CGT 1 July 2027 Valuations

CGT 1 July 2027 Cost Base Valuations

CGT 1 July 2027 valuation requirements arise from the capital gains tax changes. On 1 July 2027, a “deemed disposal and immediate re-acquisition” mechanism will occur. This will require private groups, family enterprises, and property owners to undergo an asset-valuation exercise to establish a new market-value baseline.

Timing and Preparation for CGT 1 July 2027 Valuations

A CGT July 2027 valuation determines value as at 1 July 2027; however, the valuation itself may be prepared at a later time. In practice, taxpayers often finalise valuations upon disposal of the asset or when reporting obligations arise. Even so, delays introduce practical risks that increase over time:

• access to relevant financial data may decline
• supporting documents may become incomplete
• assumptions may begin to reflect later events

Accordingly, a CGT July 2027 valuation must rely only on information known, or reasonably available, at 1 July 2027. Importantly, the ATO does not accept hindsight when determining value. For this reason, early preparation is recommendedl. In particular, taxpayers should:

• retain financial statements, forecasts and supporting records
• document key business conditions at that time
• preserve evidence underpinning valuation assumptions

As a result, a well‑maintained information base improves both reliability and defensibility.

Why a Valuation is Required

Where the rules require a reset to market value, taxpayers must establish an objective and supportable amount. In these circumstances:

• the valuation determines the new cost base
• the adopted figure supports future calculations
• the ATO may review the position

Accordingly, a CGT 2027 valuation reduces the risk of dispute and promotes consistency.

Assets Commonly Affected

The requirement to establish market value applies across a range of asset types. Typically, this includes:

• shares in private companies
• interests in trusts
• operating businesses
• intangible assets, including goodwill

As a result, many private groups and family‑owned businesses may need to consider valuation issues.

Approach to 1 July 2027 CGT Valuations

Our reports are prepared in accordance with the International Valuation Standards and APES 225 Valuation Services standard. We apply established valuation methodologies and tailor them to each asset and circumstance.

Income Approach – We apply discounted cash flow or capitalisation methods where forecasts can be supported. Accordingly, this approach reflects expected performance and risk.

Market Approach – We assess comparable companies and transactions. Consequently, this provides a market‑based reference point.

Cross‑Checks – Where appropriate, we apply multiple approaches. As a result, cross‑checks strengthen reliability and improve confidence in the outcome. We may also consider a cost‑based approach, particularly where the value of the underlying assets provides a more reliable indicator of market value. This may arise where the business is asset‑intensive or where earnings do not fully reflect underlying value.

ATO Expectations

The ATO expects valuations used for CGT purposes to be objective, evidence‑based and capable of independent review. In particular, a compliant valuation:

• reflects market value at the relevant date
• applies appropriate methodology
• relies on supportable data

Accordingly, unsupported estimates or retrospective assumptions increase the risk of challenge.

Common Issues in CGT Valuations

In practice, challenges arise when information is incomplete or assumptions lack support. Common issues include:

• missing financial data
• reliance on hindsight
• inconsistent methodologies
• limited documentation

As a result, the ATO may question the adopted value. Therefore, a structured approach remains essential.

How We Support CGT Valuations

We provide valuation services to support cost bases and ongoing compliance. Our work includes:

• determining market values
• preparing independent valuation reports
• assisting advisers in documenting assumptions
• supporting responses to ATO queries

Accordingly, our work ensures that CGT valuations remain robust and defensible.

CGT valuations interact with several broader valuation contexts. These include:

• tax and stamp duty valuations, where market value drives outcomes
• transaction valuations, where assets transfer between parties
• family dispute valuations, where value is assessed at specific dates

Accordingly, valuation must remain consistent across these areas.

Frequently Asked Questions

Do I need a CGT July 2027 valuation?

Yes. A valuation is required where the rules require market value to establish a new cost base

Can the valuation be prepared after 1 July 2027?

Yes, however, the valuation must reflect information available at that date and the valuer must not use the benefit of hindsight

What is the main challenge?

Ensuring sufficient contemporaneous information exists to support the valuation is the main challenge

What happens if the valuation is not supportable

The ATO may challenge the adopted value, which may result in adjustments and penatles, including negligence and recklessness penalties.

Important Information

Lotus Amity provides independent valuation services only. We are Chartered Accountants; however, we do not provide tax advice, legal advice or financial product advice. We do not hold an Australian Financial Services Licence (AFSL). Accordingly, this material is general in nature and should not be relied upon as advice. You should obtain specific tax and legal advice before making decisions.