The government has confirmed a AUD 3.8 billion package of business tax changes, including an expanded small business CGT concession and a proposed 50% discount for early-stage startup investors, with implementation details to be legislated through primary law rather than ministerial discretion.

RF Report

The Australian government has announced additional implementation details for its tax reform package on 18 June 2026 following an extensive first phase of post-Budget consultations.

The package includes a significant expansion of small business capital gains tax (CGT) concessions, a proposed new CGT incentive for innovative startups, amendments to existing legislation, and targeted trust tax reforms.

The government said the measures are intended to support investment, entrepreneurship, and economic growth, with additional business and startup tax relief expected to exceed AUD 3.8 billion.

Tax reform implementation for small business and startups

The reforms aim to help first-home buyers, cut taxes for workers, and align tax treatment of labour and asset income.

New CGT concessions for small businesses and startups mean all 2.7 million active small businesses (98% of all active businesses) will now qualify.

Key announcements:

  • Raising the turnover threshold for the small business 50% active asset CGT reduction from AUD 2 million to AUD 10 million
  • Releasing a consultation paper on a new Innovative Business CGT Concession (50% discount for early-stage investors, founders, and employee share scheme participants)
  • Confirming all testamentary trust income will be exempt from the minimum tax
  • Committing to implement changes via legislation rather than legislative instruments

Combined, these measures bring new business and startup tax relief to over AUD 3.8 billion, on top of existing tax cuts and housing measures.

Small businesses concessions

The Government will keep all four existing small business CGT concessions, which let small businesses reduce, defer, or eliminate CGT on active business asset sales.

  • The 50% active asset reduction turnover threshold rises from AUD 2 million to AUD 10 million
  • This aligns it with the instant asset write-off threshold
  • Extends eligibility to 2.7 million small businesses (98% of active businesses)
  • Sits alongside the existing inflation discount where eligible
  • Amendments will be introduced to the legislation already before the Senate

Consultation on arrangements for innovative start-ups

A consultation paper has been released on a proposed 50% CGT discount for early-stage investors, founders, and employee share scheme participants in innovative start-ups.

The Innovative Business CGT Concession would let individuals, partnerships, and trusts choose between a 50% discount or indexation and the minimum tax, for gains accrued from 1 July 2027.

Proposed eligibility criteria:

  • Shares must be new equity in a company under 10 years old (up to 15 years in certain circumstances)
  • Company turnover under AUD 50 million
  • Must meet principles-based innovation criteria
  • Shares held for five years before sale
  • Subject to a lifetime cap

The government may extend the age threshold to 15 years for slower-to-commercialise sectors like biotech and medtech.

  • Consultation closes 10 July
  • Will shape final design for a later legislative tranche
  • Small business measure costed at AUD 300 million over the forward estimates (bringing total business/startup support to over AUD 3.8 billion)
  • Startup measure costed at AUD 125 million
  • Both to be finalised at the next Budget update

Amendments to the legislation

The government will move targeted amendments to the current Bill, removing ministerial powers to lock in implementation detail.

Planned for the next sitting fortnight:

  • Raising the active asset reduction turnover threshold to AUD 10 million
  • Ensuring deductible donations reduce capital gains subject to the minimum tax
  • Specifying income support payments exempt from the minimum tax on capital gains
  • Embedding the Working Australians Tax Offset calculation method in legislation
  • Removing now-unnecessary ministerial powers

Later this year, following further consultation, the Government will also move into primary legislation:

  • The definition of eligible “new builds” (for the 50% discount on gains from 1 July 2027, and negative gearing access for purchases after 12 May 2026)
  • Definitions of exempt housing investment types, including affordable housing

Trusts reform and other elements of the tax reform package

Further legislative tranches will follow the Budget package, with a consultation paper on implementing the minimum tax on discretionary trusts due in the coming weeks.

Following targeted consultation, the government will exempt income from all discretionary testamentary trusts from the minimum tax, provided they:

  • Serve genuine testamentary purposes
  • Are limited to deceased estate assets

For trusts established on or after 1 July 2028, the exemption will only apply where the trust benefits individuals and tax-exempt entities.

  • The government reiterated there is no tax on inheritances or deceased estates
  • This measure is costed at AUD 50 million over the forward estimates, to be finalised at the next Budget update
  • Separately, legislation making loss carry-back and the small business instant asset write-off permanent will be introduced next week
  • The government thanked stakeholders and the Senate Economics Legislation Committee for their input during consultation

Earlier, Australia’s Treasurer, Jim Chalmers, presented the 2026–27 federal budget to Parliament on 12 May 2026, setting out a broad tax reform agenda aimed at supporting workers, encouraging business investment, and strengthening the long-term sustainability of Australia’s tax system.