Updated 16 July 2026
The short answer is yes, retirees may pay capital tax gain (CGT) in Australia but not always.
If you’re approaching retirement or already enjoying it and have investment properties or a share portfolio, this blog is for you. This blog explains when retirees need to pay CGT, the main exemptions available, and how you can plan ahead to reduce the tax you pay.
This blog has been updated to reflect the 2026 Federal Budget CGT reforms. While many of the existing CGT rules remain in place, significant changes will apply from 1 July 2027, with transitional rules for capital gains that accrued before that date.
What is Capital Gain Tax in Australia?
CGT is the tax you pay on the profit when you sell an asset like an investment property, shares, managed funds or a business.
It’s important to know that CGT isn’t a separate tax. Instead, the profit you make (called a capital gain) is added to your income for that financial year and taxed at your marginal tax rate.
Here’s a simple example how CGT works:
If you bought shares for $100,000 and later sold them for $150,000, your capital gain is $50,000. If you owned the shares for less than 12 months, the $50,000 gain is added to your other taxable income such as your investment income and taxed accordingly.
How Capital Gains Tax Works for Retirees?
Capital Gains Tax works the same way for retirees as it does for anyone else. Being retired doesn’t automatically exempt you from CGT. If you sell an investment property, shares, or other assets and make a profit, you may still have a tax obligation.
Here are the main points to keep in mind:
- No age-based exemption for CGT: There’s no special rule that says retirees don’t have to pay CGT. Your age doesn’t change the basic rules.
- Capital gains are added to your income, even as a retiree:
Any profit from selling an asset is included in your taxable income for that financial year. This means it could affect how much tax you pay overall, especially if you have other sources of taxable income like a taxable pension income, employment income, rental income, inetrest, dividends or other investment income. - Exemptions and discounts exist for retirees: Discussed in the next sections.
In short, retirement doesn’t mean CGT disappears. But understanding how it applies and planning around it can help you keep more of your hard-earned money.
What Does a 50% CGT Discount and How Is It Changing for Retirees from 1 July 2027?
The 50% CGT discount has long been one of the most common tax concessions available to Australian investors.
Under the current rules, retirees who own an eligible asset such as an investment property, shares or managed funds for more than 12 months can generally reduce their taxable capital gain by 50% when they sell the asset. This means only half of the capital gain is included in their taxable income and taxed at their marginal tax rate.
What’s Changing from 1 July 2027?
The 2026 Federal Budget reforms have now been legislated. From 1 July 2027, the way many capital gains are calculated will change, although gains that accrued before that date are generally preserved under transitional rules. The key changes include:
- The 50% CGT discount is being replaced. For Australian resident individuals, trusts and partnerships, the general 50% CGT discount is being replaced for post-1 July 2027 gains with an inflation-based cost base indexation method and a 30% minimum tax rate, subject to transitional rules and specific exceptions.
- Cost base indexation will be introduced. For assets already owned before 1 July 2027, transitional rules are expected to preserve the pre-1 July 2027 component of the gain and apply the new method only to gains accruing after that date. For long-held assets, keeping accurate records and obtaining reliable valuations may become particularly important.
- A 30% minimum tax rate will apply to certain post-1 July 2027 capital gains. In broad terms, this is designed to ensure those gains are taxed at no less than 30%, rather than allowing a large capital gain to be taxed at a much lower marginal rate
- Importantly, these changes will only apply to capital gains that accrue from 1 July 2027 onwards. If you’ve owned an investment before this date, any capital gains that accrued before 1 July 2027 will generally continue to be assessed under the existing CGT rules through transitional arrangements. This means many retirees may have part of their capital gain taxed under the current rules and part under the new rules, depending on when the gain accrued.
If you’re planning to sell an investment property, shares or another investment in retirement, understanding which CGT rules apply to your investments could make a significant difference to the amount of tax you pay.
What CGT Exemptions Are Available for Retirees?
While retirees aren’t automatically exempt from CGT, there are situations where you might pay little or no CGT. Understanding these exemptions can help you plan more effectively.
1. Your Main Residence
One of the biggest CGT exemptions is your main residence. If the property you’re selling has been your primary residence, the capital gain is usually fully exempt from CGT. The exemption applies regardless of your age, so retirees benefit just like anyone else.
But there are eligibility conditions you should be aware of:
- Your main residence is generally exempt from CGT, but the exemption may be reduced or unavailable in some situations for example, where part of the property has been rented out, used for business, the land exceeds 2 hectares, or relevant residency conditions are not met.
2. Assets Held in Superannuation (Pension Phase)
Capital Gains from investments held inside a super fund that is in the pension phase are completely tax-free. This means more of your investment returns stay in your portfolio to generate further income.
While the pension-phase status provides tax-free capital gains, it’s important to ensure your super fund is correctly structured and meets all the regulatory requirements to maintain these benefits.
Further, if you have a Transition to Retirement (TTR) pension, the rules for CGT are a bit different from a full retirement-phase pension. Assets in a TTR pension are still considered part of the accumulation phase, so capital gains may be taxed, usually at a reduced rate of 15%.
