The CGT Rules Have Changed. Know What Your Practice Is Worth.

The capital gains tax changes announced in the 2026–27 Federal Budget are no longer a proposal. They are law. They change how capital gains are taxed for practices held by individuals, trusts and partnerships (company-held practices are treated differently). For those owners, the sensible response is not to rush a sale before an imagined deadline, but to understand your position — and to know what your practice is worth.

Current as at 18 July 2026. This is the position as it stands today. Tax law in this area is still settling and some related measures are yet to be finalised, so the detail may change — confirm the current position with your tax adviser before acting.

These measures were legislated in June 2026 as the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, receiving royal assent on 26 June 2026. A few related measures — the treatment of discretionary and testamentary trusts, a concession for early-stage business founders, and temporary rollover relief for restructures — are still being finalised. The core change to the discount is settled.

I am not going to walk you through the tax mechanics; that is your tax adviser's work, and it turns on how your practice is structured. What I want to do is clear up the misunderstanding I keep hearing, and point you to the thing that genuinely matters: your value.

From 1 July 2027, the 50% CGT discount is replaced by two things working together. The first is cost base indexation, which lifts the cost of an asset for inflation so you are taxed on the real gain rather than the paper gain. The second is a 30% minimum tax on net capital gains, regardless of the marginal rate that would otherwise apply. This is broadly a return to the regime that operated before 1999, with a floor added on top. It applies to individuals, trusts and partnerships, for assets held more than twelve months. Companies never received the discount, so a company-held practice is affected differently — worth checking which applies to your structure.

Two points matter for the professions. The small business CGT concessions all survive, and the turnover threshold for the 50% active asset reduction has been lifted from $2 million to $10 million — though the 15-year exemption, retirement exemption and rollover keep their existing tests. And older practices should take note: assets acquired before 20 September 1985, previously outside the CGT net, are brought in for gains accruing from 1 July 2027.

Here is the belief I keep hearing: sell before 30 June 2027, or lose the discount. That is not how the law works. Under the transitional rule, every asset held on 30 June 2027 is treated as sold and reacquired at its market value on that date. The gain accrued up to that point keeps the 50% discount and is simply deferred until you actually sell. Holding does not forfeit the discount you have already earned.

There is a related detail worth knowing. For a standard sale, it is the contract date that determines which rules apply, not the settlement date — so a contract signed on or before 30 June 2027 falls under the current rules even if it settles later. But the broader message stands: the accrued discount is protected either way, so the timing of a sale should be driven by whether the practice is ready and the deal is right, not by a tax date.

Because the split between old and new treatment is set primarily by the market value of your assets at 1 July 2027, that valuation is the thing to get right. For pre-1985 assets and older structures being brought into the regime, it is effectively necessary — those assets are reset to their market value just before 1 July 2027, and you will want evidence of that figure. For every other owner, it is the defensible number your tax adviser needs to work from.

This is where practice owners should put their attention. Not on beating a deadline that does not bite the way people think, but on establishing what the practice is worth around the changeover — a number that serves you whether you sell soon, sell in five years, or bring in an equity partner along the way.