Get your house in order before the CGT changes on 1 July 2027

Before we start: this article is our interpretation of enacted legislation and of announced and draft measures, some of which are still being finalised. It does not constitute financial or tax advice. You should seek independent financial and taxation advice relevant to your circumstances. Legislative status checked 6 October 2026.

The capital gains tax rules for business owners change on 1 July 2027. Founders of recruitment and staffing businesses have been asking me what they should be doing now.

My answer is practical. If you might sell after 1 July 2027, it is worth planning for a credible valuation of your business at that date. Getting ready for it comes down to four things: getting your house in order, understanding what drives the value of your business, planning the valuation and taking the right questions to your accountant. None of it commits you to a sale or a restructure.

The change in brief

From 1 July 2027, the 50% CGT discount for individuals, trusts and partnerships is replaced by indexation and a 30% minimum tax on gains. Growth in your business before that date can keep the old discount, where eligible, even if you sell years later.

That makes the value of your business at 1 July 2027 the dividing line. Market value just before that date is the starting point, and Treasury has published a draft formula-based alternative. For the detail, see our guide to the CGT changes for business owners.

1. Get your house in order

Being ready for an external party to look at your business is prudent at any time. Working with an external party that provides business review and valuation is an excellent step, and the 1 July 2027 changes are a good reason to start.

• Clean accounts. Run a clean and structured profit and loss statement, so non-business expenses are easy to identify. Then ask yourself: "Are the financial accounts clear enough for another party to understand?"
• Realistic profit. A valuer is looking for the profit the business can sustain over time. Lifting profit just before a valuation date rarely helps, and aggressive adjustments do not build trust.
• Working capital. Not all the cash and assets sitting inside the business necessarily belong to the shareholders. Know how much the business needs to run, and how much is surplus.
• Ownership and records. Know whether you hold the business personally, through a trust, through a company or a mix, and find the records that show what you paid.
• Co-owners. If you share ownership, talk about each person's objectives early. Those objectives shape what kind of transaction would suit you later.

2. Know what drives value

Equity value is based on expected future performance. In my experience the drivers are consistent across the industry: predictable revenue, a diverse client base, quality and consistency of earnings, leadership beyond the founder, reliable financial information, repeatable processes and a clear position in the market.

The most useful exercise is to see your business from the perspective of a potential buyer. Three questions are a good start:

• How much of your revenue is forecastable? That is revenue that can reasonably be expected to continue, based on existing client arrangements. And does a lot of your profit come from one or a few clients?
• How much depends on you? Reducing that dependence carefully, with repeatable ways of working, builds value.
• Do your clients know more than one person in your business? Multiple points of contact with every client reduce the risk of a relationship leaving with a consultant.

3. Plan your valuation at 1 July 2027

A professionally prepared valuation is an opinion formed at a point in time. For anyone who may sell after 1 July 2027, that point in time is now fixed.

• Make it credible. The ATO's general valuation guidance says a valuation must be "objective and supported with appropriate evidence". Two experienced valuers can reach slightly different conclusions, so the evidence behind the opinion counts. Sections 1 and 2 are that evidence.
• Book early. Valuations are usually prepared after the date they relate to, and the months after 30 June 2027 are expected to be busy.
• Check whether you need one. Some situations may make a valuation unnecessary, such as signing a sale contract before 1 July 2027 or qualifying for the small business 15-year exemption. Confirm yours with your accountant.
• Use it as a reality check. I would be wary of building personal wealth plans around a large cheque at an eventual sale. Knowing the value today and the possible sale scenarios is the better starting point.

4. What to discuss with your accountant or tax adviser

Take these questions with you:

1. Which parts of the CGT change apply to the way my business is owned?
2. Do I need a valuation at 1 July 2027?
3. What records will I need to show what I paid, and do I have them?
4. Are my accounts set up so non-business expenses and genuine one-offs are easy to identify?
5. How much of the cash in the business is needed to run it?
6. Given what my co-owners and I want, what structure and timing would suit us?
7. Does the proposed trust tax affect me, and what would any restructure cost, including stamp duty?

The proposed 30% minimum tax on certain discretionary trusts, from 1 July 2028, is not yet law. I would not restructure in a hurry.

A simple first step

Put an hour in the diary with your accountant before the end of the year, and take these questions with you.

If you would like to understand what your agency is worth today, that is the work we do for recruitment, staffing and offshoring businesses. Read more about how recruitment and staffing firms are valued. For the wider picture of preparing a business for sale, our book Exit Like an Expert covers it.