Nick Bruining: Rush to lock in valuers ahead of CGT changeover

The Australian Taxation Office has released new guidance on how assets will need to be valued under capital gains tax changes to apply from July 1 next year.

This has sparked a big pick-up in enquiries to valuers, with WA’s largest licensed valuation company encouraging investors to “book ahead”.

The controversial reforms will see a new minimum 30 per cent tax rate applied to gains occurring after July 1, and the inclusion of previously GCT exempt assets.

Despite the announcement of the changes in May, there are still no details on a new method of calculating assessable capital gains income where a formal valuation is not obtained. In essence, it will allow investors to apportion capital gains based on acquisition and disposal prices linked to the respective transaction dates.

“The Government is currently developing this method and we will provide further guidance once it has been enacted,” the ATO said.

The tax office warns that any valuations to be adopted for the July 1 changes need to be done close to the effective date and can’t be done earlier.

For listed and readily traded assets like shares and managed investment funds, investors will be able to use the closing share or unit price on Wednesday, June 30, 2027.

Unlisted assets will require formal valuations from independent sources such as licensed valuers. You won’t be able to use a real-estate agent to establish the June 30 valuation on property.

WA State director of CBRE Jamie Van Burgel said enquiries from property investors had picked up significantly in recent weeks.

“They’re concerned there may be a rush closer to the date and that securing a valuer could become more difficult if they leave it too late,” Mr Van Burgel said.

Valuations must fully comply with ATO guidance to be acceptable in subsequent CGT calculations.

“The valuation report needs to apply for the relevant July 1, 2027 assessment date and can only be completed at or after that date, with the most relevant and up-to-date market evidence at that time,” Mr Van Burgel said.

Along with other valuers in the market, CBRE’s 20 WA-based valuers provide valuations used by banks and other lenders when someone applies for a mortgage. The valuation itself will depend on a number of variables.

While a valuation can sometimes vary from the ultimate price paid for a property, it can’t factor in human emotions that might drive the price to a different level.

“A valuation is an independent professional opinion based on the market evidence available at a particular point in time,” Mr Van Burgel said.

“The level of certainty can vary depending on the property type, the availability of comparable sales evidence and prevailing market conditions.”

The cost of a formal valuation on a property valued under $1 million typically starts from about $395, depending on the valuer you choose.

Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association.