Plenty of contractors and plant owners run the same structure. The trading company operates the business, hires the gear and employs the crew. The yard, depot or workshop sits outside the company, owned personally, by a family trust or by a partnership, and leased back to the business.
It is a sensible setup. It keeps the property away from the trading risk and it has served a lot of businesses well. From 1 July 2027 it also means that property is caught by the biggest change to capital gains tax in nearly thirty years.
What is changing
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 became law on 26 June 2026. From 1 July 2027, for assets held by individuals, trusts and partnerships:
- The 50 per cent CGT discount is replaced by cost base indexation, which adjusts the purchase price for inflation rather than halving the gain
- A minimum 30 per cent tax applies to net capital gains on assets held for more than 12 months
The negative gearing changes in the same package are aimed at established residential housing and have taken most of the headlines. The CGT change is broader. It applies to commercial and industrial property just as it does to houses, and there is no grandfathering based on when you bought.
Companies have never received the 50 per cent discount, so property owned inside a company is in a different position. The structure described above, with the property held outside the company, is exactly the one the change is aimed at.
The date that splits your gain in two
The transitional rules treat your property as though you bought it again on 1 July 2027, at its market value on that day.
Growth up to that date stays under the old rules and keeps the 50 per cent discount. Growth after that date falls under indexation and the minimum tax. When you eventually sell, the gain is split along that line.
That makes the property's market value on 1 July 2027 one of the most important numbers in your tax file, and it is a number you will not need until the day you sell. For a lot of business owners that will be at retirement or when the business changes hands, which could be ten or twenty years away.
Two ways to set the number
The free formula. Treasury's apportioning method estimates the 1 July 2027 value by assuming the property grew at one steady rate over the whole time you have owned it. It costs nothing and the ATO is providing tools to support it.
An independent valuation as at 1 July 2027. A registered valuer assesses what the property was actually worth on that date, using the sales evidence of the time.
The formula is fine for a property whose value moved in a straight line. Industrial and commercial property rarely does, and there are some specific reasons it will often get yards and depots wrong.
Why the formula struggles with business property
Industrial land has had a very uneven run. In many markets, industrial and logistics land sat flat for years and then moved sharply as vacancy rates fell. A steady-rate assumption spreads that late surge back across the years when nothing was happening, which moves value to the wrong side of the line.
You have probably built on it. A new shed, a hardstand, wash bays, a workshop fit-out or a second access point all land at a specific point in time. A straight line cannot see when the work was done.
Zoning and use change values in steps. A rezoning, a new road or interchange nearby, or a change in what the land can be used for does not show up gradually. It shows up in one go.
The lease matters. Property leased to your own company is often leased on informal or below-market terms. A valuer will consider what the property is worth on the market, and that judgement is not something a formula can make for you.
Acreage and rural-residential depots are hard to average. A few hectares on the urban fringe used as a depot can be valued very differently depending on its potential. Suburb-wide growth rates do not describe it at all.
Every dollar of value that belongs before 1 July 2027 but ends up after it loses the discount and picks up the minimum tax instead. On a property that has done well, that difference is not small.
There is also a timing trap. The choice between the formula and a valuation is made when you sell. If the formula turns out not to suit your property, the alternative at that point is a retrospective valuation for a date that may be well over a decade earlier. Valuers can do this, but the evidence is thinner, the job takes longer, and it is never as strong as a valuation done close to the date.
Is this you?
It is worth raising with your accountant if any of the following apply:
- Your yard, depot, workshop or industrial unit is owned by you personally, by a family trust or by a partnership
- You have owned it for a long time, or it has grown strongly in value
- You have built on it or significantly improved it
- It is on acreage, on the urban fringe, or has development potential
- It is leased to your own business
- You expect to sell it, or the business, at some point in the future
Your accountant can also tell you whether any small business CGT concessions are relevant to your situation. Those are a separate set of rules, and whether they apply depends on your own circumstances.
What to do between now and 1 July 2027
Now. List every property held outside your company. Note who owns it, when it was bought and what has been built or improved since. Sit down with your accountant and decide which properties justify a valuation and which can take the formula.
Over the next few months. Pull the paperwork together. Purchase contracts, building approvals, invoices for sheds and hardstand, dates works were completed and any leases with your business. It is much easier to find these now than in fifteen years.
Around 1 July 2027. Have the valuations done close to the date, while the market evidence is current. Specialists such as CGT Property Valuation prepare valuations as at 1 July 2027 specifically for this purpose.
After that. File the report somewhere it will survive. It may need to be found by your accountant, a buyer of the business or your executor, long after the people who arranged it have moved on.
The bottom line
If your business property is held outside your company, 1 July 2027 is a date that will matter to you whether you plan for it or not. The cost of getting the number right now is small. The cost of getting it wrong is carried for as long as you own the property, and paid when you sell.