Australia expands capital gains tax exemptions for small businesses and startups

The Albanese government announced major adjustments to its controversial capital gains tax (CGT) reforms. The turnover threshold for the existing 50 % small‑business CGT discount was raised from $2 million to $10 million, extending eligibility to an additional 200,000 firms and covering about 98 % of active small businesses. Financial commentator Rachel Cole said, “It means that more small businesses will be eligible for the 50 per cent capital gains tax discount when it does come time to sell.”

A new “Innovative Business CGT Concession” was also introduced for eligible startups – companies under 10 years old, with annual turnover below $50 million and meeting innovation criteria. These firms can choose to retain the 50 % discount on qualifying equity or opt into an inflation‑indexed model. The discount applies only to equity held for at least five years, excludes foreign residents, companies and superannuation funds, and carries a $10 million lifetime cap. The government also backed away from proposed changes to testamentary trusts, keeping income from such trusts exempt from the minimum tax measures. The revisions aim to keep promising Australian startups from relocating overseas while supporting small‑business growth and broader housing‑affordability objectives.