On Thursday 18 June 2026, Prime Minister Anthony Albanese and Treasurer Jim Chalmers announced a package of adjustments to their 2026 Federal Budget CGT measures, framing the changes as providing “more clarity and confidence to investors, more support for small businesses and more incentives for innovation.”
Chalmers noted that the announcements have followed consultation with affected sectors, though the changes are still pending until they pass in the Senate.
Three (3) key concessions were announced in today’s press conference.
1. Increased turnover threshold for the active asset reduction
The threshold for the small business active asset CGT reduction is proposed to rise from $2 million to $10 million, bringing it in line with how small businesses are defined across the rest of the tax system.
The change will allow businesses with annual turnover between $2 million and $10 million to access an additional 50% reduction in capital gains, after any applicable general CGT discount has been applied.
For businesses with turnover under $2 million, there are no changes to the existing CGT concessions available.
2. New innovative startup CGT concession
There are also changes proposed for founders across Australia. Albanese and Chalmers have proposed a carve-out for ‘innovative’ startup businesses, a 50% CGT discount for early-stage investors, including founders and employee share scheme participants.
Start-ups would also be required to be innovative at the time that new equity is issued, based on the following principles:
- the company must be genuinely focused on developing one or more new or significantly improved innovations for commercialisation;
- the business relating to that innovation must have a high growth potential;
- the company must demonstrate that it has the potential to be able to successfully scale up that business;
- the company must demonstrate that it has the potential to be able to address a broader than local market, including global markets, through that business; and
- the company must demonstrate that it has the potential to be able to have competitive advantages for that business.
3. Testamentary trust exemption
Also announced, discretionary testamentary trusts will be exempted from the 30% minimum tax on trust distributions, provided they are established for “genuine testamentary purposes”.
This proposal means there will be no change to the current rules for discretionary testamentary trusts if they meet the requirement above.
What this means for you
- If your small business turns over less than $10 million, you should now fall within the active asset reduction threshold, meaning you gain access to an additional 50% capital gains discount;
- If you are an early-stage investor, founder or employee share scheme participant in an innovative startup, you may be exempt from the new CGT rules; and
- If you are planning to set up a testamentary trust, the proposed exemption is worth following closely as the legislation progresses through the Senate.
None of these concessions are confirmed and consultation is ongoing. More to come.
