will confuse your finances, your home, your estate planning, and your family relationships in ways that will be difficult and expensive to untangle.
You live independently, are financially secure and receive a full age pension. I would not even consider such an arrangement without detailed legal, tax and financial advice.
The first problem is accessibility. Demolition and restoration are expensive, and building a duplex will require significant costs, council approvals and inevitable delays.
Passing on some of your assets to your daughter may also affect your retirement pension under the deprivation rules. It will also complicate ownership, estate planning, and equitable distribution of your assets among your three children.
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I have seen many cases where an adult child has offered to build a family property in exchange for caring for an aging parent. Some succeed, but many don’t. Circumstances change, expectations vary, and family disputes can easily arise.
Unless your circumstances change, I would leave it as is. Your children should make their own housing decisions, and if you need care later, you can consider the options available without complicating your finances and estate planning.
I recently read your comments about minimizing capital gains taxes when transferring shares to children. My wife and I are self-funded retirees with very little taxable income. I was wondering if we could sell our shares while our taxable income is low, pay the capital gains tax, and then buy them back immediately. This would result in a much higher value for the shares, so when our children end up inheriting them after we die, any future capital gains taxes should be much lower. Is there any flaw in this strategy?
Your strategy may work if the sale is genuine. Selling the shares, paying any capital gains tax at the current low tax rate, and then buying them back resets the cost basis to the new purchase price. This can significantly reduce the capital gains tax your children may end up paying if they inherit the shares.
The key point is that the sale must be for a genuine business reason and not simply for tax avoidance purposes. The ATO can challenge so-called ‘wash sales’, where an asset is sold and repurchased primarily to obtain tax benefits. Seek specialist advice before proceeding. It may be easier to buy similar assets, but not the same ones.
Noel Whittaker – author Retirement made easier and other books on personal finance. Questions: noel@noelwhittaker.com.au
- The advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek professional advice tailored to their personal circumstances before making any financial decisions.
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Noel Whittaker, AM, is the author of How to Make Money Easy and many other personal finance books.Connect via X or e-mail.