In this article:
CGT Examples for Property and Business Owners
What this means for business owners
The Main Point
The Importance of an Accurate Valuation
Our View on pre-1985 Assets
Should you sell before 1 July 2027?
The Trap
Checklist: What to do before 1 July 2027
Frequently Asked Questions
Talk to Westcourt
CGT Examples for Property and Business Owners
“Should I sell before 1 July 2027?” is the question behind every conversation about the new capital gains tax (CGT) rules. The honest answer is that it depends on the asset — and the only way to know is to put numbers on it. This article does that, using one Busselton property throughout so the comparisons are like for like. If you have not read Part 1, it explains how the new regime works; here we go straight to the numbers and the decision.
What this means for business owners
The tax difference between selling before and holding may be smaller than the headlines suggest — indexation strips inflation out of the later gain. The valuation evidence and the asset’s growth profile usually matter more than the loss of the 50% discount. Do not panic-sell; do model before you sign, value or restructure.
Worked Examples
Every example below uses the same property: bought in Busselton for $1.2 million, worth $2.65 million on 1 July 2027 (established by valuation), and the owner is an individual. Figures are rounded and use stated assumptions — they are an illustration, not advice. The CPI indexation factors will be set by the ATO and do not yet exist, so the post-2027 figures assume CPI of 2.5% a year and should be re-run when the official factors are published. Tax is shown at a 47% top marginal rate (including the Medicare levy) unless stated otherwise.
Example 1 — how much does the tax change actually cost?
Start by isolating the tax law change. Compare the tax on the same eventual $3.5 million sale price under the old rules and under the new transitional split. This is an assumption to illustrate the tax — it is not a forecast that the property will fetch $3.5 million before 1 July 2027. It simply strips out asset growth so the regime change is the only variable.
Old rules — a $3.5 million sale taxed entirely under the 50% discount. The $2.3 million gain is halved to $1,150,000 and taxed at 47%: about $540,500.
New transitional rules — the same $3.5 million sale, with the gain split at the 1 July 2027 value of $2.65 million.
On the same $3.5 million sale price, the new transitional rules tax about $577,000 in total — roughly $36,000 more than the $540,500 under the old rules. That $36,000 is the cost of the regime change itself, holding everything else equal. It is real, but it is modest against a $2.3 million gain.
The genuine sell-or-hold decision is different again. If the owner sells before 1 July 2027, they sell at the property’s value then — about $2.65 million, not $3.5 million — because the later $850,000 of growth has not happened. Selling early pays less tax, but only because the owner has given up that growth. So the choice is not “$540,500 versus $577,000”; it is “sell now, take $2.65 million and the lower gain” against “hold, capture the growth, and pay the transitional tax on it”. It does not include selling costs, duty on a replacement asset, debt, rental yield, land tax, the value of deferring tax, the time value of money, or reinvestment risk. Those factors often matter more than the CGT difference, and a decision has to weigh them together.
The Point
Headlines about “losing the 50% discount” suggest the new regime roughly doubles the tax. It does not. Indexation strips inflation out of the post-2027 gain, so the extra tax is far smaller than the loss of the discount implies. On a moderate-growth, long-held asset the gap can be small. Model your own asset — with all the non-tax factors — before assuming the change is a reason to sell.
Example 2 — why the 1 July 2027 valuation matters
The 1 July 2027 valuation sets the line between the two parts of the gain, so it directly drives the tax. Here is what that is worth in dollars. Take the hold-and-sell case above, and compare a defensible 1 July 2027 valuation of $2.65 million against a careless under-valuation of $2.4 million.
- At a $2.65 million valuation: total tax is about $577,000 (as above).
- At a $2.4 million valuation: less gain sits in the discounted pre-2027 part, and the indexed cost base on the post-2027 part starts $250,000 lower. Total tax rises to about $651,000.
A $250,000 under-valuation costs about $74,000 in extra tax on this property. The valuation is not paperwork. For property and business assets, a defensible valuation dated 1 July 2027 is the single most valuable document an owner can put in place.
