CGT COMPOUNDING
STRESS TEST
A one-page calculator for testing long-horizon Australian capital gains outcomes under the current 50% discount, an illustrative inflation-indexed cost-base scenario, and a no-discount reference case. Sources are Australian government publications only.
Scenarios
Use the presets, then drag the sliders to see how quickly the headline shifts once you change returns, inflation, holding periods or tax rate.
Outcome Snapshot
Portfolio value
$10,836,574
Nominal capital gain
$10,826,574
Indexed cost base
$34,371
Extra tax vs current
$2,532,791
Tax Comparison Graph
The graph below compares tax paid and after-tax wealth across the three treatments for the current scenario. It assumes a single realization event and a single marginal tax rate.
Current 50% discount
Illustrative indexation
No discount, no indexation
Headline Readout
Tax under current law
$2.54M
Tax under indexation
$5.08M
Increase vs current
99.5%
Multiple of current tax
2.00x
In this scenario, current-law tax is $2,544,245, versus $5,077,036 under the illustrative indexation treatment.
That is an additional $2,532,791 and roughly 2.00x the tax take.
Important limitation
This page is a sensitivity tool, not a tax ruling. It does not by itself prove any live policy package, age-cohort incidence, capital flight, or business response.
What The Official Data Says
If the claim is that the 50% CGT discount mainly protects young Australians building wealth, the published age and income splits do not support it.
Official distributional facts
Top 10% of income earners
82% of CGT discount tax savings
Top 1% of income earners
59% of CGT discount tax savings
Ages 18 to 34 combined
4% of CGT discount tax savings
Ages 60 and over combined
52% of CGT discount tax savings
Income concentration comes from the PBO's 2025â26 distribution tables. The age split comes from Treasury's TEIS chart data for the CGT discount.
Interpretation
On the published government data, the current discount is overwhelmingly an older and higher-income tax concession, not a concession mainly used by young Australians.
That makes the âthis is protecting young Australians trying to get aheadâ framing hard to sustain on the official distributional evidence alone.
The harder debate is elsewhere: founder exits, small business treatment, transition design, compliance complexity, and how any replacement regime should distinguish productive long-term investment from pure windfall gains.
Which Claims Matter Most?
This matrix separates the claims that are already well supported by official data from the ones that are important but still need stronger evidence.
Important but unresolved
- Founder exits and startup treatment under any replacement regime.
- Small business and farm transition design.
- Whether capital would shift offshore or into low-productivity assets.
Act on this evidence
- Top `10%` of income earners receive `82%` of the CGT discount benefit.
- Top `1%` alone receives `59%`.
- Ages `18â34` receive `4%`, while ages `60+` receive `52%`.
Rhetorical overreach
- Sweeping claims that young Australians are the main direct beneficiaries of the current discount.
- Confident predictions about investor behaviour without behavioural evidence.
Interesting, but secondary
- Asset-class splits across property, shares, trusts and other assets.
- Recipient counts by narrow age bucket.
- Average effect per recipient, where distributional concentration already tells the main story.
Government Stats Panel
These are the strongest source-backed anchor stats for a first public version of the page.
PBO concentration
82%
Share of CGT discount benefit accruing to the top 10% of taxable income earners in 2025â26.
PBO, Table A5PBO top 1%
â60%
Share of benefit accruing to the top 1% of taxable income earners in 2025â26.
PBO summary + Table A5Treasury under 35
4%
Combined share of CGT discount tax savings flowing to ages 18 to 24, 25 to 29, and 30 to 34.
Treasury TEIS, Chart 2.8 dataTreasury age 60+
52%
Combined share of CGT discount tax savings flowing to ages 60 to 64, 65 to 69, 70 to 74, and 75+.
Treasury TEIS, Chart 2.8 dataABS business entries
437,150
Business entries in 2024â25 across the Australian economy.
ABS latest releaseABS business exits
370,500
Business exits in 2024â25 across the Australian economy.
ABS latest releaseWhich Arguments Are Strongest?
Read this as a confidence ladder. The first row is well supported by official data. The last row is where the rhetoric outruns what public government datasets can currently prove.
The clearest case is about who benefits from the current CGT discount now: the gains are heavily concentrated at the top of the income distribution, and the policy sits beside a much larger tax preference for owner-occupied housing.
It is reasonable to argue that weaker CGT incentives could push some capital toward housing, deposits, or other lower-risk parking spots. But the public data on this page frames that risk; it does not prove investors would respond that way.
Claims about intergenerational betrayal, startup damage, farm and small-business harm, or capital fleeing offshore are much harder to substantiate from public tables alone. Those claims need linked datasets, behavioural evidence, or custom official tabulations.
References
PBO: Operation of the CGT discount
Distribution by income percentile and asset class; official baseline for who benefits now.
Treasury: 2025â26 Tax Expenditures and Insights Statement
Use for E15 CGT discount and E7 main residence exemption benchmark comparisons.
Treasury: TEIS chart data workbook
Includes the age-by-benefit split behind the 18â34 and 60+ comparisons used on this page.
ATO: Capital gains tax statistics 2022â23
Entity-type CGT statistics and estimated tax on net capital gains.
ABS: Household Income and Wealth
Use for age-by-wealth composition and household asset mix.
ABS: Housing Occupancy and Costs
Use for home ownership, mortgage and renting profiles by age.
RBA: Household Sector Chart Pack
Macro context for household wealth, liabilities and housing concentration.