11/09/2026
Tax changes disrupt common super retirement strategy
From 1 July 2027, new tax rules will fundamentally change how deductible super contributions can be used alongside capital gains.
For years, the strategy has been relatively simple.
Someone approaching retirement could wait until their income dropped, sell an investment property, shares or another asset, apply the CGT discount, then use unused concessional super caps to make a large deductible contribution.
The contribution deduction reduced their taxable income, which could substantially reduce the tax ultimately payable in a year where a large capital gain was realised.
But from 1 July 2027, that changes...
Australia is introducing a minimum 30% tax rate on most real capital gains accruing from 1 July 2027. At the same time, the existing 50% CGT discount will generally be replaced with inflation-based cost base indexation for those gains.
The important part? A deductible super contribution cannot reduce the capital gain used to calculate that 30% minimum tax.
That creates a problem.
You can still make the deductible super contribution and the deduction can still reduce your taxable income. But if that deduction reduces the tax attributable to the relevant capital gain below the 30% minimum, a new “top-up” tax can apply to bring it back to that minimum.
Once the tax paid on the contribution inside super is also taken into account, the contribution can, in some circumstances, actually result in more tax overall.
This doesn’t mean deductible super contributions are dead. They can still be extremely valuable, particularly where there is sufficient other income such as salary, business income, rent or dividends being taxed at 30% or higher.
The change specifically limits the ability to use a deduction to push the effective tax on a post-1 July 2027 capital gain below 30%.
The new treatment only applies to gains accruing from 1 July 2027. For assets already owned before then, the gain attributable to the period before 1 July 2027 generally retains the existing CGT treatment.
That makes timing, valuations and record keeping increasingly important. Because from 1 July 2027, a strategy that used to save tax could, in some circumstances, cost more.
