Prime Minister Anthony Albanese said Thursday that the Australian government will increase the turnover threshold for small business capital gains tax concessions.
The move follows a period of budget backlash and criticism regarding earlier changes that narrowed the accessibility of these tax breaks. By expanding the criteria, the government aims to provide more relief to a broader range of small business owners during asset liquidation.
Albanese said the government is announcing details to allow more small businesses access to the capital gains tax concessions. The primary change involves the 50% active-asset CGT concession, which serves as a significant tax reduction for eligible business owners selling active assets.
Under the new policy, the turnover threshold for this specific concession will increase from $2 million to $10 million [1]. This adjustment allows businesses with higher annual revenues to qualify for the 50% reduction in taxable capital gains that was previously reserved for much smaller entities.
"Today we’re announcing that we’ll increase the turnover threshold for existing small businesses' 50 per cent active access CGT concession from $2 million to $10 million," Albanese said.
The policy shift responds to pressure from business advocates who argued that the previous $2 million limit was too restrictive for modern small-to-medium enterprises. The expansion is intended to stabilize the business environment after the government faced scrutiny over its earlier fiscal approach.
Government officials said that these carve-outs are designed to ensure that the tax system does not unfairly penalize growing businesses that remain small in scale, but exceed the previous turnover cap.
“We are announcing details to allow more small businesses access to the capital gains tax concessions.”
This policy reversal indicates a strategic pivot by the Albanese government to appease the small business sector after a contentious budget cycle. By raising the threshold fivefold, the government is effectively broadening the definition of a 'small business' for tax purposes, which may reduce overall tax revenue in exchange for increased political support and economic flexibility for medium-sized enterprises.
