Capital gains tax didn't exist in Australia before 20 September 1985. Anything you acquired before that date has generally been exempt from CGT ever since, no matter how much it's grown or when you eventually sell it. The 2027 reform is the first change to that blanket exemption since it began — and it works differently from how it might sound.
What changes, precisely
Pre-CGT assets reached by the transition are deemed sold and reacquired around 1 July 2027. Market value just before that date is the default reset amount, while a determined apportioning-method choice may provide an alternative. This is separate from the ordinary-asset reset described in The 2027 Tax Changes Explained. From 1 July 2027, the asset ceases to be a pre-CGT asset.
The practical effect for most assets is that growth up to 30 June 2027 is disregarded and only later growth becomes taxable. There is an important exception for certain pre-CGT shares and trust interests whose underlying property meets the law's post-CGT threshold: a gain under that existing integrity rule is deferred at the reset and can be taxed when you actually sell. Indexation and any minimum-tax top-up depend on residency, entity type, the asset and the statutory exemptions.
Why this is not "losing the exemption"
It's easy to read "ceases to be a pre-CGT asset" as the exemption disappearing outright. It doesn't work that way. The transition generally disregards growth from before the reset and reaches forward from that date. The existing exception for some pre-CGT shares and trust interests can instead defer an integrity-rule gain until the real sale, so those holdings need separate checking.
The practical problem with the default: you need a valuation
Because the default new cost base for a pre-CGT asset reached by the transition is market value just before that date, not your original purchase price, establishing that value accurately matters in a way it never has before. Many pre-CGT holdings — a property bought decades ago, an heirloom parcel of shares — were never valued with any precision, because there was no tax reason to. That reason now exists.
If the default market-value method is used, a defensible, contemporaneous valuation as at 30 June 2027 — a formal property valuation, a documented share price, whatever's appropriate to the asset — underpins every future capital gains calculation on that asset. Getting it wrong, or not having one, is a problem you'd be solving years later with much weaker evidence.
Frequently Asked Questions
The mechanism described here applies broadly to pre-CGT capital assets. Whether a specific asset qualifies as pre-CGT in the first place — and whether any other exemption or rule affects it — depends on facts about that asset that a general article can't confirm. Check with your accountant if there's any doubt about an asset's status.
Anyone expecting to rely on the default market-value reset for a pre-CGT asset they might later sell. Even if you have no plans to sell soon, the valuation date is fixed — just before 1 July 2027 — so waiting to arrange it after that date means relying on retrospective evidence instead of a contemporaneous one.
A sale contract made before that date would be assessed under the current pre-CGT exemption, since the deemed-disposal mechanism only applies to what you still hold on the date. Whether selling makes sense for you depends on far more than this one mechanic — see Selling Before July 2027? What to Actually Consider.
This article covers the pre-CGT asset mechanic specifically, sourced from Schedule 1 of the Act. The main residence exemption is a separate, long-standing part of CGT law not addressed by this research — if your pre-1985 asset is also your home, that interaction is worth a specific question to your accountant.
Putting numbers on it
The 2027 CGT reform calculator models this case directly: enter a pre-1985 acquisition date and it applies the blanket pre-CGT exemption to a disposal before 1 July 2027, and the deemed-disposal reset to one after it, so you can see what the market value at commencement does to the gain. If you hold several parcels rather than one asset, the 2027 Reset Planner runs the same comparison across all of them.
Both are estimates on the figures you enter, and the market value at commencement is the number that decides the answer — that one needs a valuer, not a calculator.