Taxpayers must prioritise valuations, modelling ahead of CGT changes: PwC

Although the earliest direct impact of the federal budget changes on CGT will not arise until after 1 July 2027, taxpayers should not be complacent, PwC has said.

“The tax and cash-flow implications of current and proposed investments will need careful review well before then,” it warned in an insights piece.

The firm stressed that the valuation, modelling and systems work required to navigate the new regime approaching the 1 July 2027 deadline is firmly a near-term agenda item.

“Taxpayers who begin scoping the implications now – across their existing portfolios, planned transactions and reporting infrastructure – will be best placed to transition into the new regime,” it said.

“Reliable market valuation evidence as at 1 July 2027 will be critical, particularly for unlisted assets - although there will be the alternative apportioning method that taxpayers can choose to apply at the time the asset is ultimately sold.”

However, this may not result in the most appropriate tax outcome, or the ability to obtain accurate market valuations retrospectively, which may become more difficult over time, it added.

Some investors may consider whether to crystallise their gains or losses before 1 July 2027 under existing settings or to retain the asset and apply the new regime, PwC said.

“Those taxpayers with large asset portfolios, including large trusts, will need to consider the system and reporting changes needed under the new regime.”

“Not only will this be to ensure that CGT records appropriately capture adjusted cost bases, but also to calculate the four new categories of capital gains, if relevant. Trustees will also need to prepare for the additional reporting requirements.”

The federal government plans to have legislation for CGT and negative gearing ready when parliament sits in early June, but the policies are not without opposition.

With the clock ticking, the CPI indexation method will apply to capital gains as soon as 1 July 2027, which will involve additional work, including obtaining a valuation on that date.