Capital gains tax (CGT) rules are changing from 1 July 2027. A common reaction is to book a valuer straight away, but the ATO says to slow down: a valuation obtained now won’t comply with the changes.
What’s actually changing
For gains accruing from 1 July 2027: the 50% CGT discount for resident individuals, trusts and partnerships will be replaced with cost base indexation; a minimum 30% tax will apply for individuals on certain net capital gains; and those with pre-CGT assets will be subject to CGT.
Exceptions apply: eligible new residential dwellings may continue to qualify for the 50% CGT discount, and people receiving certain government support payments are excluded from the 30% minimum tax.
Reassuringly, there are no changes to the meaning of a CGT asset, the framework of a CGT event or the main residence exemption.
Why not to get a valuation today
You may need to determine the market value of your CGT asset immediately before 1 July 2027 when calculating a capital gain or loss, but this doesn’t require a valuation to be in place on that date. You also shouldn’t obtain one before this date unless a sale or restructure is close, as a valuation can’t be forward-looking.
The ATO considers that market value for tax purposes requires a valuation for a date specified by the legislation. A prospective assessment is unacceptable. So, paying for a report today will not fix a value for 30 June 2027.
When you’ll actually need the figure
Generally, you don’t need to know the market value of your asset immediately before 1 July 2027 to complete your tax return for the 2026–27 income year.
For most CGT assets, including real estate, when you dispose of the asset or another CGT event occurs to that asset, you’ll then need to establish what the market value was immediately before 1 July 2027. For most individuals and trustees, the earliest time you’ll need to include such a capital gain will be on or after 1 July 2028, when lodging the 2027–28 return.
Your choice at transition
You may need to determine the market value of your CGT asset immediately before 1 July 2027, or for real property and assets without a readily ascertainable market value, you may choose the apportionment method.
For affected post-CGT assets, any gain or loss from the deemed sale is generally deferred until a later disposal or CGT event. For pre-CGT assets, pre-1 July 2027 gains or losses are generally disregarded.
Treasury has consulted on a draft apportioning method, but the final method hasn’t yet been decided.
Focus on records
If you already hold a CGT asset or you acquire a new CGT asset before 1 July 2027, you must continue to meet existing record-keeping requirements, including details of when you acquired the asset, its value at the time, the amount you paid, and any changes to the character or ownership of the asset during the time you’ve held it.
The ATO will issue tools and guidance covering how to determine market value for certain assets, the professionals to consider when seeking a valuation, and the documentation and records required.
Need a hand?
Every asset is different, and the right approach depends on when you bought it, how you’ve used it and what you plan to do next. Please contact us before you commission any valuation so we can map out the right strategy.