PREPARING FOR 1 JULY 2027 CAPITAL GAINS TAX RESET
From 1 July 2027, the 50% Capital Gains Tax (CGT) discount on the sale of investment assets will be replaced by an indexation system. A minimum tax rate of 30% will apply to capital gains, subject to certain exemptions.
As the calendar year draws to a close, we recommend taking steps now to prepare for these changes.
1. Obtain valuations for all significant assets as at 1 July 2027
The transition rules allow you to choose the more favourable outcome—market valuation or time apportionment under the government valuation formula— but only if reliable valuation evidence is available. Gather property appraisals and valuations for unlisted assets and businesses.
2. Review pre-CGT assets
Assets acquired before 20 September 1985 will lose their blanket exemption for growth arising after 1 July 2027. Owners of substantially appreciated pre-1985 assets therefore have a one-off opportunity to compare disposing of the asset under the full exemption with continuing to hold it.
3. Review planned disposals around the changeover date
If you already intend to sell in late 2027, consider whether it may be preferable to contract before 30 June 2027 under the existing rules or wait until after 1 July if the asset’s growth profile favours indexation. We can model both alternatives rather than rely on assumptions.
4. Reassess ownership structures
The CGT discount for individuals and trusts will be removed, while superannuation will retain its concessions and the company rules will remain unchanged. From 2028, trusts will also face a proposed separate 30% minimum tax. Structures established under earlier rules should therefore be reviewed with our professional advice.
5. Understand which gains are affected
The reform applies only to real gains arising from 1 July 2027. Growth before that date will retain the 50% discount, and slow-growing assets may be better off under the new rules. Selling a sound asset solely to “beat the deadline” could crystallise tax now to avoid a smaller liability later. We recommend that we run the numbers first.
6. Prioritise record-keeping
The new system requires credible evidence of cost-base figures. Keep acquisition records, including contracts of sale and settlement documents; valuations as at 1 July 2027; and records of the dates and costs of major improvements. Complete, well-organised documentation will be more important than ever.