The Small Business CGT Threshold Rises to $10m. Three Concessions Stay at $2m.

From 1 July 2027, a business with aggregated turnover up to $10 million can use the small business 50 per cent active asset reduction. The old ceiling was $2 million. The Senate lifted it in the tax reform package that received royal assent on 26 June.

It sits inside a larger rewrite. From the same date, the flat 50 per cent capital gains discount is replaced by cost base indexation for inflation, plus a 30 per cent minimum tax rate on the real gain. The four small business capital gains concessions survive that rewrite. Treasury's small business explainer, published 18 June, says all 2.7 million active small businesses will be eligible for the 50 per cent active asset reduction.

The new threshold opens one door, not four

The turnover test moved for the 50 per cent active asset reduction. It did not move for the other three. The 15-year exemption, the retirement exemption and the small business rollover keep the $2 million turnover test and the $6 million net asset test they have always had.

So a business turning over $4 million picks up one concession, not a set. For an owner more likely to sell a single active asset than to wind up a lifetime of work, halving the gain is now worth real money.

The date that matters is 2027, not 2028

The new rules are entirely prospective. Any value built up in a business before 1 July 2027 keeps the old 50 per cent discount rule, whenever the sale happens, and the cost base is indexed from that date forward. That makes the eleven months before that date the window to act in.

Trusts are the other half of the package

For businesses operating through a discretionary trust, a 30 per cent minimum tax is proposed to apply from 1 July 2028. Primary production income is exempt, and so are fixed trusts, deceased estates and charitable trusts. Treasury expects more than 90 per cent of small businesses to be unaffected in any given year. Treasury counts about 350,000 businesses using discretionary trusts, with roughly 210,000 facing higher tax from 2028.

On Tuesday, COSBOA, the Commercial & Asset Finance Brokers Association and the MFAA told Treasury the cost is not mainly the tax. Unpicking a trust structure pulls apart licensing, accreditations, professional indemnity cover and contracts. "Restructuring a business that operates through a discretionary trust is far more than a legal or accounting exercise," MFAA chief executive Anja Pannek said. Rollover relief opens on 1 July 2027 and runs three years, removing the income tax and capital gains consequences. It does not cover state stamp duty or the accounting and legal bills.

What to do

Start with aggregated turnover, not turnover. Aggregation counts connected entities and affiliates, so a business that reads $6 million on its own can read $11 million once they are added, and miss the new threshold entirely. Check the $6 million net asset test at the same time: it did not change, and businesses that fail on turnover often pass on assets.

Then identify which concession your plan is built on. If it is the 15-year exemption, the one that can take a gain to nothing, or the retirement exemption, the new threshold does not reach you and the old tests still decide your outcome.

The work worth doing this financial year is a defensible valuation of the business and its active assets as at 30 June 2027, written down at the time rather than reconstructed from memory when a buyer turns up in 2031. The old discount attaches to value built before that line, and proving where it sat is the seller's problem.

If you operate through a discretionary trust, price the stamp duty before deciding anything else. Transferring business real property is where the duty bill lives, often the largest single number in the exercise. If that bill and a planned equipment purchase land in the same year, map the cash flow across both before committing to either. Any finance is subject to lender approval, terms and conditions apply.

This article is general information only and is not financial advice.