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The Federal Government has handed down its 2026 Federal Budget. It contains proposed changes to tax policy that should result in the Small Business CGT Concessions becoming even more valuable than they already are.
Not because the SBCGT Concessions are getting better. But because other tax provisions that might reduce capital gains are getting worse.
Let me explain.
General 50% CGT Discount – This will be replaced by cost base indexation from 1 July 2027. Transitional provisions will apply to effectively preserve the general 50% CGT discount for gains accruing prior to 1 July 2027.
Pre-CGT Assets – Assets acquired before 20 September 1985 were exempt from capital gains tax but will be subject to tax from 1 July 2027. Transitional provisions will apply to effectively preserve the exemption for gains accruing prior to 1 July 2027.
Minimum 30% Tax on Real Capital Gains – There will be a 30% minimum tax on real capital gains earned from 1 July 2027.
The effect of the above is that, prior to an application of the SBCGT Concessions:
- Capital gain amounts should be higher on average; and
- Tax on capital gains should be higher on average.
So the SBCGT Concessions might be able to disregard, reduce and / or defer what would otherwise be a higher capital gain and a higher tax cost. In other words, the SBCGT Concessions will have to do more of the heavy lifting to save you tax.
And this should result in the SBCGT Concessions becoming even more valuable than they already are.
The changes proposed in the Federal Budget are not yet law. Draft legislation is yet to be released and many political debates are yet to be had. Things could change.