Capital Gains Tax (CGT) sits behind every investment decision — when to sell, how to structure, how long to hold. For self-managed super fund (SMSF) trustees, the rules have always been more favourable than for individuals. From 1 July 2027, that gap is set to widen sharply.
The 2026 federal budget proposed a major overhaul of how individuals pay CGT on assets held outside super. Inside super — including SMSFs — nothing changes. Understanding the mechanics is now more important than it’s been in years.
How CGT works in an SMSF
Capital gains aren’t taxed at a separate rate. When an SMSF disposes of an asset, the gain is added to the fund’s assessable income and taxed at the super fund rate. Two features make this powerful: the flat 15% concessional rate (well below most individuals’ marginal rate), and a one-third discount on assets held for at least 12 months.
For assets held less than 12 months, the full gain is taxed at 15%. For assets held longer, only two-thirds of the gain is taxed — bringing the effective rate down to 10% in accumulation phase. In pension phase, capital gains supporting a retirement-phase pension are tax-free entirely (more on that below).
What the 2026 budget changed
The proposed reforms target capital gains on assets held outside super: property, shares, and trust assets. From 1 July 2027, the current 50% individual CGT discount is set to be replaced with two changes working in opposite directions:
- Cost base indexation. Cost bases are adjusted for inflation, so only the real (above-inflation) gain is taxed.
- A 30% minimum tax on the indexed gain.
Recipients of means-tested income support payments will be exempt from the minimum tax, and all four small business CGT concessions are preserved. For the full picture of the broader reforms, see our 2026 Federal Budget summary.
For SMSF trustees, the headline is simple: the rules that make CGT inside super so favourable aren’t changing.
SMSF vs individual CGT
A $100,000 capital gain on shares held five years illustrates the gap. The SMSF figures are precise. The individual post-2027 figure depends on inflation over the holding period and the proposal’s final legislative form — but the directional shift is clear.
| Holder | Tax payable |
|---|---|
| SMSF in pension phase | $0 (tax-free under ECPI) |
| SMSF in accumulation phase | ~$10,000 (1/3 discount, 15% rate) |
| Individual, current rules, top marginal rate | ~$23,500 (50% discount, 47% marginal) |
| Individual, post-1 July 2027 | Calculated on the inflation-indexed real gain, minimum 30% rate. For high-income earners on long-held assets, materially higher than today. |
The accumulation-phase SMSF advantage already existed. Whatever the precise post-2027 individual figure turns out to be, the differential is set to widen — most sharply for high-marginal-rate investors holding growth assets.
The zero-tax window: pension phase
Pension-phase exempt current pension income (ECPI) is the most powerful CGT tool an SMSF has. Capital gains realised on assets supporting a retirement-phase pension are not taxed at all.
The catch is the transfer balance cap — $2.1 million per member from 1 July 2026, and periodically indexed — which limits how much of a member’s super can support a tax-free pension.
Two approaches matter for trustees:
- Timing. Hold growth assets until a member commences a pension, then dispose of them in pension phase. Often most relevant for property or large equity positions accumulated over decades.
- Segregated vs unsegregated. Some SMSFs benefit from explicitly segregating pension assets; most use the proportional method. The right choice depends on the fund’s structure, the mix of accumulation and pension balances, and trustee preferences.
Strategies like these need to be set up well before the asset sale. Our SMSF administration team handles the compliance and reporting so trustees can focus on the strategic decisions.
Strategies to reduce SMSF CGT
A few practical levers SMSFs routinely use:
- The 12-month rule. Selling just before the 12-month anniversary forfeits the one-third discount. For close calls, timing matters more than it looks on paper.
- Loss harvesting and carry-forward. Capital losses can offset capital gains realised in the same year. Net capital losses can be carried forward indefinitely against future capital gains, so reviewing the fund’s loss balance each year creates flexibility on when to crystallise gains.
- Condition-of-release planning. The most powerful CGT lever is sequencing: hold growth assets through accumulation, commence a pension, then dispose of them in pension phase where the gain is tax-free up to the transfer balance cap.
These work best as a coordinated strategy across the whole portfolio — which is where integrated advice across SMSF strategy and superannuation planning earns its keep. Contact our SMSF team to review your fund’s CGT position ahead of the 2027 changes.
Should you hold more growth assets in super?
The widening CGT gap between super and non-super is a strong argument for using available contribution caps to shift growth assets into super, where the tax rules haven’t changed. The right answer always depends on personal circumstances, but the structural case is now stronger than it’s been in years.
The constraints are real: concessional and non-concessional contribution caps, the bring-forward rule, total super balance limits, and the transfer balance cap all shape what’s possible. There’s also the trade-off of locking money up until preservation age. Asset location decisions should be made as part of an overall financial plan, not in isolation.
If you’re rethinking how your investment portfolio is structured ahead of the 2027 changes, an integrated review of your SMSF, super, and non-super assets is the right starting point. Our wealth creation and SMSF teams work together on exactly these decisions.