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Australia eases capital gains tax changes for small businesses and startups
Australia has revised its capital gains tax reform package by expanding small business concessions and introducing startup-focused relief. The changes raise the eligibility threshold to A$10 million in turnover, widen access for SMEs, and respond to concerns from investors, founders and business groups over the proposed reforms.
Australia’s proposed CGT concessions reforms for small business has been revised, offering a more generous extension of concessions and a new startup specific concession for startup founders, employees and investors after complaints from business and tech communities.
Australia’s planned overhaul of its Capital Gains Tax (CGT) concessions for small businesses has undergone revisions, providing an extended scope of relief and introducing a unique concession for startup founders, employees, and investors in light of objections from the business and tech communities.
For the standard small business CGT concessions, annual turnover will now increase from $2 million to $10 million, and the government anticipates that this will mean roughly 98% of the nation’s 2.7 million active companies, will now be able to take advantage of the existing regime.
This has also been adjusted to align with existing small business tax measures currently operating using a $10 million benchmark.
Small Business Tax Concessions are Broader
Under the updated regulations, the small business CGT concessions can be applied to sales of certain assets by qualifying companies and entities. The government projects this increased accessibility will contribute A$475 million to government coffers over four years.
Small businesses are integral to the Australian economic landscape, making up more than 97% of companies nationally. The Australian Bureau of Statistics reported there were 2.7 million active businesses in the country in FY22.
The New Startup CGT Concessions are a Boon for Entrepreneurs and Investors
In addition to the expansion of CGT for SMEs, the Australian government has released a consultation paper which proposes a new CGT concession specifically for start-up entrepreneurs, employees and early-stage investors.
Australia has an established and thriving start-up economy, having achieved the 9th rank in the world according to the 2026 StartupBlink Startup Ecosystem Index, with over 5,100 registered start-ups.
Furthermore, the 2025 State of Australian Startup Funding report demonstrated a total of A$5.4 billion being invested in over 390 reported funding rounds, representing a particularly robust year for Venture capital in the country.
Testamentary trusts and Discretionary Powers Excluded from Tax ReformsIn other developments, the government announced that it will exclude testamentary trusts from its proposed minimum tax framework. Additionally, it will reduce or remove several discretionary powers of Ministers previously incorporated in earlier versions of the reform.
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