What happens to my business on 1 July 2027?

First, what actually changes

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

Gains that built up before 1 July 2027 are protected by a transitional rule. If you are in scope, each CGT asset you hold on 30 June 2027 is treated as sold and bought back at its market value just before 1 July 2027. That figure splits the old gain, which can still get the 50% discount if the usual conditions are met, from the new gain, which is taxed under the new rules.

You also do not have to get a valuation. The law lets you choose an apportioning method instead of market value once the Government makes one, and you make that choice in the tax return for the year you eventually sell. The method was still in draft at the time of writing. Your tax adviser decides which approach suits you.

Why your structure matters more than your industry

The rule does not look at the business. It looks at the taxpayer who owns each CGT asset. Two identical cafes can be treated quite differently if one is run by a sole trader and the other by a company. So the first question is always: who owns what?

Sole trader

As a sole trader there is no separate entity. You own the goodwill, the customer list, any trademarks or software, and the business premises if you own them. If you are an Australian resident and you held those assets through 30 June 2027, each is treated as sold and bought back just before 1 July 2027.

For many sole traders the largest CGT asset is goodwill: the value of the business beyond its equipment and stock. It is also the hardest to pin down later, because it depends on profits, customers and how much of the business relies on you personally. Some equipment is dealt with under the depreciation rules rather than CGT, so ask your accountant which assets count.

Many sole traders sell or retire after years of growth. If that sale comes after 1 July 2027, the 30 June 2027 figure decides how much of the gain can still get the 50% discount. The small business CGT concessions continue alongside the new rules and may reduce or remove the gain if you qualify.

Partnership

A partnership does not pay CGT itself. Each partner owns a share of each partnership asset and is taxed on their own share of any gain. The Budget papers describe the change as applying to individuals, trusts and partnerships, and, on our reading, the Act reaches a partner through their share.

Each partner is treated on their own facts. An individual partner who is an Australian resident is reset on their share. A partner that is a family trust is reset if the trust has an eligible beneficiary. A partner that is a company generally is not reset.

The practical point for partners is consistency. If two partners use different figures for the same goodwill, at least one of them is probably wrong, and the difference can surface when the business is sold or a partner leaves. One valuation of the partnership assets, with each partner's share worked out from it, keeps everyone on the same page. Check your partnership agreement too: buy and sell clauses can set their own valuation method.

Company

Companies never had the 50% CGT discount, so they are outside the new indexation and the 30% minimum tax. The transitional reset does not apply to a company's own assets. If your business runs through a company, nothing changes inside the company on 1 July 2027 for assets bought after 19 September 1985.

The shareholders are a different matter. Shares in a private company are CGT assets. If they are held by an Australian resident individual, or by a trust with an eligible beneficiary, those shares are treated as sold and bought back just before 1 July 2027. So for a company owner, the figure that matters is usually the value of the shares, not the value of the goodwill on its own.

Valuing shares is not the same as valuing the business. It starts with the whole company, then considers what each parcel is worth to its holder. A 25% holding with no control over dividends or a sale can be worth less per share than a controlling stake. Our article on minority interests explains why.

Discretionary (family) trust

In a discretionary trust the trustee, often a family company, owns the business assets. The reset applies to a trust if at least one beneficiary could make a discount capital gain, which in practice usually means an Australian resident individual. A family trust with a resident individual beneficiary will usually meet the test; each trust has to be checked.

The trust's goodwill and other CGT assets are treated as sold and bought back just before 1 July 2027. When the business is later sold, the pre-2027 part of the gain can still carry the 50% discount as it flows out to beneficiaries, if the usual conditions are met. The post-2027 part is generally taxed under the new rules in the hands of the beneficiaries.

Some owners are already asking whether to move a business out of a trust. The existing small business restructure roll-over may allow active business assets to move between entities without an immediate tax bill, if strict conditions are met. Market value often still matters in a restructure, so the 30 June 2027 question and the restructure question are worth answering together.

Unit trust

A unit trust has two layers, and both can matter. At the trust level, the trustee owns the business assets and is reset if an eligible beneficiary is among the unit holders. At the owner level, each unit holder owns units, which are CGT assets in their own right.

Units held by an Australian resident individual, or by a family trust with an eligible beneficiary, are reset just before 1 July 2027. Units held by a company are not. In a unit trust shared between two families, each family may hold through a different vehicle, so the answer can differ from one unit holder to the next.

Whether you need a figure for the trust's assets, for the units, or for both depends on what is likely to be sold later. Your adviser will usually start with the layer where a sale is most likely.

What to do before and after 30 June 2027

1. 01Map who owns whatList each entity, who holds the shares or units, and which assets sit where. This one page answers most of the questions above.
2. 02Talk to your accountantAsk which holdings are in scope and whether a valuation or an apportioning method (once one is made) suits each one. Your tax adviser decides how the rules apply.
3. 03Keep good records to 30 June 2027Financial statements, management accounts, customer and contract data, and anything that shows the state of the business on that date.
4. 04Book the valuation if you want oneA 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.

If a valuation suits you, Independent Business Valuation values the business or the interest that matters: the goodwill, the shares, the units or a partnership share. 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.