Why the Next 18 Months Matter More Than the Last 18 Years: Building Practice Value Before the 2027 CGT Reset

Why the Next 18 Months Matter More Than the Last 18 Years

How practice owners can build transferable value before the proposed 2027 capital gains tax reset.

In short: if the proposed rules proceed broadly as announced, value created in your practice before 1 July 2027 may be worth materially more after tax than value created after it. That makes the next eighteen months a practical window for owners who want to strengthen earnings, reduce buyer risk, and improve sale readiness.

If you own a medical practice and you have ever thought about selling — in two years, five years, or ten years — the federal budget delivered on 12 May 2026 may have changed the timeline worth focusing on.

Every dollar of post-2027 goodwill gain would be fully taxable at up to 47% combined, unless it can be reduced under the small business CGT concessions. In practical terms, the tax on that portion of your goodwill could be effectively doubled.

There's good news buried in this. There is no change to the Small Business CGT concessions, so if eligible, these concessions should continue to be applied to reduce capital gains on active assets such as ownership in practices. But the concessions would be doing heavier lifting against a bigger taxable number, so they may not fully insulate you the way they used to.

What this could mean in practice: value built before 1 July 2027 may be worth more after-tax than value built after it. If you were going to sell in 2030 anyway, the dollars you add to your practice over the next eighteen months would likely be taxed on the old, friendlier basis. The dollars you add after that potentially won't be.

So the question isn't whether to sell — that's a longer conversation. The question worth asking is: what can you do between now and 30 June 2027 to make the practice meaningfully more valuable, so that more of your sale proceeds sit on the right side of any cut-off?

Here's what actually moves the needle.

1. Add doctors if you have the rooms and patient demand

This is the single biggest, most overlooked value lever for practices with capacity. If you have spare consult rooms and a patient base that's regularly being told "the next appointment is in three weeks," you're sitting on EBITDA you haven't earned yet.

Every additional GP you bring on between now and mid-2027 does three things to your sale value:

They add normalised EBITDA at a multiple. Most practice valuations work on a multiple of normalised earnings. A new GP billing $500K in their first full year, on a typical service fee arrangement, might add $125–175K of EBITDA to the practice. At a 4–5x multiple, that's $500K–$875K of enterprise value from a single recruit — most of which crystallises on the old CGT basis if you settle a sale before the indexation regime applies to those gains.

They reduce key-person risk. A practice with eight contributing GPs is worth a higher multiple than a practice with three, all else equal. Buyers pay for resilience.

They demonstrate growth, not just scale. Buyers love a graph that goes up and to the right. Two years of visible practitioner growth — with the billings and patient activity to back it — tells a story that supports premium pricing.

The constraint, of course, is that recruiting GPs in Australia in 2026 isn't easy. The pipeline is tight, IMGs take six to twelve months to land, and good doctors have options. If this is the lever you want to pull, start now — not in twelve months when every other practice owner is doing the same thing for the same reason.

2. Improve earnings quality, not just revenue

Practice buyers — whether corporates, mid-market consolidators, or another GP — don't pay for revenue. They pay for normalised, sustainable, transferable EBITDA. A practice billing $4M with one GP doing 60% of the work is worth dramatically less than a practice billing $3M across six evenly contributing GPs.

The work in the next eighteen months:

• Reduce key-person risk. If you, the owner, are responsible for more than 25–30% of clinical revenue, your practice has a discount baked into it that no buyer will pay full multiple on. Recruit, delegate, and visibly transition patients to other GPs.

• Diversify your billing mix. Practices that are heavily reliant on bulk-billing or a single income stream get priced more conservatively than practices with a balanced mix of private billing, chronic disease management plans, mental health care plans, and allied health rental income.

• Document everything as recurring. Buyers pay multiples on what they believe will keep happening. If 40% of your revenue is from regular care plan reviews, immunisations, skin checks, and chronic disease programs — make that visible in your reporting. Don't bury it in a P&L line.

3. Get your numbers acquisition-ready early

In transaction advisory work, the single most common reason a sale process stalls or a price gets chipped down is bad data. Practices that look attractive from the outside turn out to have:

• A general ledger that mixes personal and business expenses

• Owner remuneration that needs heavy add-back adjustments to normalise

• No clean separation between service fees, rental income, and clinical earnings

• Twelve months of patient activity data that nobody has ever pulled into a dashboard

If you fix this now, you get two things. First, you understand your own business better and can manage it more profitably. Second, when a buyer's diligence team turns up, they don't find reasons to discount the headline number.

A clean three years of normalised EBITDA, a documented service fee model, and a clear practitioner-by-practitioner P&L is worth a meaningful uplift on the final price. Not because the practice is "worth more" intrinsically — but because the buyer's risk perception is lower, and they'll pay closer to the top of the multiple range.

