Reviewed 24 October 2026.
What does the law provide for?
For an asset you or your trust still hold on 1 July 2027, the capital gains tax (CGT) rules set its 30 June 2027 figure at its market value or, if you choose and once one is made, a formula called the apportioning method (ITAA 1997 ss 112-155(3), 112-165(3), 112-175(3)).
It matters because the law generally treats the asset as sold just before 1 July 2027 and bought back (ss 112-155, 112-165). Some assets are excluded, such as new residential dwellings that meet the law's tests and affordable housing (ss 112-155(1)(e), 112-165(1)(e)). Assets bought before 20 September 1985 get their own deemed sale (s 112-175). The part of a later gain that built up to 30 June 2027 can generally still get the 50% CGT discount; the part that builds up from 1 July 2027 does not (ss 112-160 and 115-100). See how the deemed sale works.
- Market value
is the default: what the asset was worth just before 1 July 2027 (s 112-155(3)(a)). A valuation is one way to support it.
- The apportioning method
is a formula you may choose instead, once the Minister makes one and only for the assets it covers (s 112-185). The ATO calls it the "apportionment method" (ATO, CGT reform).
Has the apportioning method been made?
No: at 24 October 2026 the Minister had not made the method, so its final rules are unknown.
Section 112-185 lets the Minister set it by legislative instrument, a type of law made under an Act. It has to work out both the 30 June 2027 sale figure and the new cost base (s 112-185(3)).
A Federal Register of Legislation title search on 24 October 2026 found no such determination, and on 19 October 2026 the ATO said the Government is currently developing it (ATO, 19 October 2026).
Treasury consulted on a draft in August 2026, closing 21 August (Treasury). As drafted, it would:
- cover real property, and assets without a readily ascertainable market value (one not easily found, unlike a listed share price) whose cost base isn't already worked out from market value under another rule; not listed shares;
- estimate the 30 June 2027 figure by assuming the asset's value changed by the same percentage every day between purchase and sale.
A draft is not law, and the final method may differ (draft determination; explanatory statement).
When is the choice made?
Later: by the day you lodge your tax return for the income year of the later sale or other CGT event (the Act's "realisation event", s 977-5), or later if the ATO allows (ITAA 1997 ss 112-155(4) and 103-25(1)).
- For a trust, the trustee chooses by the day it lodges the trust's return for that year (s 112-165(4)).
- The deemed-sale gain or loss waits until that year; the Act notes you can hold off working it out until then (s 112-155(2), note 2).
- The ATO says that, generally, you don't need to know the market value to complete your 2026-27 return. For most individuals and trustees the earliest return affected is 2027-28, and only if they sell (or another CGT event happens) that year (ATO, CGT reform).
How can the two give different answers?
A market value reflects the market on the day; the draft formula assumes steady growth, so the two can differ when growth was uneven.
A market valuation draws on what was known, or reasonably foreseeable, at the valuation date, such as comparable sales or earnings (ATO, Market valuation for tax purposes). The draft formula uses only the price paid (the cost base's first element), the sale price and the days held, so its figure isn't known until you sell (draft s 5).
Illustration under the draft, ignoring costs and inflation indexation (s 110-36(1A)): bought for $400,000, sold for $900,000, held 10 years either side of 1 July 2027. The market value rows show two possible valuation results, not figures you can pick.
| 30 June 2027 figure | Gain to 30 June 2027 | Gain from 1 July 2027 |
|---|---|---|
| Draft formula: about $600,000 | About $200,000 | About $300,000 |
| Market value of $750,000 | $350,000 | $150,000 |
| Market value of $500,000 | $100,000 | $400,000 |
The total gain is the same; only the split changes.
Which one should I use?
Oliver Group doesn't recommend either: it is a tax decision for you and your accountant.
The ATO says that for most assets, including real estate, the market value just before 1 July 2027 will have to be established when you later sell, and that you may instead have the choice of the apportionment method (ATO, CGT reform).
If market value is the route, a valuation as at 30 June 2027 may be useful, prepared after that date: the ATO says not to obtain one earlier (ATO, 19 October 2026). A planning valuation as at today is a current figure to plan around, not the 30 June 2027 value. See when a valuation may be useful.
Questions people ask
What is the apportioning method in CGT?
The apportioning method is a formula the Minister may set under ITAA 1997 s 112-185. Once made, it may be chosen instead of an asset's 30 June 2027 market value, for the assets it covers, to split a later capital gain or loss between the old and new CGT rules.
Has the CGT apportioning method been made yet?
No. At 24 October 2026 the apportioning method under ITAA 1997 s 112-185 had not been made. Treasury consulted on a draft in August 2026, but no determination was on the Federal Register of Legislation, and the ATO says the Government is currently developing it.
When do you choose between market value and the apportioning method?
You choose between market value and the apportioning method by the day you lodge your tax return for the income year in which you sell the asset or another CGT event happens, or later if the ATO allows (ITAA 1997 ss 112-155(4) and 103-25). Nothing is chosen on 30 June 2027 itself.
Which assets would the apportioning method cover?
Under Treasury's August 2026 draft, the apportioning method would cover real property and assets without a readily ascertainable market value: not listed shares, but possibly some private company shares. The method had not been made at 24 October 2026, so its final coverage may differ.
Does the choice apply to assets bought before 20 September 1985?
Yes, once a method is made. Under ITAA 1997 s 112-175, assets acquired before CGT began on 20 September 1985 get their own deemed sale just before 1 July 2027, at market value or, if chosen, the apportioning method figure. This resets the cost base; gains up to then generally stay outside CGT.
Another question? Call 03 8375 4177.
