Labor Lifts CGT Small Business Threshold to $10 Million

Albanese lifts the CGT small business threshold fivefold to $10m annual turnover, shielding most brokerages and SME owners from the original budget changes.

The federal government has made a significant concession on its capital gains tax overhaul, lifting the small business CGT concession threshold fivefold from $2 million to $10 million in annual turnover. The announcement was made at a Sydney press conference on Thursday by Prime Minister Anthony Albanese and Treasurer Jim Chalmers, and it directly affects the overwhelming majority of Australian mortgage brokerages and thousands of their small business clients.

As reported by The Adviser, Albanese described the change as covering the most widely used of the four CGT concessions available to small businesses in Australia. "A total of 2.7 million existing active small businesses will be eligible for this concession," he said.

What was proposed — and what is now changing

The original 2026–27 federal budget proposal would have replaced the existing 50% CGT discount with a system that taxes capital gains based on inflation and introduces a 30% minimum tax rate. Under the existing rules, businesses with annual turnover below $2 million — or net assets under $6 million — could access a range of concessions, including the 50% active asset reduction, when owners sell a business or business assets.

The revised package lifts the turnover threshold for the 50% active asset concession to $10 million. Chalmers confirmed roughly 98% of all active businesses would now be eligible for capital gains tax relief, at an estimated budget cost of $475 million in foregone revenue over four years.

"There are four existing concessions for businesses in the CGT system," Chalmers said. "We're leaving all four in place, but we are making one of them substantially broader and significantly more generous at the same time."

Beyond the threshold change, the package also includes:

- A new innovative business tax concession targeted at startups, with a consultation paper flagged for release. - An exemption for approximately 10,500 discretionary testamentary trusts from the new minimum tax provisions, where those structures exist for legitimate estate-planning purposes. - The removal of broad ministerial discretionary powers from the draft legislation. Nine separate ministerial discretions had been embedded in the bill — including the power to define "new builds" for negative gearing and decide which assets retain CGT discounts. These are now being scaled back, with the definition of a qualifying new home to be written directly into legislation.

That last point matters for property investors and lenders. Clarity around what qualifies as a new build for negative gearing purposes will now be fixed in law rather than left open to administrative interpretation.

The first tranche of the CGT and negative gearing package had faced a fast-tracked Senate economics legislation committee inquiry, with hearings held on 15 and 16 June. Submissions from the Mortgage & Finance Association of Australia and the Australian Finance Industry Association said the original changes could undercut how borrowers build deposits and that several core concepts remained undefined. Today's announcement addresses some — though not all — of those concerns.

What this means for borrowers, business owners, and investors

Approximately 180,000 small businesses with annual turnover between $2 million and $10 million are now captured by the expanded threshold — a cohort previously excluded from the concession that now qualifies. The Council of Small Business Organisations Australia welcomed the announcement while calling on the government to go further, arguing thresholds should also reflect businesses with net capital assets under $12 million to adequately reflect modern business conditions.

For mortgage brokers specifically, the relief is material. Most brokerage businesses in Australia turn over well below $10 million annually, meaning succession planning, business sales, and exit conversations can now proceed with greater certainty.

It is important, however, to note what has not changed. The negative gearing reforms — restricting the tax break to new dwellings for investors acquiring after the budget — remain intact. The broader CGT discount changes for property investors are also proceeding. The concession changes specifically protect business owners on the sale of a business, not property investors on the sale of an investment property.

If you are a property investor reassessing your strategy in light of the budget changes, exploring [investor home loan options](/home-loans/investor) is a sensible first step. The [borrowing power calculator](/calculators/borrowing-power) can help you model what your position looks like under the new tax settings before committing to a purchase or refinance.

For first home buyers, the expanded 5% deposit guarantee remains fully in place. First-home buyer lending reached 29.0% of owner-occupier lending in the March quarter — slightly above the decade average of 27.6% — reflecting strong demand from that cohort. [First home buyer loan options](/home-loans/first-home-buyer) are worth comparing now that some of the budget uncertainty has been resolved and market conditions may stabilise in the second half of the year.

Labor is aiming to pass the legislation through the Senate by 2 July ahead of the winter recess. Whether the concessions are enough to attract crossbench support remains to be seen, but the government's direction is now clearer than it was in May.

[Read the full story at The Adviser](https://www.theadviser.com.au/broker/48570-albanese-unveils-sweeping-cgt-carve-outs)