The Bigger Picture
That is why the 1 July 2027 valuation should be done properly, and early. Before you commission a valuation or sign a contract, ask Westcourt to run a CGT transition review — we model the old-rule outcome, the post-2027 transitional split, and the valuation sensitivity, so the number you adopt is defensible.
Example 3 — when the 30% minimum tax applies
The 30% floor only does something when a taxpayer’s marginal rate on the gain is below 30%. Because the 30% tax bracket is wide — it runs from about $45,000 to $135,000 of income — most middle and higher earners are already at or above 30%, so the floor changes nothing for them. It bites on low-income owners who are not on income support: a self-funded retiree, a low-income spouse, an adult child, or a low-rate beneficiary of a trust.
Take a self-funded low-income investor with about $25,000 of other income, who realises a post-2027 real capital gain of $10,000 and does not receive an income support payment. The ordinary tax on that $10,000 gain is about $1,400 — an effective 14%, before the Medicare levy. Because that is below 30%, the minimum tax adds about $1,600 of top-up so the gain is taxed at 30%, or $3,000. Tax offsets may reduce the minimum tax. This mirrors the pattern in the Government’s own example.
One important carve-out: recipients of means-tested income support payments, including the Age Pension and JobSeeker, are exempt from the 30% minimum tax if they receive a payment in the year they realise the gain. So the floor bites on self-funded low-income individuals and on low-rate trust beneficiaries — not on income support recipients. If your CGT planning has relied on directing modest gains to low-income family members, that strategy is materially weaker from 1 July 2027.
Example 4 — a pre-1985 asset
The same property, but bought before 20 September 1985. The pre-1 July 2027 part of the gain stays fully exempt — the historical pre-CGT exemption preserved. Only the post-2027 part is taxed.
- Pre-2027 part: $2,650,000 − $1,200,000 = $1,450,000. Fully exempt. Tax: nil.
- Post-2027 part: $2,650,000 indexed to about $2,998,000; real gain ≈ $502,000, taxed at the marginal rate with the 30% floor.
A $2.3 million headline gain, but only about $502,000 is ever taxed — and that $1.45 million pre-2027 exemption is preserved whether the asset is sold in 2027 or in 2037.
Our view on pre-1985 assets
There is a common misreading that a pre-1985 owner must “sell before 30 June 2027 to keep the exemption”. That is wrong. The exemption on the pre-1 July 2027 part of the gain is preserved either way — it is locked in by the 1 July 2027 valuation, not by a sale. Only growth after that date is taxed, and on a sale within a few years of the transition that slice is small. The decision to sell or hold a pre-1985 asset should be driven by commercial factors — succession, liquidity, the property cycle — not by the CGT change. The one genuine tax action is to obtain and document a defensible market valuation as at 1 July 2027.
Example 5 — a business, not a property
The same logic applies to business assets, and this is where it matters most for private business owners. Suppose the goodwill of a business carried on by a sole trader, a partnership or a discretionary trust, or commercial premises held in a family trust, is sold after 1 July 2027. The gain is split at the asset’s 1 July 2027 value in the same way as the property above — the pre-2027 part under the old rules, the post-2027 part under indexation and the 30% minimum tax.
If the asset is held inside a company, the position is different. The new indexation regime applies to assets held by individuals, partnerships and trusts — not companies. A company does not receive the CGT discount and never has; its gain is taxed under the company tax rules, and the after-tax amount is then subject to the dividend, franking and Division 7A rules when it reaches shareholders. Part 1 covers the company position.
Two further things change the picture for a business sale. First, goodwill is hard to value at a fixed date — a defensible 1 July 2027 valuation of goodwill is more difficult, and more important, than for real estate. Second, an eligible business sale may qualify for the small business CGT concessions, which can reduce or eliminate the taxable gain and sit alongside the transitional split. The interaction of the concessions with the new indexation regime is not yet spelled out. A business sale should be modelled as its own exercise, not read off a property example. Part 3 covers the trust and business angle in detail.
