The Australian Taxation Office (ATO) has issued a warning to businesses against inflating asset valuations to circumvent upcoming changes to capital gains tax (CGT) introduced by the Albanese government. The reforms, announced in the May budget, represent the most significant adjustment to CGT rules in four decades, including the elimination of the 50 percent discount on capital gains in favor of an inflation-indexed discount. These measures, combined with a ban on new negative gearing for existing properties, aim to generate $43 billion in revenue.
The changes, set to take effect from July 1, 2027, require taxpayers to establish accurate valuations of their assets—including property, shareholdings, and businesses—as a baseline for future CGT assessments. Many investors and business owners are seeking valuations as of June 30, 2027, to maximize eligibility for the current 50 percent discount before the new, generally less favorable inflation-indexed discount applies.
An ATO spokesperson emphasized that deliberately inflating or deflating valuations for tax advantage will attract compliance scrutiny. The tax authority, which recently faced criticism over its decision to stop accepting credit card payments after June 2027, intends to closely monitor valuations suspected of being manipulated to avoid tax obligations.
Treasurer Jim Chalmers acknowledged on Friday that debates surrounding the tax reforms have overshadowed broader efforts aimed at improving Australia’s productivity. He noted that hundreds of thousands of businesses will need to revalue potentially millions of assets to comply with the new CGT regime.
Industry representatives say demand for valuation services is expected to surge ahead of the July 2027 deadline. Troy Williams, chief executive of the Auctioneers & Valuers Association of Australia, highlighted capacity challenges within the valuation profession, particularly for specialised asset types such as fine art, antiques, and collectibles. Williams also pointed out the technical difficulties in reviewing these valuations for compliance, even among certified professionals.
Leo Delgado, director of business valuation consultancy Proval Partners, predicted increased valuation work but urged caution. He stressed that valuations must reflect genuine market value based on sound methodologies and commercial evidence to withstand ATO scrutiny. Delgado warned that Labor’s proposed CGT formula, which assumes consistent compound growth over the ownership period, may undervalue gains realized before July 2027 for businesses that have grown significantly. This could lead to higher tax liabilities post-reform and support the case for independent valuations for entities planning sales or ownership changes around that time.
Delgado added that retrospective valuations remain an option if accurate records exist, reducing the need for businesses to rush into valuation commissioning immediately.
Meanwhile, the Australian Securities & Investments Commission (ASIC) has been reviewing valuation practices, particularly regarding unlisted investments in superannuation funds. ASIC Commissioner Simone Constant underscored the importance of accurate valuations in the private credit sector to ensure investor confidence and early risk recognition, noting that valuers, auditors, and rating agencies all share responsibility for maintaining integrity in financial reporting.