Australia Eases Capital Gains Tax Changes for Small Businesses After Backlash

Key Insights

• Australia has changed plans for capital gains tax reforms.
• Small business tax concessions will see the turnover threshold raised from A$2 million to A$10 million.
• The 30% minimum tax on net capital gains remains postponed until July 2027.
• Prime Minister Anthony Albanese stated 2.7 million small businesses will be able to access the rebate.

Australia has made changes to its planned capital gains tax (CGT) reforms after critics warned the measures would impose costs on small businesses, and disincentivise investment. The legislation represents a significant policy reversal following protests from industry bodies after the reforms were announced in last month's federal budget.

Govt Extends CGT Discount 

The reforms originally included a 30% minimum tax on net capital gains that is scheduled to start from July 2027. There are exceptions even now, including a 50% CGT discount on assets held for over 12 months.

The government has now raised the turnover threshold for small businesses to be able to receive the discount. The discount cap is increasing from A$2 million to A$10 million, and this is a very important development, as it opens the concession up to many more businesses.

Supporting Small Businesses And Start-Ups

In announcing the changes, Prime Minister Anthony Albanese said they showed the government was having "your back" for small businesses and their contribution to the Australian economy.

Around 2.7 million active small businesses across the country will be eligible for the discount, Albanese said. He later announced the government would create a new tax concession for the setting up of an innovative business' as part of a drive to support start-up companies.

Source: Reuters

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