From 1 July 2027, the 50% CGT discount is being replaced with cost base indexation and a 30% minimum tax on capital gains for assets held outside superannuation. For higher-income share and ETF investors, this makes superannuation relatively more attractive than it used to be, since gains inside superannuation remain taxed at concessional rates. This case study looks at Superannuation vs ETF investing after CGT changes and shows how one couple, Ben and Claire, could be around $180,000–$200,000 better off at retirement by rebalancing how much they invest inside versus outside superannuation.
Ben and Claire earn $280,000 between them. They own their home, they’re on top of their mortgage, and for the past five years they’ve been putting $2,000 a month into a diversified ETF portfolio outside superannuation. It’s a disciplined, consistent approach, exactly what you’d want to see from a couple juggling two kids and a mortgage.
Superannuation has always felt like a “later” problem for them, something to focus on once the kids are through school and the mortgage is smaller. But with the capital gains tax changes announced in the Federal Budget, now is a good time to take another look at whether that approach still makes sense.
Their portfolio is now worth around $160,000. Of that, $120,000 is what they originally paid in (known as the cost base), and $40,000 is unrealised gains — the profit they’d make if they sold today, on paper but not yet taxed. Once the Australia CGT discount changes takes effect, the maths behind where they build wealth, inside or outside superannuation , starts to look noticeably different.
According to the Treasury’s official Budget 2026–27 tax reform page and the ATO’s guidance on the reform, these changes are now law, though the impact on assets held before the commencement date is limited by transitional rules.
Ben and Claire sit in the 47% marginal tax bracket, meaning that’s the rate of tax they pay on most additional income they earn. Right now, gains on their ETF portfolio are taxed as part of their personal income when sold, with the existing 50% discount reducing the taxable amount. This will change when the CGT changes take effect.
Under the new rules, gains from July 2027 onward are indexed rather than discounted. In simple terms, indexing adjusts the original purchase price for inflation before working out the taxable gain, rather than simply halving the gain the way the current discount does. At their income level, even this indexed gain is still taxed at their full marginal rate of 47%. Running the numbers over the next 20 years makes the impact clear.
If Ben and Claire continue investing $2,000 a month outside superannuation for another 20 years at 7% annual growth:
Here’s where tax planning strategies can make a difference. If they redirect $1,000 of that $2,000 monthly contribution into superannuation via salary sacrifice (an arrangement where money goes from your pre-tax salary straight into superannuation instead of your bank account), keeping the other $1,000 in the ETF portfolio, the picture changes considerably.
The table below sets out the worked comparison over 20 years:
| Detail | Investing Outside Superannuation | Redirecting $1,000/month to Superannuation |
|---|---|---|
| Monthly contribution | $2,000 | $1,000 outside + $1,000 salary sacrificed |
| Tax on contribution | Nil (already-taxed income) | 15% (vs. 47% marginal rate) |
| Annual tax saving on contribution | — | $3,840 ($12,000 × 32%) |
| Tax saving over 20 years (contributions only) | — | $76,800 |
| Tax on investment gains at sale | 47% (indexed gain, post-2027) | 10% (or 0% in pension phase) |
| Estimated balance at year 20 (redirected portion) | Baseline | Approx. $180,000–$200,000 more |
Superannuation contributions made via salary sacrifice are taxed at just 15% going in, rather than their marginal rate of 47%, and any gains inside superannuation are taxed at 10% on sale — or 0% once they’ve retired and moved into pension phase.
Ben and Claire aren’t doing anything wrong. They’re simply building wealth in a structure that’s becoming less tax-efficient, while a structure that’s becoming relatively more attractive sits largely unused. Understanding the CGT implications of this shift is the first step toward rebalancing that mix.
There are limits on how much can go into superannuation each year (known as contribution caps), and the money stays locked away until you reach preservation age, the age at which you’re allowed to access your superannuation, generally around 60.
That’s a genuine constraint with two kids and a mortgage in the picture. The real question isn’t whether to move everything into superannuation. It’s whether the current balance between inside and outside superannuation still makes sense given the new rules.
Weighing up superannuation vs ETF investing is the kind of conversation that looks simple on the surface but has plenty of moving parts underneath:
A debt recycling strategy could also suit a couple in Ben and Claire’s position. In simple terms, this means paying down their home loan and then using the equity they’ve built up to borrow again, this time to invest in the same ETF share portfolio, so that the interest on the new loan becomes tax-deductible, unlike the interest on their original home loan.
Every property, every ownership structure, and every timeline is different. If you’d like to see what superannuation vs ETF investing could mean for you, book a complimentary and confidential discovery session with one of our My Wealth Solutions advisers.
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How are superannuation investments impacted by the 2027 CGT changes?
Superannuation isn’t directly affected by this reform, the 2027 CGT changes apply to gains on assets like shares and ETFs held outside super, not to gains inside it. Investments held inside superannuation keep their existing concessional tax treatment: 15% on earnings in accumulation phase, 10% on discounted capital gains, or 0% in pension phase.
When will the CGT changes happen?
The changes are proposed to take effect from 1 July 2027, as outlined in the Australia CGT discount changes May 2026 budget. This applies to shares and ETFs held outside superannuation in the same way it applies to investment property.
Are there any CGT exemptions that still apply to superannuation?
Superannuation itself is untouched by this reform. Gains inside superannuation continue to be taxed at concessional (reduced) rates ,15% in accumulation phase, 10% on discounted capital gains, or 0% in pension phase, making it a relatively more attractive structure now that outside-superannuation capital gains tax treatment is changing.
Disclaimer: This article is provided for general information purposes only and does not constitute personal financial, tax, or legal advice. Any case studies or examples are illustrative only and are based on hypothetical or composite client scenarios. Any Capital Gains Tax (CGT) calculations, tax outcomes, or financial projections are estimates only and may not reflect your individual circumstances. Tax laws and legislation may change over time, and investment markets can rise and fall. Before making any financial or tax-related decisions, you should seek advice from your accountant, registered tax agent, or licensed financial adviser to ensure the information is appropriate for your personal circumstances.
Ben is a founding partner of My Wealth Solutions and is passionate about helping his clients achieve their financial goals.
Grad. Dip. FP, SMSF
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