ASX dividend shares look more compelling following the passage of capital gains tax (CGT) changes into law, experts say.
Cost base indexation will replace the current 50% CGT discount for assets held longer than 12 months from 1 July next year.
The new rules grandfather existing ASX shares investments. So, the 50% discount will still apply to gains made before 1 July 2027.
After that date, capital gains on existing and new investments will be subject to cost base indexation.
A minimum 30% CGT tax rate will apply, too.

Image source: Getty Images
Income strategies looking better than growth: expert
Portfolio strategist Damien Boey from Wilson Asset Management says the CGT changes have already affected investors' behaviour.
In an interview with Wilson chair and chief investment officer, Geoff Wilson AO, Boey said:
So it's early days, but one of the things which we've noticed, particularly as we've been doing the rounds with shareholders, is that people have actually anticipated and responded to these changes.
So a lot of people … have decided that look, it's not worth their while anymore to keep holding out for big capital gains. They'd rather actually go for much more income-based investment … there's definitely a shift there for investors to prefer income over capital growth.
Wilson and Boey said buying and holding ASX shares for capital growth now looked less rewarding due to the 30% minimum CGT rate.
Boey said:
… The Australian Shareholders Association ran a survey a little while ago and what they showed was that over 40% of people are basically saying, look, I'm not so sure I want to invest in long-term equities any more as a result of these changes.
Wilson pointed out the significance of that percentage, given 7.7 million Australians invest in shares outside their superannuation.
Overseas markets may offer better capital growth
Boey also questioned how Australian capital growth would even materialise for investors given his expectation that the CGT changes would negatively impact already anaemic productivity growth.
The minimum 30% CGT rate also applies to businesses. This could disincentivise reinvestment and stifle productivity growth, he said.
This dynamic may encourage Aussie investors to continue putting their money into overseas share markets like the US for growth.
US stocks have delivered substantially more capital growth than ASX shares over the past three years.
"If I still have a preference for capital growth, then where am I going to get it? I have to go overseas," Boey said.
He added:
… when you're really starving the place of actual, real productivity growth, then what are you actually earning?
Where is the capital growth going to come from? What you'll probably see is a big shift into income-based [products].
In Australia you've got to go for the most reliable income sources, particularly after inflation, and then if you want capital growth you really have to invest abroad.
Goal: $15,000 in passive income
In FY26, the ASX 200 provided an average dividend yield of 4.2%, so let's use that as a guide.
If you only own ASX shares with full franking credits, that 4.2% yield grosses up to 6%.
To get $15,000 passive income per year, you'll need about $250,000 in ASX dividend shares on a 6% yield.
Of course, that's an oversimplification, because each individual ASX dividend share pays a different yield.
So, you'll need to do your research.
You could try building a portfolio of several individual stocks which deliver a collective average 6% yield.
Some examples of ASX shares paying fully franked dividends include Wesfarmers Ltd (ASX: WES) and BHP Group Ltd (ASX: BHP).
There's also Fortescue Ltd (ASX: FMG) and Commonwealth Bank of Australia (ASX: CBA) shares.
Easier alternative to individual stock picking
Alternatively, you could invest in an ASX exchange-traded fund (ETF), ideally one with a high level of franking.
The most popular ASX dividend-focused ETF is Vanguard Australian Shares High Yield ETF (ASX: VHY).
VHY ETF has delivered a 10-year average annual distribution of 6.46% and growth of 4.03%.
This ETF's franking levels have changed significantly from year to year.
In FY26, VHY ETF distributions came with 89% franking.