It is not only a widow tax. The new CGT design can hurt mothers too.

We have discovered another curious consequence of Australia’s new CGT rules — and it comes with a motherhood penalty nobody put in the birth plan.

From 1 July 2027, the 50% CGT discount is replaced by inflation indexation. Depending on how long an asset has been held, a substantial portion of the gain may still be assessable and subject to a minimum 30% tax rate.

Here’s where it gets interesting.

Imagine a mother sells an investment while on parental leave or working reduced hours. Under today’s system, a low-income year can be one of the most tax-effective times to realise a capital gain. In some circumstances, where the tax-free threshold has not otherwise been used, little or no tax may be payable.

Under the new rules, the remaining gain can be taxed at no less than 30%.

Her income hasn’t fallen because of clever tax planning. She’s had a baby.

It’s not just the “widow tax”

The same problem can arise whenever someone’s income falls for an entirely ordinary life reason: parental leave, caring responsibilities, part-time work, separation or retirement.

The tax calculation sees the income.

It doesn’t see the life happening around it.

Our view

We’ve already expressed our concerns about these changes, so we’ll spare you another thousand words. But this particular consequence deserves attention. A low-income year isn’t always a tax strategy. Sometimes it’s simply life. Tax policy is at its best when it understands the difference — and remembers there is a human being behind the calculation.