Prime Minister Anthony Albanese has announced 'generous' capital gains tax (CGT) exemptions for Australia's 2.7 million small businesses, following sustained criticism over Labor's proposed tax reforms. The concessions also carve out startups and testamentary trusts from the contentious changes.
Details of the Proposed Changes
The government plans to raise the annual turnover eligibility threshold for existing CGT exemptions from $2 million to $10 million. This means small businesses with turnover up to $10 million can access concessions, including an extra 50% discount. Founders of genuinely innovative startups with low or zero cost bases, along with early investors and employees paid in shares, will retain the existing 50% flat CGT discount. Testamentary trusts managing deceased estates will be exempt from the proposed 30% minimum tax rate on discretionary trusts.
Revenue Impact
Treasurer Jim Chalmers stated the changes would cost the budget an estimated $475 million over the forward estimates, while the overall reforms are expected to raise about $8.1 billion. Chalmers noted the increased threshold aligns with how small businesses are defined elsewhere in the system.
Reactions from Business Groups and Opposition
The Australian Chamber of Commerce and Industry's CEO, Andrew McKellar, called the concessions a 'rushed patch-up job'. Skye Cappuccio, CEO of the Council of Small Business Organisations Australia, welcomed the new threshold but remained concerned about broader impacts on investment and productivity.
Opposition leader Angus Taylor urged the government to scrap the reforms entirely, arguing the $10 million threshold still discourages business growth. The Coalition remains opposed, leaving the legislation's fate dependent on negotiations with the Greens.
Greens' Stance
Greens leader Larissa Waters appreciated the government's move to limit discretionary powers but stated the party is not yet ready to support the legislation. 'We've still got a way to go,' she said, criticizing the government for tinkering rather than tackling the housing crisis.
The government aims to pass the initial bill before parliament rises for the winter break on 2 July. Treasury has released a consultation paper on the innovative business CGT concession, inviting feedback over three weeks.
