The CGT changes are now law. The value of your business at 1 July 2027 will shape the tax on every future sale.
From 1 July 2027 the 50% CGT discount is replaced by cost base indexation and a 30% minimum tax rate. Gains accrued before that date keep the discount; gains after it do not. For private company shares, business interests and intellectual property there is no market price to split the two, so an independent valuation at the transition date is the most accurate and defensible way to set it.
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 passed Parliament on 26 June 2026 and applies from 1 July 2027. For individuals, trusts and partnerships:
The split depends on the market value of the asset at 1 July 2027. You can establish it with an independent valuation, or rely on the ATO's apportionment formula.
Shares in a private company have no quoted price, so the transition value has to be established.
Businesses held for years, where most of the growth happened well before the transition date.
Trustees and JV partners holding business interests, including private equity investors.
Patents, trademarks, software and licensing rights held personally or through a trust.
Assets acquired before 20 September 1985 that were outside the CGT net until now.
One independent process everyone can rely on is cheaper and more consistent than several.
The ATO formula applies a constant compound growth rate across the holding period. Private businesses rarely grow that way: value tends to arrive with a product launch, a major contract, a capital raise or an acquisition. When most of the growth came before 1 July 2027, the formula understates it, and more of the gain lands under the new regime.
Take shares bought for $1 million in January 2020 and sold for $5 million in January 2030, in a company that grew strongly early and then plateaued:
| ATO formula | Independent valuation | |
|---|---|---|
| Value at 1 July 2027 | $3,400,000 | $4,500,000 |
| Pre-2027 gain (50% discount applies) | $2,400,000 | $3,500,000 |
| Post-2027 gain (new regime applies) | $1,600,000 | $500,000 |
| Gain shifted to the discounted period | – | +$1,100,000 |
Illustrative example. The formula value applies a constant compound growth rate across the holding period.
A valuation prepared at the transition date reflects conditions as they actually were. One prepared years later is less reliable and more open to challenge.
Every private business owner needs the same valuation at the same date, and the profession has warned it will be stretched. Engaging early secures your place.
Financial statements, management accounts, forecasts and asset registers need to be current before the work begins.
The small business active asset reduction threshold is now $10 million and there is a new start-up CGT concession. Both are worth reviewing with your tax adviser.
We understand the asset, its history and your position, with your accountant if helpful.
Methodology, timing and fee, agreed before any work starts.
We gather the financials and value the asset as at 1 July 2027.
A draft for review, then a final report suitable for tax, shareholder or regulatory purposes.
Is the CGT reform law or still a proposal?
It is law. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 was enacted on 26 June 2026, with effect from 1 July 2027.
Do listed shares need a valuation?
No. The quoted market price at the transition date does the job. A formal valuation matters for unlisted assets: private company shares, business and trust interests, and IP.
When should the valuation be done?
At or close to 1 July 2027, with the engagement starting well before that so records are ready and the work is not caught in the capacity crunch.
Why does an AFSL matter?
ASIC classifies equity valuation as a financial service under the Corporations Act. Sherwood Australia holds AFSL 563351, so valuations relied on for tax positions, shareholder transactions or ATO review are provided under a regulated framework.
Our article The CGT changes are now law: why you need a business valuation by 1 July 2027 walks through the rules and the worked example in detail. For other tax events such as restructures, Division 7A and employee share schemes, see business valuation for tax & CGT.
General information only, not tax, legal or financial advice. ATO guidance, including the apportionment tool, is still being finalised.
Tell us a little about your situation and Anthony Vago will be in touch — confidential, no obligation. Prefer to talk? Call +61 492 280 220 or email anthony@sherwoodaustralia.com.au.
