Prime Minister Anthony Albanese and Treasurer Jim Chalmers announced new capital gains tax carve-outs for small businesses, start-ups, and testamentary trusts.
These adjustments aim to support innovation and protect small-scale entrepreneurs from the broader impact of proposed minimum tax changes. By easing the burden on specific business structures, the government seeks to maintain economic competitiveness while securing necessary revenue.
The Australian government is increasing the turnover threshold for the small-business capital gains tax discount from $2 million to $10 million [1]. This change expands the number of businesses eligible for tax relief on the sale of assets.
Additionally, the government is extending the 50% active-assets discount to innovative start-ups [2]. This measure is intended to encourage the growth of new companies by reducing the tax burden on the disposal of active business assets.
In a move to protect family legacies, the government said the minimum tax on discretionary testamentary trusts will be abolished [3]. These trusts, often established for genuine testamentary purposes, will no longer be subject to the proposed minimum tax requirements.
The measures follow a period of significant pushback regarding the government's broader tax strategy. The carve-outs are designed to quell backlash from the business community and ensure that innovative ventures are not penalized by the new regime [4].
When questioned about further concessions, Albanese said he did not reveal whether additional carve-outs were being considered [5]. The current package focuses on the specific needs of start-ups and small enterprises to balance fiscal goals with economic growth.
“The turnover threshold for small-business CGT discount increased from $2 million to $10 million.”
The Australian government is attempting a delicate balancing act between increasing tax revenue through a minimum tax and avoiding a freeze in private investment. By significantly raising the turnover threshold and exempting testamentary trusts, the administration is shielding a larger segment of the middle-market and family-owned businesses from the new tax regime to prevent political and economic instability.
