Is selling an agency a CGT event?
Usually, yes. Treasury's small business explainer says selling your business name, client database or business goodwill triggers a CGT event. A disposal is CGT event A1, and for a disposal under a contract the event happens when you enter into the contract, not at settlement (section 104-10 of the Income Tax Assessment Act 1997).
Who makes the gain depends on what is sold. In an asset sale, the entity that owns the agency sells the goodwill, the rent roll or book and other assets. In a share sale, the shareholders sell their shares, and different discounts and concessions come into play.
What changes for CGT from 1 July 2027?
The ATO states that from 1 July 2027 the 50% CGT discount for individuals, trusts and partnerships is replaced by cost base indexation and a 30% minimum tax rate on capital gains, that these measures are now law, and that they apply to gains accruing after 1 July 2027. Section 115-100 now limits the 50% discount for individuals and trusts to CGT events happening before that date.
Where an Australian resident individual or a trust holds an asset across the date, the Act generally treats it as sold just before 1 July 2027 and reacquired, for its market value or an amount worked out under an apportioning method (sections 112-155 and 112-165), with the gain or loss deferred until the asset is actually sold. The valuation date is therefore 30 June 2027. A market valuation at that date may be useful, but it is not strictly required. Companies never had the discount, so the change generally does not alter a company's position; a company asset acquired before 20 September 1985 is the exception (section 112-175), so ask your adviser.
Hypothetical illustration: a principal holding her agency company shares personally signs a sale contract in August 2027. Her gain is generally split at 30 June 2027: the gain to that date can still qualify for the 50% discount, and the gain after it falls under the new indexation and minimum tax rules. A 30 June 2027 valuation is one way to measure the split; the apportioning method is the other.
Is anything still changing?
Yes. A further Bill, the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026, was introduced on 14 October 2026 and passed the House of Representatives on 29 October 2026. It would clarify how the rules apply in more complex cases, including some trust structures. As at 15 November 2026 it had not passed the Senate, so it is not law. Check the position with your adviser before you rely on the detail, and before you choose between a 30 June 2027 market valuation and the apportioning method.
Do the small business CGT concessions still apply?
Yes. Division 152 keeps its four concessions: the 15-year exemption, the 50% active asset reduction, the retirement exemption and the roll-over, and Treasury states that all four are staying. The basic conditions include being a CGT small business entity (aggregated turnover under $2 million) or meeting the $6 million maximum net asset value test, and the asset passing the active asset test; shares and trust interests face extra conditions (section 152-10).
Treasury says the turnover threshold for the 50% active asset reduction rises from $2 million to $10 million from 1 July 2027. The ATO applies the 15-year exemption first, then capital losses, the CGT discount, the 50% active asset reduction, and then the retirement exemption or roll-over. Because the net asset value test looks at the net value of CGT assets, the market value of the agency and of connected entities' assets can matter.
How is the price allocated, and does GST apply?
An agency sale often includes goodwill, a rent roll or client book, a restraint on the seller, and plant and equipment. The parties and their tax advisers settle how the price is split; a valuation can value each component at the contract date so the split rests on evidence.
GST is a separate question. Under section 38-325 of the GST Act, as the ATO's ruling GSTR 2002/5 explains, the supply of a going concern is GST-free where it is for consideration, the buyer is registered or required to be registered, both parties agree in writing that it is a going concern, and the seller supplies all of the things necessary for the continued operation of the enterprise and carries it on until the day of supply. Whether a sale of a rent roll or book on its own meets those conditions depends on its facts.
How are earn-outs and sales to family or staff treated?
An earn-out that meets the look-through conditions in Subdivision 118-I, including benefits provided within five years after the end of the income year of the CGT event and arm's length dealing, has the gain or loss on the right disregarded, with later payments added to the seller's capital proceeds. Otherwise, the ATO says an earlier approach applies and the right can need its own market value.
For sales to family members, related entities or staff, section 116-30 replaces the capital proceeds with market value where the parties did not deal at arm's length and the price was more or less than market value, or where some of the proceeds cannot be valued.
Which questions should you settle with your tax adviser?
Take this checklist to your accountant or tax adviser before the contract is signed:
- ·What is being sold, and who owns it: business assets, a rent roll or book, or shares or units held by a company, trust, partnership or individuals
- ·When the contract will be signed, as CGT event A1 generally happens then
- ·Whether the 30 June 2027 deemed sale applies, and whether market value or the apportioning method suits
- ·Whether the Division 152 basic conditions are met, including the extra conditions for shares
- ·How the price is allocated between goodwill, the book, any restraint and other assets
- ·Whether the sale can be a GST-free going concern, and what the contract must say
- ·How any earn-out, retention or clawback is treated
- ·Whether a market value is required, and at what date
What do we need from you?
Where your adviser asks for a market value, we usually ask for:
- ·The draft contract or term sheet, and a chart of the entities involved
- ·Three years of financial statements and accounts to the valuation date
- ·Revenue by client, or a book report reconciled to the accounts
- ·The valuation date your adviser has asked for, such as the contract date or 30 June 2027
What does a valuation for a sale or tax purpose cost?
This page is general information about the law as at 17 October 2026, not tax advice. Every valuation is a fixed fee agreed in writing before work starts; the 30 June 2027 change uses the same fees. The band is set by the annual revenue, excluding GST, of what is valued: a rent roll's annual management income, an insurance or mortgage book's annual recurring income, or the agency's total annual turnover where the whole agency or shares or units in it are valued. Delivery time starts once payment and all required information have been received.
- ·Small Business Valuation: $1,495 + GST where the revenue of what is valued is under $2 million, delivered in 2 business days
- ·Medium Business Valuation: $2,495 + GST from $2 million to $3 million, delivered in 3 business days
- ·Large Business Valuation: $3,495 + GST above $3 million up to $10 million, delivered in 3 business days
- ·Above $10 million: quoted in writing before work starts, with the delivery date agreed before commencement
- ·Expert report for a dispute or court: $4,495 + GST, with the delivery date agreed before commencement
- ·Add-ons: +$495 per retrospective (past) valuation date and +$795 per additional entity