CGT 2027 and family trusts: what trustees and their accountants should know

What changed, and why trusts are in the picture

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 is law. For CGT events from 1 July 2027, the 50% CGT discount for individuals and trusts no longer applies to gains that build up after that date. Instead, the cost base can be indexed to inflation, and resident individuals generally pay at least 30% on those capital gains.

Family trusts are squarely inside these changes. Many families hold a business, shares in a family company or units in a unit trust through a discretionary trust. The discount now stops for growth after 30 June 2027, but growth before then is protected by a transitional rule that applies to trusts in its own right.

How the transitional rule works for a trustee

Under section 112-165 of the Income Tax Assessment Act 1997, a trust that meets the conditions is taken to have sold its relevant CGT assets just before 1 July 2027 and bought them back on 1 July 2027. The amount used is the market value just before 1 July 2027, unless the trustee chooses an apportioning method instead, once one is made. In practice that makes 30 June 2027 the valuation date.

• It is automatic. The only choice is how the 30 June 2027 amount is worked out.
• Nothing is payable in 2027 because of it. The notional gain or loss is deferred until a later CGT event, usually a sale.
• It covers assets the trust acquired before 1 July 2027 and held right through to the end of 30 June 2027.
• It applies only if at least one beneficiary could make a discount capital gain. A foreign or temporary resident beneficiary does not count for this test, and nor does a complying super fund.

When the asset is eventually sold, the gain is split in two. The part that built up to 30 June 2027 can keep the 50% discount, provided it would qualify as a discount capital gain at that time. The part that builds up from 1 July 2027 is worked out under the new rules, with indexation and no discount.

There is also a separate rule for pre-CGT assets, those acquired before 20 September 1985. They are treated as sold and reacquired at market value immediately before 1 July 2027, which keeps the earlier gain exempt but means later growth becomes taxable. Older trusts sometimes still hold these.

What a family trust might need valued

The deemed sale applies asset by asset, so start by listing what the trust actually owns.

What is valued is the trust's interest, not the company for its own tax purposes. A 40% parcel and a 100% holding in the same company can have quite different values per share, because control, marketability and shareholder agreements all affect what a buyer would pay.

Valuation or apportionment: the trustee's choice

The law does not insist on a valuation. Market value just before 1 July 2027 is the default, but section 112-185 allows the Minister to set an apportioning method by legislative instrument, and a trustee may choose to use it instead once it is made. A draft instrument was released for consultation in August 2026. As at early October 2026 it had not been finalised, so the details may change.

The choice is made later, by the time the trust lodges its return for the year the asset is eventually sold. That flexibility has a catch: a market value chosen at a sale in, say, 2035 must still be as at 30 June 2027, and reconstructing it from old files is harder and less convincing than recording the evidence close to the date.

Whether a valuation is worthwhile is for the trust's tax adviser. It is often considered where:

• The business or shareholding has grown strongly in value before 30 June 2027.
• A sale, buy-in, buy-out or restructure is likely in the next few years.
• The trust holds an interest, such as a minority parcel, where a simple formula may not reflect the real value.

How the gain reaches beneficiaries

A family trust usually does not pay tax on a capital gain itself. The gain generally flows to the beneficiaries entitled to it, and the discount follows the gain. Under the new rules:

• The pre-2027 part of a gain can still carry the 50% discount when it reaches an eligible individual beneficiary, if the conditions are met.
• The post-2027 part has no discount. Indexation applies instead.
• The 30% minimum tax on capital gains in Division 119 generally applies to resident individuals, so it can reach trust gains that are attributed to them. It is not a tax on the trust as an entity.

Distribution and streaming decisions are tax advice that depend on the trust deed, and we do not give it. A valuation simply gives the trustee and accountant a documented starting figure.

The separate 2028 trust minimum tax is not yet law

This is a different measure from the CGT changes, and it is not law. The Government has proposed a 30% minimum tax on the taxable income of many discretionary trusts, to start from 1 July 2028. Draft legislation was released in September 2026 and a Bill was introduced into Parliament on 14 October 2026. The final rules, exclusions and start date may change before Parliament passes it, if it does.

As proposed, the trustee would pay at least 30% on the trust's taxable income, and non-corporate beneficiaries would receive a non-refundable credit for it. Some trusts would be excluded, and the draft includes an opt-out for trusts that lock in fixed distributions. It also proposes roll-over relief for three years from 1 July 2027 for trusts that restructure, subject to the legislation passing.

Small business concessions still matter

The four small business CGT concessions in Division 152 continue after 1 July 2027, and a trust can access them where the conditions are met. One threshold changes: the turnover test for the 50% active asset reduction rises from the income year that includes 1 July 2027, while the other concessions keep their existing turnover and net asset tests. Market value often matters here too, for example in the maximum net asset value test.

An illustrative example

A practical checklist for trustees and accountants

1. 01Confirm the structureWho is the trustee, what does the trust deed allow, and which beneficiaries could receive a discount capital gain?
2. 02List the CGT assetsNote each business, parcel of shares, unit holding or partnership interest the trust owns, with its acquisition date and cost base records. Flag anything acquired before 20 September 1985.
3. 03Talk to the tax adviserDecide, asset by asset, whether a market value or an apportioning method (once one is made) is likely to suit, and whether any sale or restructure is planned.
4. 04Keep records to 30 June 2027Financial statements, management accounts and any offers received around that date are the evidence a valuer relies on.
5. 05Reserve a place if a valuation is likelyA 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.

How Independent Business Valuation can help

We value businesses and business interests held through family trusts, including shares in family companies, units in unit trusts and interests in trading businesses. Each report is prepared by a suitably qualified business valuer at Valuo and states the 30 June 2027 valuation date and the exact interest valued.

We charge one fixed fee of $999 + GST for a full valuation report on one business or ownership interest with annual turnover under $10 million. Groups and several interests are quoted in writing, and each additional entity or interest is $795 + GST. The fixed fee applies once we confirm the interest, purpose, structure and records fit the fixed-fee scope. Anything outside it is quoted in writing before we start. Fixed fee, confirmed in writing before we start. No hourly billing and no surprises.

We do not give tax advice: whether a valuation is the right choice belongs with the trust's tax adviser. Accountants can refer trustee clients, and see a matter only with the client's written consent.