In our last newsletter we looked at the capital gains tax (CGT) changes starting on 1 July 2027. Since then the ATO has published more detail, and one question keeps coming up: what about valuations? Here is what we know so far.
What is changing
The first stage of the changes is now law. According to the ATO, from 1 July 2027 the 50% CGT discount for resident individuals, trusts and partnerships will be replaced with cost base indexation for gains that build up from that date. Indexation adjusts the cost of an asset for inflation. A minimum 30% tax for individuals on certain capital gains will also apply.
The ATO also confirms what is not changing, including the main residence exemption for the family home.
Why the value at 1 July 2027 matters
For assets owned before 1 July 2027 and sold later, the gain is split in two. The part that built up before 1 July 2027 keeps the current rules, including the 50% discount. The part that builds up afterwards falls under the new rules.
To split the gain, the ATO says owners "may need to determine the market value" of the asset immediately before 1 July 2027.
A valuation, or the formula
According to the ATO, owners may be able to choose not to work out a market value, and use an alternative called the "apportionment method" instead. The ATO will release guidance on it once it becomes law.
Treasury released a draft of this method in August 2026. It is not yet final. As drafted, it works out a value at 1 July 2027 from the purchase price and the eventual sale price, assuming the asset grew at the same steady rate for the whole time it was owned.
In practice, values rarely grow evenly. Business valuers have noted that where most of an asset's growth happened before 1 July 2027, the formula may place more of the gain after that date, where the 50% discount no longer applies. The reverse can also happen: where values were flat before 1 July 2027 and rose afterwards, the formula may give a better result than a valuation.
Professional bodies have asked Treasury to consider a different approach, so the final method may change.
When is a value needed?
According to the ATO, the value is generally not needed for the 2026–27 tax return. It is needed when the asset is sold, or another CGT event happens. For most people, the earliest this can come up is the 2027–28 tax return, lodged from 1 July 2028.
What the ATO expects
The ATO has said it will publish more guidance before 1 July 2027, covering:
- how to work out market value for different types of assets
- the types of professionals who can provide a valuation
- the records to keep.
The ATO has also said valuations need to be "supportable, replicable and based on appropriate evidence", and that this applies even where a professional valuer has been engaged. Valuer industry groups have also reported growing demand ahead of the date.
Records still matter
The ATO's existing record-keeping rules continue. For each asset, these include:
- when it was acquired
- its value when acquired
- the amount paid for it
- any changes to its character or ownership.
Good records will be important for working out both parts of a future gain.
Sources
- Australian Taxation Office, Capital gains tax reform, published 13 October 2026 – ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/capital-gains-tax-reform
- Treasury Laws Amendment (Tax Reform No. 1) Act 2026 – legislation.gov.au
- Treasury, exposure draft: Income Tax Assessment (Method for Apportioning Capital Gains and Capital Losses) Determination 2026 (August 2026, not yet final)
This article is general information only. It doesn't take into account your personal circumstances and isn't financial product advice. Please speak with us before acting on anything here.
