CGT Record-Keeping After 2027: What Australian Investors Must Keep to Avoid ATO Audits

The 2027 CGT reform increases the volume and the importance of records every Australian investor must keep. Under the new system, the cost base is indexed annually, the value at 1 July 2027 becomes a permanent reference point, and capital improvements need to be tracked separately. The ATO has signalled that it will sharpen its audit focus on CGT calculations once the new rules commence, particularly on the 1 July 2027 transitional valuations. This guide explains exactly what to keep, how long to keep it, and how to organise records so a future ATO audit is straightforward rather than catastrophic.

The complete records checklist

At acquisition

• Signed contract of sale.
• Settlement statement showing actual purchase price paid.
• Stamp duty assessment notice and payment receipt.
• Conveyancing invoice (legal fees form part of the cost base).
• Building and pest inspection reports and invoices.
• Mortgage documents (for understanding ownership structure).
• Initial property condition report and photographs.

During the holding period

• All capital improvement receipts (renovations, extensions, structural changes).
• Date and cost of each improvement, with itemised invoices.
• Before-and-after photographs of improvements.
• Council approval documents for major works.
• Annual rates notices and water notices (cost base maintenance items).
• Body corporate special-levy notices (capital nature).
• Depreciation schedules and quantity surveyor reports.
• Annual rental statements and ledgers.
• Insurance certificates of currency (proof of asset existence and value).

At 1 July 2027

• Formal valuation report from a CPV, OR
• ATO apportionment calculation worksheet.
• Supporting evidence: comparable sales, listing screenshots, CoreLogic suburb reports.
• Property condition photographs taken around 1 July 2027.
• Current rent roll and tenancy schedule.

Each financial year after 2027

• ABS All Groups CPI figures for the year (ATO will publish the relevant factor).
• Updated indexed cost base in your records.
• Capital improvements made during the year (and their pro-rata indexation start dates).

At sale

• Signed contract of sale showing sale price.
• Settlement statement.
• Agent's commission invoice (deductible from gain).
• Conveyancing invoice for the sale.
• Marketing costs (deductible).
• Final indexed cost base calculation.
• Final CGT calculation worksheet.

The 5-year rule (and why it really means 30 years)

ATO record-keeping rules require you to keep CGT records for at least five years from the date of the CGT event usually the date of sale. But here is the catch: the records must go back to the original acquisition. If you bought a property in 2010 and sell in 2040, the records relating to 2010 must still be available in 2045.

In practical terms, for property investors:

• Keep all acquisition records permanently while the asset is owned.
• Keep all records for five years after sale.
• Total record-keeping horizon: holding period + 5 years.
• For a property held 25 years, that is 30 years of records.

Digital record-keeping setup

Paper records get lost. A modern CGT record system uses cloud storage with redundant backup. Recommended setup:

1. Primary cloud storage Google Drive, OneDrive or Dropbox. One root folder per property, sub-folders by year.
2. Secondary backup different provider (e.g. iCloud) or external hard drive. Sync monthly.
3. Spreadsheet master single workbook tracking purchase price, all improvements, annual indexation factor, indexed cost base running total.
4. Tax agent access share the property folder with your accountant so they can pull records as needed.
5. Naming convention e.g. 2030-03-15_Renovation_Bathroom_Invoice.pdf. Consistent naming makes searching trivial decades later.

How to track an indexed cost base

Maintain a spreadsheet with one row per financial year from 2027 onwards. Columns:

• Financial year (e.g. 2027-28).
• Opening indexed cost base.
• CPI factor for the year (ATO published).
• Indexed cost base after applying factor.
• Capital improvements added during year (with start-date for indexation).
• Closing indexed cost base.

At sale, the closing indexed cost base for the final year is your reference for calculating the post-2027 gain. Maintaining this annually is far easier than reconstructing 10+ years of CPI factors retrospectively.

What an ATO audit looks like

ATO compliance activity on CGT typically follows one of three patterns:

1. Data-matching review. The ATO matches your tax return CGT figure against state revenue office records of the sale. If figures don't reconcile, you receive a please-explain letter.
2. Document request. The ATO asks you to provide proof of cost base, improvements, valuation and indexation. You have 28 days (extendable) to respond.
3. Full audit. A formal audit involves an ATO officer reviewing your records on-site or by request. Audits last 3-12 months and may extend to other tax years.

Penalties for poor records

If you cannot substantiate your CGT figures, the ATO may:

• Disallow your claimed cost base (substituting a lower figure or zero).
• Impose administrative penalties (25-75% of the shortfall amount).
• Charge general interest charge (GIC) on unpaid tax.
• Refer cases involving deliberate concealment to prosecution.

An annual record routine

Build CGT record-keeping into your normal tax-time process:

1. Every July, update the indexed cost base for the prior year using the ATO CPI factor.
2. File any capital improvements receipts from the year just ended.
3. Save annual rental statements and rates notices.
4. Confirm cloud backups are running.
5. Share the year's records with your tax agent during return preparation.

This article provides general information about the 2026-27 Federal Budget CGT reform measures announced for commencement on 1 July 2027 and is not financial, tax or legal advice. Tax outcomes depend on individual circumstances. Always consult a registered tax agent, financial adviser or the Australian Taxation Office before acting. Treasury factsheets and the official Budget Papers remain the authoritative source.