4. Tighten your doctor agreements and lease

This sounds boring. It's not.

When a buyer is looking at a medical practice, two documents tell them how much of what they're buying is actually theirs after settlement:

Service agreements with each GP. Restraint clauses, notice periods, service fee arrangements, and the clarity of the contractor relationship all materially affect value. A practice where every doctor is on a tight, current, well-drafted agreement with a sensible restraint sells for more than a practice where half the doctors are on handshake arrangements from 2014.

The premises lease. A short remaining lease term, or a lease with no option to renew, is a red flag to any buyer. They're not just buying a business — they're buying a business in a specific location with a specific patient catchment. If your lease has under five years to run, renegotiate. If you own the premises, decide now whether you want to sell it alongside the practice or retain it and lease it back. Both have implications for the deal structure.

5. Invest in what buyers can actually see

There's a temptation to "spruce up" before a sale. Some of this is worth doing. Some isn't.

Worth doing:

• Modernise clinical software if you're still on a legacy version (Best Practice and MedicalDirector are both fine, but the version and configuration matter)

• Tidy the patient experience — booking system, online presence, Google reviews, signage

• Make sure the practice is on top of accreditation and that recertification is well clear of any sale window

• Address any compliance gaps — PRODA, AHPRA practitioner currency, infection control, the lot

Not worth doing:

• Major capital refurbishments in the year before sale. Buyers don't pay back capex pound-for-pound, and you'll erode your free cash flow during the very period when buyers are looking at recent trading.

• Hiring extra admin staff to "look bigger." It just dilutes your margin.

6. Bring the structure conversation forward

This is the bit that needs a good accountant, not a blog post. But the headline:

The way your practice is held — sole trader, company, discretionary trust, unit trust, partnership — could affect how any CGT changes hit you, what concessions you can access, and what restructuring options exist between now and 2027. This makes the question of business structure more important than it has been in 25 years. Different structures may produce different outcomes under the new rules.

The budget also flagged expanded rollover relief for three years from 1 July 2027, specifically to support businesses wishing to restructure out of discretionary trusts into a company or fixed trust without triggering a CGT liability on transfer. If this lands as proposed, it would be a genuine and time-limited opportunity.

If your practice is held in a structure that may not be optimal under the new regime, there could be a window — limited, but real — to restructure without triggering a tax event. Most practice owners don't know this yet. The ones who do are already talking to their advisors.

7. Decide what kind of sale you want

Practice sales come in three broad shapes, and each has a different value-building strategy:

Sale to a corporate or consolidator. Higher multiples, more diligence, longer earnout periods, and usually a requirement that you stay on clinically for two to three years post-sale. To maximise value here, focus on EBITDA scale, governance, and showing that the practice runs without you.

Sale to an internal successor (an associate or junior partner). Lower headline multiple, but cleaner transition, and you can structure the deal across multiple years to manage tax. To maximise here, start grooming the successor now — they need 18+ months of visible leadership before they can credibly borrow against the practice to buy you out.

Sale to another local GP or practice group. Somewhere between the two. The buyer is sophisticated enough to do diligence but not large enough to pay corporate multiples. Value-building here is about being the "tuck-in" that obviously makes their group stronger — geographic fit, complementary services, doctor pipeline.

You don't need to commit to a path today. But knowing roughly which direction you're heading shapes what you spend the next eighteen months on.

A measured view on timing

It's worth being honest about where this all sits. The Federal Budget 2026 CGT changes are proposed legislation only and have not yet passed Parliament. The detail will move between now and any commencement date, some elements may be softened, others may be tightened, and the final shape of the rules will only be clear once exposure draft legislation and ATO guidance are released.

So this isn't a "sell now or be punished" message. It's a more measured one: practice owners who use the next eighteen months to recruit, lift the quality of their business, clean up their numbers, sort their structure, and think clearly about the right kind of buyer will end up better off regardless of exactly where the policy lands. The fundamentals of practice value — earnings quality, doctor depth, clean data, sensible structure — matter under any tax regime. If the legislation passes broadly as announced, you'll be glad you started early. If it's softened, you've still built a more valuable, more resilient business.

The best time to start building practice value is always five years before you sell. The second-best time is whenever you decide that the value of your life's work is worth a deliberate eighteen months of effort.

What to do next: if a sale is even a medium-term possibility, use the next eighteen months to improve earnings quality, reduce key-person risk, tidy your data, and review your structure. Those steps can strengthen your position whether the legislation lands exactly as proposed or not.

This isn't financial or tax advice — the CGT reforms are still moving through legislation and your situation deserves a proper conversation with your accountant and a transaction advisor.