Short answer
It is a formula the Government has proposed, under a power in the tax law, to split a capital gain at 1 July 2027 instead of using a market valuation. The draft assumes one steady compounding growth rate from purchase to sale. In October 2026 it was still a draft and could not yet be used. Your tax adviser decides.
How it works in principle
For a business interest held by an individual or a trust, growth from 1 July 2027 is generally taxed under new rules, while growth before it keeps the old treatment, which may include the 50% CGT discount. So the gain on a later sale is split at the end of 30 June 2027.
The default line is market value just before 1 July 2027, which usually means a valuation. The apportionment method is the proposed alternative: a formula that splits the gain by time instead of by evidence.
The draft uses what you paid, what you sell for and the days you held the asset. It assumes one steady compounding growth rate every day, then reads off where that curve sat at the end of 30 June 2027. How the business performed along the way plays no part.
Where it stands legally
The power to set a method is law: section 112-185 of the Income Tax Assessment Act 1997 lets the Minister make one by legislative instrument.
Treasury released a draft instrument for consultation in early August 2026 (consultation ran from 4 to 21 August 2026). When we checked the Federal Register of Legislation on 13 October 2026, it had not been made. The final version may differ: check its status with your adviser.
The draft covers only real property and assets without a readily ascertainable market value. Listed shares are out. Treasury's draft notes say private company shares may not always have one. Some assets already valued under other rules, such as shares from a demerger, are excluded.
Who decides, and when
Nothing is chosen in 2027. The choice between market value and the method is generally made with your tax return for the year you sell. Because the formula needs the sale price, nobody can tell in 2027 what it will produce.
That is a tax decision for you and your adviser, not a valuer. What you control now is evidence: market value is the default, and a valuation as at 30 June 2027, prepared soon after that date, gives that figure the best support, because the records behind it are hard to rebuild years later. For both routes side by side, read valuation or apportionment.
A valuation as at 30 June 2027 is prepared after that date, once your records to 30 June 2027 are available. You can book your place now. Independent Business Valuation values the business or interest; we do not give tax advice.
Could 30 June 2027 matter for you?
Five quick questions. No names or contact details. General information only, not tax advice.
Question 1 of 5: Who owns the business?
Whoever holds the business assets, or the shares or units in it. Sole traders: choose me personally.
General information about the 1 July 2027 CGT changes, not tax advice. We value businesses and business interests; your tax adviser applies the law to your circumstances.
Read the full guide
- Valuing a business as at 30 June 2027: the date and the evidenceA valuation for the 1 July 2027 CGT changes is not a valuation of your business today. It measures what the business, or your interest in it, was...
- CGT business valuation as at 30 June 2027.From 1 July 2027 the CGT rules change for Australian resident individuals, and for many trusts and partners. If your adviser wants your business...
- Valuation or apportionment: two ways to work out the 30 June 2027 amountMarket value or the draft apportionment method: how each sets the 30 June 2027 amount, where they part ways, and why the choice can wait.
- Preparing your records for a 30 June 2027 valuationAn item by item records checklist for owners and accountants, and why records made at the time beat anything rebuilt years later.
- How a valuation worksThe steps, what we analyse and what the report contains.
- What a valuation costsOne fixed fee for turnover under $10 million, confirmed in writing before we start.
Related questions
Is the apportionment method the same as a valuation?
No. A valuation looks at the business as it stood at 30 June 2027. The draft method uses only the purchase price, sale price and dates, so it can land far from what the business was worth.
More short answers
- Is a 30 June 2027 valuation needed for every business?No. The 30 June 2027 rule applies to assets held by Australian resident individuals and trusts with at least one eligible beneficiary, not...
- Can I get a valuation as at 30 June 2027 after that date?Yes. Valuing a business as at a past date, called a retrospective valuation, is normal valuation work. A valuation as at 30 June 2027 can only be...
- Does a company need a 30 June 2027 valuation?Generally, no. Companies can’t use the 50% CGT discount, so the 30 June 2027 rule does not reach a company’s own assets, except any acquired before...
- Do the small business CGT concessions still apply after 1 July 2027?Yes. All four small business CGT concessions continue after 1 July 2027. From the income year that includes that date, the 50% active asset reduction...
Sources
- Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (No. 49, 2026), sections 112-155 to 112-185, Federal Register of Legislationlegislation.gov.au
- Treasurer: Consultation on next tranche of tax reform legislation (4 August 2026)ministers.treasury.gov.au
- Treasury consultation: Capital Gains Tax and Negative Gearing, Tranche 2 Legislation (c2026-792170)consult.treasury.gov.au
- Treasury: draft explanatory statement, Income Tax Assessment (Method for Apportioning Capital Gains and Capital Losses) Determination 2026storage.googleapis.com
- ATO: Tax reform, boosting home ownership, reforming negative gearing and capital gains tax (QC107304)ato.gov.au
- ATO: CGT discountato.gov.au
Updated
General information only, not advice about your circumstances. A valuation depends on the facts of the business and the purpose it is for.