Since the CGT reforms became legislation, one question comes up in almost every conversation I have with accountants. Does my client need to book a valuation before 1 July 2027?
The headlines suggest a run on valuers, with every asset needing a value on a single date. The reality is calmer. The date is fixed, but the work around it is not, and advisers who understand that difference can keep more options open for their clients.
The Valuation Date and the Inspection Date
There are two dates in play, and only one of them is fixed.
- Valuation date: 1 July 2027, set by legislation
- Inspection and report date: flexible. A retrospective valuation can be prepared after the date, using evidence available at the date
- Prospective valuations: the ATO's market valuation guidance does not accept an assessment of a future value, so a report prepared before 1 July 2027 is not acceptable
- Method choice: the choice between the ATO’s apportioning method or a market value is made in the tax return for the year each asset is sold, not in 2027
Retrospective valuation is not new. Acumentis already values property to historical dates for family law, deceased estates, SMSF and litigation matters. For most clients, the question of whether a valuation is needed can be answered asset by asset, over time.
The CGT Transition at 1 July 2027
The 1 July 2027 market value is the line between two tax regimes. The higher a justifiable value at that date, the more of the gain stays under the old rules.
- Assets held by individuals and trusts at the end of 30 June 2027 are deemed sold and reacquired, with values set at 1 July 2027 at market value or an amount worked out under the ATO’s apportioning method
- Gain to the date keeps the 50% discount, deferred until sale
- Gain after the date moves to cost base indexation and a 30% minimum tax
- Pre-CGT assets lose their exemption and are reset at the date
- The main residence exemption and small business CGT concessions are unchanged
- Complying SMSFs sit outside the deemed sale
Pre-CGT assets deserve particular attention. For long-held family farms and commercial property, the 1 July 2027 value now separates an exempt gain from a taxable one.
Market Valuation and the Apportioning Method
The apportioning method costs nothing upfront. It works backwards from the eventual sale price and assumes the asset grew at one constant rate for every day it was held. It uses the purchase price only, so capital improvements don't shape the growth rate.
Property rarely behaves that way. National dwelling values over the past decade show how uneven the path can be:
- 2018: down 4.8%
- 2021: up 24.5%
- 2022: down 4.9%
- 2026 to end of September: down 3.0%
A market valuation records what the asset was worth at the date, supported by sales from that period. Commercial, industrial and rural markets run on their own cycles, so the formula can miss by a different amount for each asset a client holds.
Appraisals, Online Estimates and Market Valuations
Clients will offer what they already have, an agent's appraisal, a bank's desktop figure or an online estimate. None of these is a market valuation for tax purposes.
If a value is reviewed, the ATO tests how the number was reached, not just the number. Its market valuation guidance looks for a qualified valuer, a stated purpose and date, a method suited to the asset, analysed sales evidence and disclosed assumptions. An appraisal exists to win a listing. An online estimate involves no valuer at all. It's a little like asking a bookkeeper to sign off work that needs a CPA's name on it.
The warning signs in a report a client brings to you:
- a different date or purpose, such as a mortgage valuation or sale appraisal
- reliance on earlier or later sales or events, not evidence current at the valuation date
- a desktop-only report for commercial, rural or specialised property
- a document prepared by someone linked to the sale or the client, or paid on the outcome
Priority Assets and Records to Keep
The biggest risk in waiting isn't a shortage of valuers. It's evidence decay. Renovations, changes of use and lost paperwork all make a later valuation harder to support.
The assets where the formula is least reliable and the stakes are highest:
- any asset where growth has been uneven
- commercial, industrial, rural, specialised and prestige residential property
- pre-CGT and long-held assets
- assets facing a restructure, estate planning or sale decision
The records worth gathering now, at almost no cost:
- title, contract of purchase and settlement statement
- leases, rent rolls and outgoings at the date
- capital works, approvals, plans and floorplans
- photos of condition around 1 July 2027
- water entitlements, plant and asset registers
These records make a retrospective valuation faster, cheaper and easier to defend, whether it is commissioned in 2027 or 2035.
What Comes Next
Two pieces of the picture are still settling. The apportioning method is still in draft and not yet final, and the ATO has signalled further guidance on the transition, including the professionals taxpayers may engage and the records to keep.
What won't change is the test. A value that holds up shows its date, its evidence and its method. Advisers who start the records conversation with clients now give them the most choice later.
Acumentis valuers are presenting on this topic at CPA Australia's CGT and Negative Gearing Roadshow in six cities this November. To talk through a client's portfolio, or to schedule a CGT valuation, get in touch below.
This update is provided for general information only and does not constitute financial, tax or legal advice. Clients should speak with their accountant or financial adviser about how these changes apply to their individual circumstances.