Australia: Market valuation requirements under new capital gains tax rules

Following passage on June 26, 2026, of the first tranche of capital gains tax (CGT) reform, the Australian Taxation Office (ATO) released a guide on the market valuation requirements under the reform.

Under the new CGT rules taxpayers may:

• Need to determine the market values of CGT assets immediately before July 1, 2027, when calculating capital gain or loss
• Have the choice to determine the values of CGT assets using an alternative method, known as the apportionment method

In addition, taxpayers holding CGT assets before July 1, 2027, who may have these assets treated as having been disposed of immediately before July 1, 2027, and re-acquired on July 1, 2027, would have to calculate capital gains and losses for each period as though they are separate ownership periods. To calculate the capital gains or losses for each period, taxpayers may need to determine the market values of the assets immediately before July 1, 2027, as the market values will be used as the capital proceeds for the deemed disposal of the assets and as the first element of cost base to calculate the gain accrued after July 1, 2027.

Any capital gain or loss relating to the deemed disposal of assets immediately before July 1, 2027, is deferred and only needs to be reported when the asset is disposed of, or another CGT event occurs.

Background

The first tranche of CGT reform, comprised of the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and its imposition bill, Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026, replaced the 50% CGT discount for individuals, trusts and partnerships with cost base indexation to ensure only real gains are subject to taxation and introduced a 30% minimum tax on capital gains (with an exemption for certain income support recipients), effective for all capital gains accruing on and after July 1, 2027, including gains accruing on pre-CGT assets.