Superannuation vs Outside Super Investing After the 2027 CGT Changes

Before the May 2026 Budget, the super vs outside-super investing debate had a nuanced answer. Both had access to long-term CGT discounts — super's 33.3% vs outside-super's 50%. Outside-super offered more flexibility. Super offered tax-free earnings in retirement.

The 2027 CGT changes upend this. From 1 July 2027:

Superannuation funds keep their 33.3% CGT discount. No change.
Outside-super investors lose the 50% CGT discount. It's replaced by cost base indexation with a 30% minimum tax rate.

For the first time since 1999, the CGT treatment inside super is meaningfully better than outside-super for most investors. This article runs through the maths and explains how to think about this shift.

Use our CGT Comparison Calculator to model the after-tax impact of the new rules on your outside-super investment portfolio.

How CGT works inside vs outside super: a quick refresher

Inside superannuation:

Earnings (dividends, interest, rental income) taxed at 15%
Capital gains on assets held 12+ months: 33.3% discount → effective rate of 10% (15% × 66.7%)
In retirement phase (pension account): earnings and capital gains taxed at 0%
Assets locked until preservation age (60 for most people)

Outside superannuation (current rules until 30 June 2027):

Earnings taxed at your marginal rate (18–47% including Medicare)
Capital gains on assets held 12+ months: 50% discount → effective rate of 9–23.5% depending on bracket
Full flexibility — sell and access proceeds at any time

Outside superannuation (proposed rules from 1 July 2027):

Earnings taxed at your marginal rate — no change
Capital gains on assets held 12+ months: no 50% discount — indexed cost base with 30% minimum floor
Effective rate: 30–47% on the real (inflation-adjusted) gain
Full flexibility — unchanged

The CGT comparison before and after 1 July 2027

This table shows the effective CGT rate on a capital gain across the three scenarios:

	Inside super (accumulation)	Outside super (current)	Outside super (from July 2027)
CGT method	33.3% discount	50% discount	Indexation, 30% min
Effective rate on gain	10%	9% – 23.5%	30% – 47% on real gain
Who benefits	All super investors	All outside-super investors	Lower-income + high-inflation scenarios only

Up to 30 June 2027, outside-super CGT (9–23.5%) and super CGT (10%) are broadly comparable. After July 2027, super's 10% effective rate looks dramatically better than outside-super's 30–47% on the real gain.

The liquidity trade-off has always existed — but the maths changed

The standard case against maximising super is access. You can't touch your super until preservation age (generally 60 for those born after June 1964). If you're 40 and investing for a house deposit, kids' school fees, or business capital in 10 years, super doesn't work for those goals.

That hasn't changed. But the tax cost of investing outside super has risen sharply. The question is now: how much of a liquidity premium is reasonable to pay for outside-super flexibility?

Before July 2027, the outside-super 50% discount was actually slightly better than super's 33.3% discount at moderate income levels (32% bracket). The liquidity premium had a low tax cost.

After July 2027, you're comparing super's flat 10% CGT rate against outside-super's 30–47% on real gains. The liquidity premium now costs substantially more.

Worked example: $10,000 per year invested for 20 years

Assumptions:

Annual investment: $10,000
Total return: 8% per year (4% capital growth, 4% income yield)
Marginal tax rate on income: 32%
CPI inflation: 2.5%
Franking credit rate on income: 30%
Investment period: 20 years

Inside super (accumulation phase):

Income yield taxed at 15% inside fund: net income yield ~3.4%
Capital growth compounds at full 4% (10% effective CGT rate at end, deferred until sale)
Total portfolio after 20 years (approximate, contributions + growth): ~$490,000
CGT at sale (10% effective rate on 20-year gain): ~$25,000
Net after-tax: ~$465,000

Outside super (current 50% discount):

Income yield taxed at 32% each year: net income yield ~2.72%
Capital growth accumulates (tax deferred until sale)
Total portfolio after 20 years: ~$455,000
CGT at sale (16% effective rate on gain at 32% bracket with 50% discount): ~$32,000
Net after-tax: ~$423,000

Outside super (proposed rules from July 2027, for portion of gain post-July 2027):

The 20-year investment starting now crosses the July 2027 transition after approximately 1 year. So ~1/20 of gains use old rules (50% discount), ~19/20 use new rules (indexation + 32% rate on real gain).

Indexation relief over 19 years at 2.5% CPI is meaningful but doesn't approach the 50% discount benefit in a period of 4% annual capital growth
Effective tax rate on post-2027 gains: ~32% on real gains (marginal rate; above 30% floor)
CGT at sale (blended): ~$55,000–$60,000
Net after-tax: ~$395,000–$400,000

The rough result: after the 2027 changes, super comes out ~$65,000 ahead on a 20-year, $10,000/year investment at 32% marginal rate — compared to roughly $42,000 ahead under the old rules.

