Australian government backs down on capital gains tax and trust reforms

The Albanese government announced a reversal of several controversial tax measures introduced in the May 2025 budget. The 50 % capital gains tax (CGT) discount for assets held over 12 months will remain, and the active‑asset CGT concession threshold for small businesses has been raised from $2 million to $10 million, covering an estimated 2.7 million enterprises. In addition, the proposed 30 % minimum tax on discretionary testamentary trusts has been scrapped, with the Treasury stating, “Income from all types of testamentary trust will be exempt from the minimum tax.”

The changes are expected to cost the budget about $475 million over four years, a small fraction of the $8.1 billion revenue the broader tax package was projected to raise. Industry groups welcomed the move, with the National Farmers’ Federation noting the higher CGT threshold will bring “99 % of Australian farm businesses within reach of the concession.” The government framed the backtrack as a response to widespread business and public backlash and as a step to support small businesses, startups and the broader housing‑affordability agenda.

Prime Minister Anthony Albanese and Treasurer Jim Chalmers emphasized that the reforms aim to reduce distortions in the market and protect the “blood running through the veins of our local communities.”