When the 50% CGT discount is replaced on 1 July 2027, every asset you already own gets a line drawn through it. Growth up to 30 June 2027 keeps the discount. Growth after that date falls under indexation and the 30% minimum tax. Where that line sits depends on a single number: what the asset was worth at 1 July 2027.
The law gives you two ways to set that number. Choosing well can move tens of thousands of dollars of gain from one side of the line to the other.
The 1 July 2027 valuation at a glance
- Assets held on 30 June 2027 are treated as sold and reacquired, with no tax payable on the day
- The value at that date splits the eventual gain into a discounted part and an indexed part
- You can use market value, or an apportionment formula
- The choice is made in the tax return for the year you sell, which could be decades away
- You can only choose market value later if you have evidence of it
The two methods
Market value
The actual market value of the asset at 1 July 2027, supported by evidence. For listed shares and ETFs that is the quoted price. For property and private business interests it means a valuation.
The apportionment formula
The formula takes your purchase price and your eventual sale price, works out a single compounding growth rate across the whole time you owned the asset, and uses that rate to estimate the value at 1 July 2027. The method is set out in a draft legislative instrument released in August 2026 and is aimed at real property and other assets without a readily ascertainable market value.
Treasury’s own example shows how it behaves. An asset is bought on 1 July 2022 for $800,000 and sold on 1 July 2032 for $1,600,000. The formula puts the value at 1 July 2027 at $1,131,371. That is not the midpoint of $1,200,000, because compounding pushes more of the dollar growth into the later years.
The formula knows nothing about what actually happened. It ignores a boom that came early, a renovation, a rezoning or a flat decade. It only sees the two end points.
When a valuation beats the formula
Take a property bought on 1 July 2015 for $500,000 and sold on 1 July 2031 for $1,000,000. The formula puts its value at 1 July 2027 at $840,896.
| Formula | Valuation of $900,000 | Valuation of $780,000 | |
|---|---|---|---|
| Gain to 30 June 2027 (50% discount applies) | $340,896 | $400,000 | $280,000 |
| Gain from 1 July 2027 (indexation and minimum tax) | $159,104 | $100,000 | $220,000 |
If the property was really worth $900,000 at the changeover, the valuation moves almost $60,000 of gain back into the discounted period. If it was really worth $780,000, the formula is better and you would use that instead.
That is the point. Because the choice is made when you sell, a valuation is an option, not a commitment. With one on file you pick whichever method gives the better result. Without one, you have the formula and nothing else.
Which assets are worth valuing?
Listed shares, ETFs and crypto. No valuer is needed. Keep statements showing the closing prices at 30 June 2027 and your holdings on that date.
Investment property. A valuation is worth it where growth has been strong or front-loaded, where you have renovated or extended, or where a rezoning or subdivision has lifted the value before 2027. The formula sees none of that.
Private company shares, trust units and business goodwill. These often have a low or nil cost base, so the split matters a great deal. There is no quoted price, and a later reconstruction is hard to defend. For most business owners a valuation is close to essential.
Pre-CGT assets. For an asset acquired before 20 September 1985, the value at 1 July 2027 decides how much of the gain stays tax-free.
Your home. Generally no valuation is needed, because the main residence exemption continues. It is worth considering if the home has been rented out, used to earn income or sits on more than two hectares.
When the formula is probably enough
- The asset was bought recently and the gain so far is modest
- Growth has been steady, with no major improvements
- The asset is low in value, so the cost of a valuation outweighs any saving
- You expect to sell before 1 July 2027 anyway
What makes a valuation stand up
- It is prepared by a suitably qualified, independent valuer: a registered property valuer for real estate, or an experienced business valuer for a company or business interest.
- It values the asset as at 1 July 2027, not on some other convenient date.
- It is prepared close to that date. A valuation done at the time is stronger, and cheaper, than one reconstructed years later from thin evidence.
- It shows its workings: the method, the comparable sales or earnings relied on, and the assumptions made.
- It is kept with your tax records for as long as you own the asset, and for five years after you sell.
A real estate agent’s appraisal letter is weak evidence. If the ATO reviews the split, it is the quality of the valuation that will be tested.
What to do before 1 July 2027
- List the assets you expect to still hold on 30 June 2027.
- Sort them into quoted assets, where records are enough, and unquoted assets, where a valuation is needed.
- Gather the cost base records now: purchase contracts, settlement statements and invoices for improvements.
- Book valuers early. Demand around mid-2027 will be heavy.
- Keep everything. The choice may not be made for many years, and whoever makes it may be your executor.
Common questions about the 1 July 2027 valuation
Do I have to get a valuation?
No. The formula is always available for the assets it covers. A valuation gives you a second option.
Do I pay tax on 1 July 2027?
No. The sale and reacquisition is notional. Nothing is taxed until you actually sell or otherwise dispose of the asset.
Can I get a retrospective valuation later?
Yes, a valuer can assess what an asset was worth at an earlier date. It costs more, the evidence is thinner and it is easier to challenge.
What about my shares?
For listed shares the market value is the quoted price. The work is record keeping: your holdings and prices at 30 June 2027, plus your original cost base, including any dividend reinvestment parcels.
Need a hand with this?
Working out which assets deserve a valuation is a modelling exercise, and it is better done before valuers are booked out. We can list your assets, estimate the formula result for each and tell you where a valuation is likely to pay for itself. We are Chartered Accountants and registered tax agents in Cairnlea, in Melbourne’s west.
Related reading
- CGT discount ends 1 July 2027: indexation and the 30% minimum tax
- Negative gearing changes from 1 July 2027: who is grandfathered
- Depreciation schedules: when they’re worth it and when they’re not
- Rental property tax mistakes: why the ATO says 9 in 10 landlords get it wrong
- Our full range of services
Sources
- ATO – Tax reform: reforming negative gearing and capital gains tax
- Budget 2026–27 – Tax explainer: negative gearing and capital gains tax
- Treasury – Consultation on next tranche of tax reform legislation
This article is general information only and does not take your personal circumstances into account. It reflects the law and announced measures as at October 2026. Measures described as draft or proposed may change before they are enacted. Speak to us before acting on anything you read here.