Should you sell before 1 July 2027? Our view
There is no single answer, but the facts allow clear positions for most cases.
The CGT change should not drive the decision. The exemption on value built up before 1 July 2027 is kept whether you sell now or years later, provided you have a defensible 1 July 2027 valuation. Sell or hold for commercial reasons — succession, liquidity, the property cycle — and obtain the valuation either way.
The transition is close to neutral. Selling early just to beat the date is usually the wrong move — you trigger tax now, lose future growth, and indexation may treat the later gain reasonably anyway.
This is the case most likely to favour selling before 1 July 2027. Short, high-growth holds lose the most from the discount, because there is little inflation for indexation to strip out. Model it — the gap can be real here.
Likely no need to act, on the expected treatment — but confirm the super position before relying on it.
Look past 1 July 2027 to the separate 30% minimum tax on discretionary trusts from 1 July 2028. The two changes should be reviewed together, with enough lead time to use the three-year restructure rollover if it is needed.
Residency must be settled before any sale. It changes the answer and the cost.
The Trap
Do not sell a good asset purely to beat a tax date. The reform is not retrospective — gains built up before 1 July 2027 keep the old treatment whether you sell now or in ten years. The decision should be driven by whether you want to own the asset, then by the numbers — not by the calendar alone.
What to do before 1 July 2027
- List every asset you may sell in the next few years and estimate the likely gain.
- For each asset, model the sell-before outcome against the hold-and-split outcome. The answer differs by asset.
- Arrange a defensible market valuation dated 1 July 2027 for property and business assets — including pre-1985 assets, where the valuation, not a rushed sale, is what protects the exemption.
- Do not restructure into super or a company on the assumption those vehicles escape the rules — confirm first.
Frequently asked questions
For CGT events on or after 1 July 2027. For most contracted sales the relevant date is when the sale contract is entered into, not when it settles — so a contract signed before 1 July 2027 generally keeps the old rules even if settlement falls later. The timing depends on the type of CGT event and should be checked for the specific transaction.
No. The reform is not retrospective. Growth in value up to 1 July 2027 keeps the old treatment — the 50% discount, or full exemption for a pre-1985 asset — whether you sell before or after that date.
From 1 July 2027, tax on the post-2027 real gain cannot fall below 30%. If your marginal rate is higher, your marginal rate applies. If lower, the 30% floor applies.
If you hold an asset across that date and sell later, yes — you need to establish its 1 July 2027 value, by a formal valuation or the ATO apportionment formula. For property and business assets, a formal valuation is usually worth the cost.
They are expected to keep their current 33.33% discount and stay outside the new regime. This is expected, not confirmed, and should be checked against the law before you rely on it.
No. The exemption for your main home is not affected by this reform.
Two things. The CGT changes apply to gains made by the trust from 1 July 2027. Separately, a 30% minimum tax on discretionary trust income is announced from 1 July 2028. Part 3 of this guide covers the trust changes in full.
Yes. The 15-year exemption, the 50% active asset reduction, the retirement exemption and the small business rollover are announced as retained, unchanged. Part 3 covers what this means for a business sale.
The same Budget also announced negative gearing changes, separate from the CGT reform. From 1 July 2027, losses on established residential investment properties acquired after 7:30pm on 12 May 2026 will only be deductible against residential property income, not against other income such as salary. Properties held before that announcement are grandfathered. Eligible new builds keep negative gearing, but the definition is narrow: the dwelling must genuinely add to housing supply, and subsequent purchasers do not inherit the concession. This article is about CGT; negative gearing is a separate analysis and is worth its own advice if you hold geared residential property.
Talk to Westcourt before you act
Do not panic-sell. Do the tax modelling before you sign, value or restructure. Book a CGT transition review with Westcourt: we can give tax modelling on the old-rule outcome, the post-2027 transitional split, valuation sensitivity, trust distribution impact, bucket-company exposure, and restructure cost and duty risk — before you sell or restructure.
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