Key highlights

  • Parliament passed the first tranche of capital gains tax reform legislation on 26 June 2026.
  • Assets held before 1 July 2027 may be treated as disposed of immediately before that date and reacquired on 1 July 2027.
  • The ATO said taxpayers should not obtain valuations before that date, because a valuation cannot be forward-looking.

The Australian Taxation Office has published guidance on market valuations under the government’s capital gains tax reforms, setting out how a 1 July 2027 start date could change the way gains on existing assets are worked out. The ATO said on 19 October 2026 that the guidance follows Parliament’s passage of the first tranche of the reform legislation on 26 June 2026.

What the new rules require

Under the new rules, taxpayers holding CGT assets before 1 July 2027 may have those assets treated as disposed of immediately before that date and reacquired on 1 July 2027. Gains and losses are then calculated for each period as though they were separate ownership periods.

To do that, taxpayers may need to determine the market value of the asset immediately before 1 July 2027. The ATO said that value is used as the capital proceeds for the deemed disposal and as the first element of cost base for working out the gain that accrues after 1 July 2027. Any capital gain or loss on the deemed disposal is deferred and only needs to be reported when the asset is sold or another CGT event occurs.

Valuations: timing and alternatives

The ATO addressed one practical question directly. Taxpayers do not need a valuation in place on 1 July 2027 and, the ATO said, should not obtain one before that date, because a valuation cannot be forward-looking.

The ATO also said taxpayers may have the choice of an alternative method known as the apportionment method for determining the value of their CGT asset. The government is still developing that method, and the ATO said it will provide further guidance once it has been enacted.

Existing valuation standards and what comes next

The ATO pointed to its existing guidance on market valuations for tax purposes, which covers its expectations, the evidence needed to support a valuation and the factors it considers when assessing accuracy.

Acknowledging that taxpayers and advisers want certainty about how the reforms will operate, the ATO said it is considering what advice and guidance products are needed, which tools and calculators to develop or update, and what systems changes are required for compliance and administration. It said it will issue guidance in stages as further legislation is developed and enacted, including how to determine market value for certain asset types, which professionals to consider for valuations and what documentation and records are needed.