These are simplified estimates. Use the Superannuation Calculator for a projection of your super balance and the CGT Comparison Calculator for your outside-super tax outcome.

The division 296 complication for high-balance investors

For individuals with super balances above $3 million, Division 296 tax applies an additional 15% on the earnings of the amount over $3 million (effective from 1 July 2026). This reduces super's tax advantage at very high balances:

Super earnings tax: normally 15% → effectively 30% on the portion over $3M
CGT inside super on that portion: 10% effective rate becomes ~20% effective rate on gains over $3M
Outside-super at 47% marginal rate: 47% on real gains (new rules)

Super still wins at these balances even with Division 296, but the margin narrows significantly above $3 million. For those with large super balances considering further voluntary contributions, the benefit calculation is more complex.

Who should direct more money into super after the 2027 changes

The case for maximising super is strongest if:

You're 10+ years from retirement and won't need the capital before then
Your marginal rate is 32% or above — the tax saving on both income and CGT is substantial
You plan to hold growth assets (Australian shares, international ETFs, property) that generate significant capital gains over time
You are not near the $500,000 TSB threshold for carry-forward contributions (you have room to use unused concessional cap)
You're investing in assets where the CGT gap matters most — long-held equities and ETFs with large unrealised gains

The case for outside-super remains if:

You need access to funds before age 60 — a house deposit, business capital, school fees, emergency reserves
You're already near or at the transfer balance cap ($1.9M in 2026-27) — further non-concessional super contributions don't help
Your outside-super portfolio is near-term CGT negative (e.g., you have loss positions that offset gains, making CGT immaterial)
You hold Australian shares with high franking credit yields — franking credits can reduce your effective outside-super tax rate substantially, partially offsetting the CGT disadvantage
You want to invest in property outside super, which has practical advantages inside super (SMSF required, specific rules apply)

The hybrid strategy: max concessional contributions, supplement outside super

The most tax-efficient structure for most investors after the 2027 changes is:

Max concessional super contributions ($32,500 for 2026-27) — captures the income tax saving and ensures growth assets build inside the low-CGT super environment
Invest outside super only with capital that may be needed before 60 — accept the higher post-2027 CGT rate as the cost of liquidity
For outside-super assets already held: consider the CGT timing decision — whether to realise gains before July 2027 or hold through the transition with the 50% discount preserved on pre-July 2027 gains

Should you move existing outside-super investments into super?

You can contribute existing outside-super assets to super — but you can't transfer them directly. You'd need to sell the assets, pay CGT on the realised gain, and then contribute the cash to super. For assets with large unrealised gains, this triggers an immediate CGT event.

The better strategy is usually:

Continue holding existing outside-super assets through the transition (pre-July 2027 gains keep the 50% discount even if you sell later)
Direct new investment capital into super going forward
Review at the July 2027 transition whether to sell and rebalance into super at that point

Selling a $200,000 unrealised gain today to move into super has an immediate CGT cost that takes years of super's lower rate to recoup.

Frequently asked questions

Do super funds pay the new CGT rate from July 2027?

No. Complying superannuation funds retain their 33.3% CGT discount on assets held over 12 months. The effective CGT rate inside super remains 10% (15% × 66.7%). The new indexation rules and 30% minimum floor do not apply to super funds — only to individual taxpayers. Division 296 is a separate measure affecting individuals with super balances above $3 million.

Is investing in super now more tax-effective than outside-super?

For most investors in the 32–47% marginal bracket, yes — more so than before the 2027 changes. Super's 10% effective CGT rate compares favourably to outside-super's 30–47% on real gains under the new rules. The trade-off is access: super is locked until age 60.

Can I use my SMSF to invest in property and get the better CGT rate?

Yes. An SMSF can own investment property and the 33.3% CGT discount applies (effective 10% rate) on assets held over 12 months. However, the SMSF must comply with strict rules — the property cannot be used by related parties. Professional SMSF advice is essential before pursuing this strategy.

What happens to my outside-super ETF portfolio under the new rules if I hold for 20 years?

Only the gains accrued after 1 July 2027 are taxed under the new rules. Gains accrued before that date retain the 50% discount. For a 20-year investment starting today, roughly 19/20 of the gain will be subject to the new rules. The impact is significant but not total — the pre-July 2027 portion is protected.

Should I transfer my outside-super shares into my SMSF?

You can't transfer shares directly into an SMSF (except listed securities via an in-specie contribution in some cases). Generally, you'd need to sell, pay CGT, and then contribute cash or repurchase inside the SMSF. The CGT triggered on sale needs to be weighed against the future CGT saving inside super. For large unrealised gains, this often doesn't make sense until you approach the point where you'd be selling anyway.

This article is for general information only and does not constitute financial, tax or legal advice. The proposed CGT changes are subject to legislative passage. Super rules are complex and individual circumstances vary significantly. Consult a licensed financial adviser and registered tax agent before making superannuation or investment decisions.