Australia Lifts Small Business Tax Concession Threshold to $10M

Key Facts

In a move reflecting a strategic shift to support the small and medium enterprise sector, the Australian government has modified its capital gains tax (CGT) reform proposals to ease the financial burden on small businesses. This decision follows significant public and political backlash against the original plans, as authorities aim to reduce the potential negative impact on local business growth. According to reports, these modifications represent a government response to concerns over the economic stability of small firms amidst pending legislative changes.

The updated measures include raising the annual turnover threshold for the existing 50% active asset CGT reduction from $2 million to $10 million, making 98% of all active businesses eligible as of June 18, 2026. Despite these concessions, industry bodies such as the Australian Industry Group noted that the broader reform package could still push Australia's capital gains taxes to some of the highest levels in the OECD. These specific carve-outs are expected to cost the budget approximately $475 million, while the overall tax and negative gearing reforms are projected to raise $8.1 billion per Treasury estimates.