ACTION NEEDED BEFORE 1 JULY 2027
The 50% Capital Gains Tax discount that has protected Victorian farm owners for over 25 years changes on 1 July 2027 — but not in the way most people assume. This is not speculation — it is federal legislation. The gain you’ve already made stays protected, permanently, provided it’s properly documented before that date.
The 2026 Federal Budget has fundamentally altered how capital gains are taxed on the sale or transfer of land in Australia. Here is what is going away — and what replaces it.
50% CGT discount applies to all assets held longer than 12 months. If you sell your farm, only half your capital gain is included in your taxable income.
Pre-1985 assets are completely CGT exempt — that exemption ends on 1 July 2027.
Small business CGT concessions remain available and can reduce your bill further.
50% discount applies only to gains built up before 1 July 2027 — permanently protected once documented. New growth from that date is taxed under cost base indexation and a 30% minimum tax rate.
Pre-1985 absolute exemption ends. Any gains accruing after 1 July 2027 will be taxed under the new rules.
Negative gearing on established residential dwellings on farm (farmhouses, worker cottages) is restricted for purchases made after 7:30pm AEST, 12 May 2026.
These are illustrative examples only. They are not tax advice. But they show what a defensible valuation is actually worth. Both examples use the 45% marginal tax rate.
You fall back on whatever apportionment formula the ATO ultimately prescribes to split old gains from new — likely a less favourable outcome than an actual valuation, especially on land that hasn’t appreciated evenly.
You fall back on whatever apportionment formula the ATO ultimately prescribes to split old gains from new — likely a less favourable outcome than an actual valuation, especially on land that hasn’t appreciated evenly.
Illustrative examples for educational purposes only. Not financial or tax advice. Individual outcomes depend on your holding structure, eligibility for small business CGT concessions, and personal tax circumstances. Always consult a qualified tax adviser before making decisions.
If you are buying or selling rural property in Victoria, the rules have changed. Here are direct answers to the most critical questions facing landowners and agribusiness investors today.
I am thinking of selling my farm. What is the urgency with the new Capital Gains Tax rules?
Only gains you make from 1 July 2027 onward are affected — those will be taxed under a new system: cost base indexation plus a 30% minimum tax rate. The 50% discount on gains you’ve already made is preserved, permanently, no matter when you eventually sell.
If you own a pre-1985 asset, your absolute exemption ends on 1 July 2027 — any growth in value after that date becomes taxable for the first time. But you do not need to sell or transfer before then to protect what you’ve already got. What you need is a defensible, independent valuation dated at or near 1 July 2027 — that figure becomes the reference point separating your protected historical gain from any future taxable growth.
Without a defensible valuation on record, you fall back on whatever formula the ATO ultimately prescribes for splitting old gains from new. The main residence exemption for your family home on the farm, and the small business CGT concessions, remain unchanged.
I own a farm and my primary residence is also located on the same property. Am I CGT exempt?
The main residence exemption will continue to apply to your family home for CGT purposes. However, the remaining acreage is a commercial asset.
The gain that’s already accrued on that farmland keeps the 50% discount permanently, regardless of when you eventually sell — but only if there’s a defensible valuation on record at 1 July 2027. Any further growth in value after that date is what falls under the new cost base indexation and 30% minimum tax rules. The exemption covers the house. It does not cover the paddocks.
We hold our farm in a family discretionary trust. Will the new 30% minimum tax apply to us?
A 30% minimum tax will apply to discretionary trusts from 1 July 2028. But here is the critical distinction for our industry: primary production income from farms is specifically excluded.
For example: your family discretionary trust earns $200,000 this year. $150,000 comes from selling livestock and grain (primary production). $50,000 comes from an off-farm residential investment portfolio. The $150,000 primary production income is completely exempt from the new minimum tax. Only the $50,000 investment income is caught by the 30% rate.
If you need to restructure off-farm assets out of your discretionary trust, the government is providing a 3-year rollover relief window starting 1 July 2027 to move into a company or a fixed trust without triggering a CGT event. This window is limited. Use it.
I am looking to acquire a farm, zoned farming, with some cattle income. Do I need to pay Victorian Land Tax?
Usually, no. Primary Production Land (PPL) is generally exempt from land tax in Victoria. However, the State Revenue Office enforces very different requirements depending on the exact location of the property.
The SRO distinguishes heavily between land located wholly outside Greater Melbourne and land situated within Greater Melbourne and urban zones. If your property is in an urban zone, the requirements to secure the PPL exemption are significantly stricter. You must demonstrate the land is being used for a genuine commercial primary production business — not a lifestyle hobby with a few cattle.
Get this wrong and you could face a significant and retroactive land tax liability. Get clarity before you sign anything.
Get an independent valuation of your land before 1 July 2027.
This locks in today’s value as the reference point that separates your protected historical gain from future taxable growth. Without it, you fall back on the ATO’s own apportionment formula to estimate that split — likely a less generous outcome than an actual valuation.
We can arrange a formal valuation on your behalf.
Call us and we will connect you with a registered valuer who understands farming. The valuation must be defensible — not a rough estimate. It will be on record with the ATO, and a general residential valuer is simply not adequate for rural land.
Speak to your tax adviser about your specific position — now, not later.
Small business CGT concessions — including the 15-year exemption and the retirement exemption — may significantly reduce your exposure further. These require planning in advance and cannot be applied retroactively. The window to act is narrowing.
Want to run your own numbers first?
A free calculator covering CGT, land tax and stamp duty for every Australian state is available at propertytaxcalculators.com.au.
I have spent my career working with Victorian and Tasmanian farming families on transactions that involve some of the most significant assets they will ever own. The CGT changes represent the most material shift in rural property taxation I have seen in over two decades.
The farms that will be hurt most are the ones where the owners assumed someone else was watching the deadline — their accountant, their solicitor, their financial planner. The reality is that no one is going to chase you. That responsibility sits with you.
Conversation is the currency of success in real estate. If you need to understand where you stand — and what your options are — let us talk.
Whether you are considering selling, planning a succession transfer, or simply want a defensible valuation on record before 1 July 2027 — reach out. No obligation. Just a straight conversation about what this means for you.
Jason Hellyer — Director & Principal, Ray White Rural Victoria & Tasmania | Australian Farm Leasing
This page is provided for general informational purposes only and does not constitute financial, taxation or legal advice. The examples shown are illustrative only. Individual circumstances vary. Ray White Rural Victoria recommends you seek independent advice from a qualified tax adviser, solicitor and/or financial planner before making decisions regarding the sale, transfer or restructuring of property assets.