The Federal Government has announced a significant change to the way capital gains tax is calculated for many Australian taxpayers. Under the current system, individuals, trusts and partnerships may generally access the 50% CGT discount where an eligible CGT asset has been held for at least 12 months.
From 1 July 2027, the Government has announced that the 50% CGT discount will be replaced with cost base indexation for CGT assets. In practical terms, this means capital gains would be adjusted for inflation, with tax intended to apply to the real gain rather than the inflationary component of the gain.
For business owners, the concern is not just the technical tax calculation. The bigger issue is evidence. If a business is sold after 1 July 2027, owners may need to show how much of the value existed before that date and how much value was created afterwards.
Learn more about the 2026-2027 tax reform budget here.
Important: The precise application of the new rules will depend on final legislation, transitional arrangements and each taxpayer's circumstances. Business owners should obtain advice from their accountant or tax adviser before making decisions.
The announced start date is 1 July 2027. That date is likely to become a critical valuation point for many business owners who may sell their business in future.
A business may continue trading for years after 1 July 2027 before it is eventually sold. However, when that later sale occurs, the owner and their accountant may need to calculate how the gain should be treated under the new rules and any transitional provisions.
That is why a valuation prepared at or around 1 July 2027 may become an important supporting document. It can help establish the market value of the business at the time the tax rules changed, rather than trying to reconstruct that value years later.
Many private businesses are owned through structures such as family trusts, unit trusts, partnerships or related entities. These structures are commonly used for asset protection, income distribution, succession planning and commercial reasons.
Where a business has been built up over many years, a large part of its value may be goodwill. That goodwill could include its brand, customer base, contracts, trained staff, systems, location, reputation, supplier relationships and recurring revenue.
If that goodwill existed before 1 July 2027, business owners may want to ensure there is credible evidence of its market value at that time. Without a properly prepared valuation, there may be greater uncertainty when the business is eventually sold.
Example issue:
A business owner may sell their business in 2030. At that time, the business sale price may reflect value created both before and after 1 July 2027. A professional valuation dated around 1 July 2027 may help the owner and their advisers support how much value existed before the new rules commenced.
Where required, the report may also be prepared with reference to recognised valuation service standards, including APES 225 Valuation Services. This may be relevant where accountants, advisers or other professionals are involved in the valuation process.
Lloyds Business Brokers understands how privately owned businesses are bought, sold and assessed in the real market. That commercial experience is important when valuing a business for future sale and CGT planning purposes.
Our approach considers not only accounting information, but also the commercial factors that influence buyer behaviour, business risk and market value. This includes earnings quality, owner dependence, customer concentration, staff structure, lease terms, competitive position, growth profile, industry trends and comparable transaction evidence where available.
For business owners preparing for the 1 July 2027 CGT changes, Lloyds can help provide a professional valuation report that is clear, practical and suitable for discussion with your accountant, tax adviser or lawyer.
Do I definitely need a business valuation before 1 July 2027?
Not every business owner will need one. However, if you own a business through a structure that may be affected by the announced CGT changes and you may sell the business in future, you should speak with your accountant about whether a valuation around 1 July 2027 is appropriate.
Can I do my own valuation?
You may be able to estimate value internally, but a self-assessed valuation may not carry the same weight as a properly prepared independent report. For tax planning, future sale planning and ATO review purposes, a professional third-party valuation may provide stronger support.
What date should the valuation be prepared for?
The key date is expected to be 1 July 2027. In practice, the valuation should be prepared at or around that date, using information and market evidence relevant to that valuation date.
Will the valuation guarantee my tax outcome?
No. A valuation report supports the value of the business, but your tax outcome depends on legislation, your structure, your cost base, available concessions, the final sale terms and your personal circumstances. Tax advice should be obtained from your accountant or tax adviser.
If you may sell your business after 1 July 2027, now is the time to consider whether a professional valuation should be part of your tax and sale planning strategy.
Speak with Lloyds Business Brokers about obtaining a professional business valuation report designed to support your accountant, tax adviser and future sale planning.
