18/06/2026
📣TAX LAW CHANGES - UPDATE!
You may have seen our recent breakdown of the tax changes raised in the 2026 Federal Budget (link in the comments if you have not), today there have been some updates announced.
The legislation covering the Budget tax changes is still being debated in Parliament, and consultation with professional bodies (including CPA Australia, of which we are members) and others has led to some proposed changes, worth flagging for small business owners.
🔸GOOD NEWS ON THE SMALL BUSINESS BUSINESS CGT CONCESSION DISCOUNT
As previously announced, the general 50% CGT discount that currently applies to most asset sales is proposed to be removed from 1 July 2027.
However, there is a separate small business discount that is not going away. The Small Business Active Asset 50% discount allows eligible small business owners to reduce the capital gain made on the sale of an active business asset by 50%. Today it was announced that the eligibility threshold for this discount is proposed to increase from $2 million to $10 million in annual turnover, meaning far more business owners will qualify.
In plain terms: if you sell your business or a key business asset, you may only pay tax on half the capital gain, rather than the full amount. That is a meaningful saving.
This is good news for small to medium business owners, and particularly for anyone thinking about selling up down the track. The higher threshold goes a long way toward softening the blow of removing the general 50% discount.
🔸CARVE-OUTS FOR START-UP BUSINESSES
It sounds like founders of genuinely innovative start up businesses, early investors and employees who receive shares in these businesses will be able to continue to use the 50% CGT discount when they sell up. Details still to come on how this will work.
Essentially this is to stop venture capital and start-up investment from being hit by the broad CGT reforms.
🔸TESTAMENTARY TRUSTS
Previous announcements meant that a 30% minimum tax rate applicable to discretionary trust income would also be applied to income earned by Testamentary Trusts - trusts set up in wills that come to be after a person has died. This is now looking to be amended, with Testamentary Trusts being included in a list of trusts exempt from the rule changes.
Familes using a trust set up through a deceased estate would not be caught by the new trust tax rules.
🔸TREASURER'S DISCRETIONARY POWERS REDUCED
The original legislation gave the Treasurer fairly broad powers to make certain decisions by regulation later on. After criticism, they are looking to remove or reduce some of these powers. Fewer tax settings will be able to be changed by ministerial decision along, more will require the normal parliamentary process.
