Labor's Small Business CGT Rollback: What Borrowers Need to Know

Prime Minister Albanese has lifted the small business CGT concession threshold fivefold — from $2 million to $10 million in annual turnover.

For the thousands of Australians who run a small business and also carry a mortgage, the announcement from Prime Minister Anthony Albanese on 18 June landed like a weight lifted. Labor has agreed to raise the small business capital gains tax (CGT) concession threshold from $2 million to $10 million in annual turnover — a fivefold increase that effectively exempts the vast majority of Australian small businesses from the government's sweeping CGT overhaul.

Here's what changed, who benefits, and what smart borrowers should do next.

What Changed and Why It Matters

The May 2026 Federal Budget contained the most significant rewrite of Australia's CGT rules in over a quarter century. The core change: the existing 50 per cent CGT discount — introduced by the Howard government in 1999 — would be replaced with inflation-adjusted cost-base indexation from 1 July 2027. A minimum 30 per cent tax rate on realised capital gains would apply at the same time.

[MPA Australia](https://www.mpamag.com/au/news/general/its-a-complete-backflip-broking-industry-cheers-labors-cgt-rollback/579384) reports that the combined CGT and negative gearing reforms were projected to raise $3.6 billion over four years, or around $8.1 billion when combined with discretionary trust taxation changes.

The problem was scope. At an original threshold of just $2 million in annual turnover, almost every small business in Australia would have faced a dramatically higher tax bill on the sale of their enterprise — a sale that, for many owners, represents their primary retirement vehicle.

The backlash was fierce. Brokers, advisers, and small business owners argued the Budget broke a pre-election pledge Labor had made not to alter CGT or negative gearing settings. Opposition leader Angus Taylor called the measures "toxic taxes." Pauline Hanson's One Nation launched a 'Fire the Liar' campaign across television and radio. A Freshwater Strategy poll taken shortly after the Budget found 45 per cent of respondents said the changes had decreased their trust in the government.

On 18 June, the reversal came. The small business threshold would rise from $2 million to $10 million in annual turnover. Treasurer Chalmers described it as "the outcome of the consultation that we flagged in the Budget papers themselves" — a characterisation that was not universally accepted.

"They backpedalled like I've never seen before," said Joseph Daoud, founder of It's Simple Finance, speaking to MPA Australia. "It's a complete backflip. There's no other words around it."

What It Means for Small Business Owners Who Borrow

The practical effect is significant.

At $10 million in annual revenue, the exemption shields the overwhelming majority of Australian brokerages and small businesses from the CGT discount changes. "If your brokerage is doing $10 million revenue a year, you've got probably the best brokerage in Australia," Daoud said. "Most brokerages that are operating under 20 people — pretty much every single brokerage — are captured in these rollbacks."

For business owners with mortgages, the announcement relieves a pressure that had been causing widespread anxiety: whether to invest, grow, borrow, or stay put while the tax implications of a future business sale remained unclear. When the cost of selling your business looks materially higher, property decisions get deferred too.

Maddie Walton, a mortgage broker at Money Lounge, told MPA Australia she was "stoked" at the news. "The government's decision to expand the concessions and provide greater clarity around business succession gives many owners more confidence to plan ahead. That's important not only for business owners themselves, but also for brokers, accountants and advisers who are helping clients make long-term decisions around lending, investment and wealth creation."

Walton noted that when small business clients feel more confident about their exit options, "they're generally more willing to invest, grow, acquire property and borrow to support that growth."

Jon Gawley, managing director of Kanebridge Finance, welcomed the concession as "a good start in rectifying an ill-thought-out policy" but warned the damage to business confidence hadn't been fully undone. Mhairi Macleod of Astute Ability Finance Group agreed: "It is a positive and I'm hoping that it breathes more confidence into the market, but unfortunately I think the damage is already done. Small businesses are a little gun shy, which has slowed down capital investment and has many small businesses placing a pause on spending plans."

What to Do Now

If you're a small business owner or self-employed borrower, a few things are worth considering in light of these changes.

**Succession planning can restart.** The uncertainty around CGT on business sales had caused many owners to defer restructuring and growth decisions. The $10 million threshold clears that blockage for the overwhelming majority of Australian brokerages and small businesses.

**Borrowing capacity conversations are worth revisiting.** When the after-tax proceeds from a business sale look materially different, it changes how a lender assesses future capacity and how a broker structures a lending strategy. Now is a good time to revisit those projections with your adviser.

**The broader CGT regime still changes from 1 July 2027.** The 50 per cent discount is being replaced with indexation for most assets. Only businesses below the new $10 million threshold escape this under the small business concession. Property investors and shareholders still face a more complex environment — independent tax advice remains essential.

If you're reassessing your strategy in light of the Budget changes, our [investor home loans hub](/home-loans/investor) covers options for borrowers navigating this environment, and the [refinance savings calculator](/calculators/refinance-savings) is a useful starting point if you're reviewing your current mortgage costs.