Proposed Tax Reforms: Could Capital Gains Tax Apply Without Selling an Asset?
- Future Accounting
- Jul 28
- 3 min read
Written by: Chris Mulcahy
Proposed tax reforms could significantly affect family businesses, investors and long-term asset owners.
The Federal Government's proposed capital gains tax reforms continue to generate significant discussion, particularly around how they may apply when a person dies or during a relationship breakdown.
Under the current tax rules, capital gains are generally deferred until an asset is actually sold.
However, under the proposed reforms, certain assets may be treated as though they have been disposed of at 30 June 2027, with future capital gains calculated from that date. While the legislation is still being developed, professional bodies including CPA Australia and Chartered Accountants Australia & New Zealand have expressed concerns that, in some circumstances, families could face capital gains tax liabilities even though no asset has actually been sold.
For family businesses, investors and business owners, this could have significant implications.
Why This Matters
Many Australian families have accumulated substantial unrealised capital gains over many years.
These gains may exist in:
Commercial property
Investment property
Shares and investment portfolios
Family businesses
Farming enterprises
Other long-held investment assets
Historically, these gains have generally remained unrealised until the asset was sold.
Under the proposed reforms, that may no longer always be the case.
If ownership changes because of death, divorce or certain restructuring events, the deferred gain may potentially crystallise much earlier than many families expect.
A Simple Example
Assume David purchased a commercial property in 2005 for $900,000.
By 30 June 2027, the property is worth $4.8 million.
Under the proposed reforms, the increase in value up to 30 June 2027 would effectively become "locked in" for future tax purposes.
Several years later, David passes away and the property transfers to his children through his estate.
If the proposed legislation applies as currently understood, the family could potentially trigger a significant capital gains tax liability despite:
not selling the property
receiving no sale proceeds
simply transferring ownership to the next generation.
The tax may need to be funded from borrowings or other family assets.
Why Planning Has Never Been More Important
Whether these reforms proceed in their current form or are amended before becoming law, they reinforce an important message.
Tax planning should not begin when an asset is sold, or after someone passes away.
The best outcomes are usually achieved years earlier, while families still have choices.
Business structures, ownership arrangements, trusts, companies and succession plans all play an increasingly important role in managing future tax outcomes.
Families that leave planning until retirement, death or succession may have far fewer options available.
What Should You Review?
Now is an ideal time to review:
Ownership of business and investment assets
Trust and company structures
Unrealised capital gains across your asset portfolio
Pre-CGT assets
Succession and estate planning
Business succession strategies
Financing arrangements should tax become payable in the future
The earlier planning begins, the more opportunities are generally available.
How Future Accounting Can Help
At Future Accounting, we are already working with family businesses, investors and farming families to understand how these proposed reforms may affect their circumstances.
Through our Future Tax Strategy Review and Future Prosperity Process, we help clients:
Identify unrealised tax exposures
Review business and investment structures
Assess succession and estate planning strategies
Identify restructuring opportunities
Prepare for potential legislative changes before options become limited
Every family and every business is different. The right strategy depends on your assets, ownership structure and long-term goals.
Preserve. Protect. Prosper.
Tax reform is a timely reminder that preserving wealth is about far more than preparing an annual tax return.
It's about understanding where future tax liabilities may arise and taking action while planning opportunities still exist.
If you would like to understand how the proposed tax reforms could affect your family or business, contact Future Accounting to arrange a Future Tax Strategy Review.
Disclaimer
This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.
Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder
Liability limited by a scheme approved under professional standards legislation.
