🚨The CGT Discount Trap: When 'Smart Tax Planning' Becomes an Expensive Mistake
This is one of the most common and most costly mistakes I see Australian tech executives make.
The logic sounds sensible. Hold your RSUs for 12 months after vesting. Qualify for the 50% CGT discount on any gain above your cost base. At a 47% marginal rate, that's a real tax saving.
And from 1 July 2027, the rules change.
🗓️ What changes on 1 July 2027
The 2026 Budget is now law. It replaces the 50% CGT discount from 1 July 2027.
The new rules apply to individuals, trusts and partnerships. Shares are included. So are your RSUs.
Here's what replaces the discount:
- Your cost base is indexed to inflation (CPI).
- You pay tax on the real gain above inflation.
- A minimum tax rate of 30% applies to that real gain.
Gains made before 1 July 2027 keep the 50% discount.
Why this matters for your RSUs
There's no rush to sell before July 2027. Gains built up to 30 June 2027 keep the 50% discount, even if you sell later.
What changes is the growth after that date. From 1 July 2027, new gains are taxed on the real gain above inflation, with a 30% minimum rate.
So the 50% discount still isn't a reason to hold everything. Concentration risk is the bigger question. That hasn't changed.
Here's the problem that hasn't changed
Your cost base is the market value at the date of vesting.
If your shares vested at $50 and you sell at $50 twelve months later, there is no capital gain.
The CGT discount saves you nothing.
If your shares vested at $50 and the stock is now at $30, you have a capital loss.
You've held the risk for 12 months. You've lost money waiting for a tax benefit that never came.
This is exactly what happened to tech executives holding Atlassian, Zoom, Meta, Nvidia and other US listed tech stocks during recent corrections.
They held, waiting for the discount.
The stock dropped 30 to 70%.
The tax saving was irrelevant compared to the capital lost.
👉 When holding actually makes sense:
- The stock has real long term upside you believe in, apart from your job
- Holding it doesn't push your single stock exposure above 20% of your net worth
- You have a written plan for a 40% fall in the price
- You've run the numbers under the July 2027 rules, not just the old 50% discount
👉 When it's a trap:
- You already hold 30 to 70% of your net worth in employer stock
- The stock is volatile, and your income is also tied to the company
- The market is in a correction, and "waiting it out" is the plan
- You're holding because you feel loyal, not because you've run the numbers
Tax rules change. Concentration risk doesn't.
Used on a portion of your holdings, with a plan, holding can still build wealth.
Used as a reason to hold everything and hope, it's a trap.
If you're reading this and recognising your own situation, you don't need to wait until the end.