Albanese announces ‘generous’ capital gains tax exemptions for small businesses after budget backlash | Australian politics
All of Australia’s 2.7 million small businesses will receive “generous” exemptions from capital gains tax; Anthony Albanese-marked startups and testamentary trusts will benefit from the government’s contentious tax reforms.
The Prime Minister’s announcement on Thursday follows weeks of criticism from industry groups who have labeled the move from a fixed 50% CGT discount model to an inflation-linked approach a “growth tax”.
In particular, there were concerns that entrepreneurs could be treated particularly harshly under the proposed tax reforms and that taxes would be increased on small firms that do not meet the $2 million turnover threshold to qualify for existing CGT concessions.
Jim Chalmers said the annual turnover threshold would be increased to $10 million, bringing it in line with the definition of small businesses elsewhere in the system.
The treasurer said 98% of all active businesses in the country would receive CGT concessions under changes to “primary” legislation before the Senate.
“There are four concessions available to businesses in the CGT system. We are leaving all four in place, but making one of them significantly wider and also significantly more generous.”
The treasurer said the planned changes would cost the budget $475 million, above budget estimates going forward.
“To put this in context, downside, capital gains and confidence changes are expected to total approximately $8.1 billion over the course of forward forecasts.”
A Treasury document published on Thursday set out the government’s “preferred position” on CGT regulations flagged for initiatives and invited feedback in the coming weeks.
“We think there’s a special case for businesses with low or no start-up costs, and that warrants this different treatment in the tax system,” Chalmers said.
The government also announced that testamentary trusts used to manage the distribution of income from deceased estates will be exempt from the planned 30% minimum tax for discretionary trusts.
Chalmers said further details on the separation of trusts would be included in an upcoming consultation document and that any changes would not be part of the “first tranche” of legislation before the Senate.