3. Small Business CGT Retirement Exemption
If you’ve owned a business or business assets, there are CGT concessions available that can make a real difference when you retire and sell part or all of your business.
Small business owners have access to four main CGT concessions, but here, we’ll explore one that’s particularly useful as you approach retirement – the Small Business Retirement Exemption.
This exemption allows you to disregard up to $500,000 in capital gains over your lifetime when you sell qualifying business assets.
- If you’re aged 55 or over: You can generally take the exempt amount tax-free.
- If you’re under 55: The exempt amount must be contributed to your superannuation fund to receive the full tax benefit.
- For business structures such as companies or trusts, there are extra conditions to meet, including how payments are made to concession stakeholders and how records are maintained.
- It’s also possible to combine this exemption with other small business CGT concessions, such as the rollover or 50% active asset reduction, depending on your situation and long-term goals.
- The 2026 reforms also preserve the existing small business CGT concessions. From 1 July 2027, the turnover threshold for the 50% active asset reduction is increasing from $2 million to $10 million, although other small business CGT concessions continue to have their own eligibility requirements.
As you can see, these exemptions can get quite technical, especially when it comes to timing, eligibility, consequences and how super contributions are handled. You also can’t apply every exemption available and combining them comes with additional rules and conditions. That’s why it’s always wise to get specialist financial advice before making any decisions.
4. Pre-CGT Assets
Some assets acquired before 20 September 1985 have historically been treated as “pre-CGT” assets, meaning any capital gain on disposal was generally disregarded. This has been particularly relevant for retirees who have held property, shares, business assets or family assets for many decades.
However, this area is changing under the 2026 Federal Budget CGT reforms. From 1 July 2027, pre-CGT assets will be brought into the CGT regime for gains that accrue after that date. Importantly, this does not mean the entire historical gain becomes taxable. Gains that accrued before 1 July 2027 are generally preserved under the existing rules, while gains arising after that date may be subject to the new CGT rules.
For retirees with long-held assets, this makes record-keeping and valuation especially important. In many cases, it may be necessary to determine the market value of the asset around 1 July 2027, or apply another approved transitional method, so that the pre- and post-1 July 2027 components of the gain can be separated.
It is also important to remember that even under the existing rules, improvements or additions made to a pre-CGT asset after 20 September 1985 may be treated as separate CGT assets in some circumstances. Inherited assets can also have separate CGT rules, so it is important not to assume that an asset is fully exempt simply because it has been in the family for a long time.
Because these rules are technical and the tax outcome can vary significantly depending on the asset, ownership structure and timing of sale, retirees with pre-CGT assets should seek tailored tax and financial advice before making decisions.
What Steps Should You Take to Plan for CGT in Retirement?
1. Review your assets and their structure
Start by listing all your investments like properties, shares, business assets and noting when you acquired them. Next, take a look at how each asset is held. For example, assets held in superannuation may be tax-free if they’re in the pension phase, while personally held assets could be subject to CGT. Understanding both ownership and structure is a key first step in planning for tax-efficient retirement income.
2. Consider the timing of asset sales
CGT is calculated in the financial year you sell an asset. Sometimes, spreading sales over multiple years or waiting until you transition fully into retirement can lower your overall tax bill.
If you’re weighing up whether to sell an investment property before retirement, we’ve covered this in detail in our latest blog: Should I Sell Investment Property Before Retirement?
3. Understand your exemptions and concessions earlier
Whether it’s the 50% CGT discount, pre-CGT exemptions, or small business CGT concessions, knowing what you’re eligible for is key. Each exemption has rules and requirements, so getting clarity early helps you plan smarter.
4. Structure your superannuation wisely
If your investments are in super, the pension phase can make capital gains completely tax-free. Even a TTR strategy can help manage CGT while still earning an income from super.
The key is to structure your super in a way that suits your own situation. Everyone’s retirement goals and financial circumstances are different. So taking a tailored approach can help you make the most of your super while minimising tax.
5. Seek professional advice
CGT isn’t always straightforward. There are a range of exemptions, concessions and rules that can affect how much tax you pay, and with the new CGT changes from 1 July 2027, there’s even more to consider.
Before selling a major investment, it’s worth having a conversation with an experienced retirement advisor. They can help you understand how the rules apply to your situation, explore ways to minimise tax where possible, and make sure your decisions support the retirement you’ve worked hard for.
How Yield Retirement Advisors Can Help You?
At Yield, we have retirement specialists with extensive experience working with retirees from all walks of life. We’ve guided many through the complexities of CGT, helping them make informed decisions, plan effectively, and enjoy retirement with confidence.
Whether it’s structuring your assets, understanding exemptions, or creating a tax-efficient retirement plan, our team can help you navigate the rules and maximise your retirement income.
If you’d like to discuss your situation and plan for CGT in retirement, reach out to us to book your initial consultation with one of our Yield Retirement Advisors.
