Labor's CGT Carve-Out: What Property Investors Should Know

The Albanese government has lifted the small business CGT concession threshold fivefold to $10 million, bringing 2.7 million businesses under the protection.

When Prime Minister Anthony Albanese addressed reporters in Sydney on 18 June 2026, the announcement was significant but carefully worded. The capital gains tax (CGT) concession threshold for small businesses would rise fivefold — from $2 million to $10 million in annual turnover. New concessions for start-ups and a clarification on testamentary trusts were also confirmed. Treasurer Jim Chalmers flatly denied it was a reversal of the government's Budget plans.

For borrowers and property investors, the implications are real — and the timeline is tight. The government is aiming to pass the legislation through the upper house by 2 July 2026. Here is what you need to understand before that happens.

What the government has actually changed

The original 2026–27 federal Budget proposed replacing the existing 50% CGT discount — in place since the Howard government introduced it in 1999 — with inflation-adjusted cost-base indexation and a new 30% minimum tax rate on capital gains, taking effect from 1 July 2027. Those core elements remain unchanged.

What has changed is who gets to remain outside those new rules. As [Australian Broker](https://www.brokernews.com.au/news/breaking-news/albaneses-labor-party-reveals-cgt-carveouts-for-small-businesses-289532.aspx) reports, there are four existing small business CGT concessions, and the government has confirmed all four will remain — while making one "substantially broader and significantly more generous." The small business active asset reduction, which provides a 50% CGT discount on the sale of active business assets held for more than 12 months, will now apply to businesses with annual turnover of up to $10 million. Previously the threshold was $2 million.

Treasurer Chalmers confirmed that around 2.7 million active small businesses are now covered, representing approximately 98% of all active Australian businesses. The cost of the expanded threshold is $475 million in foregone revenue over the next four years.

Two other measures accompanied the announcement. All testamentary trusts — established for genuine succession and estate planning — will be exempt from the new 30% minimum tax on capital gains, resolving concerns about an inadvertent "death tax" effect on inherited wealth. And the government has wound back the broad ministerial discretion it originally proposed for shaping key definitions in the law, including what qualifies as a "new build" for negative gearing purposes. Those definitions will instead be set out in legislation, providing more predictability for investors.

ATO data: who is actually paying CGT today

While the policy debate has dominated headlines, Australian Taxation Office data published by MPA Australia provides useful context on the scale of the existing system. In 2023–24, individual taxpayers reported $40.6 billion in net capital gains — up from $37.8 billion the prior year — with real estate the single largest source. Individual CGT bills totalled an estimated $14 billion, up 15% from $12 billion in 2022–23.

The top two gain brackets drove the bulk of that figure. The $100,000–$999,999 range contributed over $15 billion from nearly 69,000 filers, while the $1 million-or-more bracket added $14 billion from fewer than 4,000 individuals.

Super funds recorded a dramatic turnaround: $43 billion in net capital gains in 2023–24, a 144% surge from $18 billion the year before. Across all entity types, total net capital gains reached $102 billion — a 37% recovery from 2022–23. These numbers matter because they show how heavily the existing CGT system relies on individuals, particularly property investors, as the primary revenue source. Under the revised rules, property investors who also run small businesses with turnover between $2 million and $10 million now have a clearer runway.

The start-up concession and what comes next

Treasury has also released a consultation paper on a new Innovative Business CGT Concession. The Adviser reports this is designed to preserve the existing 50% CGT discount for genuine early-stage businesses as the broader discount regime transitions to indexation.

Under the proposed concession, new equity issued after 30 June 2027 in unlisted, independent companies with annual turnover below $50 million and less than 10 years of incorporation would retain access to the current 50% CGT discount. Investors would need to hold eligible shares for a minimum of five years, and Treasury is considering a $10 million lifetime cap on discounted gains per investor. Founders, early-stage investors and employees paid in equity would be eligible; companies, foreign residents and super funds would not. Submissions close 10 July 2026.

What property investors and borrowers should do now

The Housing Industry Association has acknowledged that the broader CGT and negative gearing reforms could reduce investor demand and slow apartment development in the near term — a relevant signal for borrowers watching supply projections in capital cities.

For property investors who also operate small businesses with annual turnover between $2 million and $10 million, the expanded threshold is directly useful. The Council of Small Business Organisations Australia estimates approximately 180,000 businesses fall in that band — organisations its CEO Skye Cappuccio described as "often family-owned businesses, manufacturers, professional services firms, transport operators, retailers and trades businesses."

If you hold investment property within a business structure, or are planning to sell a business and reinvest the proceeds in real estate, now is the time to model the difference in tax outcomes under the new rules. A shift in your effective CGT liability can materially affect your [borrowing power](/calculators/borrowing-power) and the equity available for your next purchase.

For a broader review of your investment property strategy, our [investor home loans hub](/home-loans/investor) is a useful starting point for comparing options that suit your structure and goals.

The government is aiming to pass the relevant legislation by 2 July 2026, with the Greens' support still required in the Senate. Further amendments remain possible. Talk to your accountant and mortgage broker together — this is not a decision to make in isolation.