G'day.
I try not to write these posts. The property-investor internet already has too many people yelling into a megaphone about whatever the Albanese government did this week, and most of it is nonsense on both sides. But every so often something drops that genuinely deserves a shout — and Treasury's Friday-afternoon exposure draft is one of them.
Here's the short version: the government's promise that existing investors would be fully grandfathered under the CGT changes is quietly narrower in the draft legislation than it was in the May press release. Not "different" in a spin-doctor way. Different in a way that on a normal Brisbane investment property could cost a mum-and-dad investor $84,000 in extra tax on eventual sale.
I am genuinely angry about this one. Let me walk you through why.
What we were told in May
When Treasurer Chalmers announced the CGT reforms on Budget night (13 May 2026), the language was blunt and unambiguous. From the Budget lock-up press pack, verbatim:
"Every investment property acquired on or before 30 June 2027 will retain the full 50% CGT discount for the life of the asset. There are no exceptions."
That was the deal. Buy before mid-2027 and the old rules ride with the property until you sell — whether that's next year or in 2050. It's the promise every accountant, every buyers' agent, and every hopeful young investor has been repeating for two months.
What Friday's exposure draft actually says
The Treasury Laws Amendment (Better Tax Fairness) Bill 2026 exposure draft dropped at 4:47pm Friday 3 July — the classic take-out-the-trash timing. The transitional provision is in Schedule 2, Part 3, section 118-190A. The operative wording:
"The 50% CGT discount continues to apply to a CGT asset that is residential premises, provided the asset was acquired on or before 30 June 2027 and continues to be used by the taxpayer for the same purpose as at the acquisition date."
Read that second clause slowly. "Continues to be used… for the same purpose as at the acquisition date."
That is not what was promised in May. That is a use-condition grafted onto the grandfathering. If your property was originally purchased as an owner-occupier and later converted to an investment (which is how a huge chunk of accidental landlords end up in the game — job moves, blended families, upgrades) — the grandfathering doesn't apply. If it was purchased as an investment and later moved into as a PPOR for a stint, then rented again, same problem. If you did a granny-flat build and it changed the "predominant use" classification — same problem.
Every one of those scenarios was fully grandfathered under the May press release. Every one of those scenarios is arguably not grandfathered under the July draft.
The $84,000 worked example
Take a Brisbane investor — call her Jess — who bought a townhouse in 2019 for $520,000 as her PPOR. In 2023 she moved in with her partner, kept the townhouse, and rented it out. Today it's worth $780,000. She sells in 2030 for $920,000.
Under May's promise (full 50% discount, life-of-asset):
- Nominal gain: $400,000
- Less 50% CGT discount: $200,000 taxable
- At her 39% marginal rate: $78,000 tax
Under the July draft's "same purpose" wording (grandfathering denied because use changed):
- Nominal gain: $400,000
- Less new 35% CGT discount: $260,000 taxable
- At 39%: $101,400 tax
Wait — that's only $23,400 extra, not $84,000. Correct, on that example. But run the same maths on a longer-held, larger-gain property (a Melbourne inner-north house bought in 2011 for $650,000, converted from PPOR to rental in 2018, sold in 2035 for $1.9M) and the delta pushes past $84,000 on a single dwelling. On a two-property portfolio it's easily $150k-plus. This is not a rounding error. This is a policy switch dressed as a technical drafting decision.
If your portfolio is negatively geared today, the annual holding cost also feeds into your eventual CGT position — every non-deducted expense you missed is a dollar you can't add back to the cost base later. Our negative gearing calculator shows the annual after-tax cost at your marginal rate, which is the number you want to know before deciding whether to hold, sell or restructure ahead of 2027.
Why I'm calling this a grab
Because it will affect exactly the cohort Labor swore it wouldn't touch: the accidental landlord. Not the six-property investor with a family trust and an accountant on retainer — that person's structuring already handles it. It's the single mum who kept her first flat when she moved in with a new partner. The retired couple who moved to the coast and rented out the family home rather than selling. The tradie who did a granny-flat build ten years ago.
These are the people who read the May press release, breathed out, and got on with their lives. The July draft moves the goalposts on them specifically, and it does it in language deliberately opaque enough that Treasury can — and will — argue it was always the intent.
If that's the intent: say so publicly. Don't smuggle it in a Friday-afternoon exposure draft.
What to do this week
I'm not writing this to fear-monger — I'm writing it because there's a public consultation window and it closes on 15 August. Concrete steps:
- Pull the acquisition record for every property you own. Contract date, purpose at acquisition (PPOR vs investment), and every subsequent use change. If your property was ever your PPOR, flag it — it's the highest-risk category under this drafting.
- Lodge a submission. Treasury's consultation portal takes submissions from anyone. A one-page letter from an ordinary investor pointing out the mismatch between the May promise and the July drafting is worth more than a hundred lobby-group emails. treasury.gov.au/consultation — search "Better Tax Fairness Bill".
- Talk to your accountant before you do anything. Do NOT sell in panic. The draft is not law. It will change. The point is that it needs to change, and pressure this month is what makes that happen.
- Do not fall for the "sell now" pitch from any buyers' agent or spruiker who's using this news to churn transactions. Anyone who read the draft and reacted with a sell recommendation this week is not reading it carefully.
The bigger pattern
This is the second time in six weeks a Labor property-tax reform has ended up quietly narrower in draft form than it was in press-release form (the first was the SMSF residential carve-out, which I covered here). Two data points isn't a conspiracy — but it is a pattern worth watching.
I'll update this post the moment Treasury clarifies. If you're a PropAlly user and you want a hand pulling your acquisition dates and use-history for a submission, hit reply on the newsletter and I'll do it for you personally this week. This is exactly the sort of thing the platform was built to make easy.
— PropAlly, Brisbane
General information only — not tax, financial or legal advice. This post analyses an exposure draft that is not yet law and may change materially before enactment. Get personal advice from a registered tax agent before acting on anything here.
