Concession threshold for small businesses lifted fivefold
Prime minister Anthony Albanese (pictured) has announced the capital gains tax (CGT) concession threshold for small businesses will be lifted fivefold – from $2 million to $10 million in annual turnover.
“We are announcing details to allow more small businesses access to the capital gains tax concessions,” Albanese told reporters in Sydney.
“Today we’re announcing that we’ll increase the turnover threshold for existing small business 50% active access CGT concession from $2 million to $10 million.”
Albanese said it is one of four concessions that are on the cards.
“And obviously we’ll increase the new threshold by five times, bringing into line with the threshold for small business that there (are) in a number of other features of the system,” said Albanese. “We’re also proposing to introduce a new innovative business tax concession for start-ups.”
Small businesses are among the most vocal opponents of Labor's capital gains tax overhaul, with industry groups warning the reforms risk undermining the retirement plans of thousands of founders.
Council of Small Business Organisations Australia (COSBOA) as called on the Senate committee to recommend the legislation does not proceed as written, while concerns have been raised that business owners ineligible for existing small business CGT concessions will face significant tax bills on exit.
COSBOA chief executive Skye Cappuccio said: "What we are hearing very clearly from small businesses is that this is not just a conversation about tax. It is about whether Australia still encourages people to back themselves and build something over the long term," she said.
A Finder survey found 63% of economists said the changes would be harmful to small business, and 68% believed start-ups should be exempt.
Albanese also confirmed the government will exempt income from “discretionary testamentary trusts” from the minimum tax, “provided they are established for genuine testamentary purposes”.
Treasurer Jim Chalmers said the lifted threshold means that 98% of all active businesses in Australia will now be eligible for a 50% CGT discount.
"There are four existing concessions for businesses in the CGT system. We're leaving all four in place, but we are making one of them substantially broader and significantly more generous at the same time," Chalmers said.
Chalmers also confirmed that a consultation paper on CGT carve-outs for the startup sector would be released later today, with further detail on how the exemptions will be structured for early-stage businesses.
On testamentary trusts, the Treasurer confirmed a broad exemption from the minimum tax. "We are also confirming that income from all types of testamentary trusts will be exempt from the minimum tax, with implementation details, including the details around integrity, to be included in further consultation.”
A separate consultation paper on the trust legislation will also be released, though Chalmers noted that portion of the reform is not part of the first legislative tranche before the Senate.
More to come.
