Proactive planning crucial for CGT changes

Changes to how the ATO will deal with CGT on asset disposal mean that investors and small businesses must engage early with advisers, as the Treasury Laws Amendment (Tax Reform No.1) Bill 2026 [and related Bill] (Schedule 1) becomes law on 1 July 2027, one tax expert said.

Included in this bill is the exclusion of the 50 per cent CGT discount for assets purchased after 30 June 2027, which will be replaced by cost base indexation, HLB Mann Judd wrote in an online insights article.

In addition, pre-CGT assets will now have CGT applied on gains accruing post 1 July 2027, and a 30 per cent minimum tax rate will apply to capital gains accruing from 1 July 2027, with an exemption applying for certain income support recipients, the article added.

Accounting Times spoke to the article’s author, HLB Mann Judd business advisory director Tristan Harmstorf (pictured), who stressed the importance of investors and small businesses being proactive in their tax planning and reconsidering their investment structures to ensure they deliver the best outcomes under the new rules.

Despite stressing the need to be proactive, Harmstorf said the changes are not solidified.

“We're still … waiting for the real changes to filter through and the government is still looking at those changes and the various amendments that might be put in place,” he said.

If companies move too quickly before the legislation comes into play, they will risk incurring tax.

“I wouldn't be advising investors to rush out in panic and sell anything. They should just be considered and measured in their approach and look at the changes that the government has proposed now … and [look to plan] with their financial adviser so that they can be aware of the potential outcomes,” he said.

In June, accounting bodies said that valuing illiquid assets will incur high compliance costs. Harmstorf agreed that investors will likely face a financial burden as a result of valuation requirements in the bill.

He also said that investors must begin “looking at [their] investments [and] sitting down with a trusted adviser and making sure you have the right strategies in place for the long-term and not just thinking about short-term tax consequences.”

“It's about]being proactive and starting to look at their investment portfolios now and modelling what the various outcomes that they're trying to achieve are and what the tax implications on that will be, whether it's disposing of investments now or into the future and looking at the implications of that.”

“So it's all about being proactive, and I guess being more hands-on in terms of growing your portfolio in wealth,” he said.

Harmstorf said there is no one-size-fits-all, as all investments differ, meaning each investor will need to consider strategies that suit their requirements.

“Investors in small businesses should be talking to their accountants and financial advisors and going through the rules as they stand now [and] once the final legislation is implemented, reassessing [their strategy] and making any updates that are required and then acting on those in a considerable manner.”