Peak broker body says the fivefold increase to the CGT concession threshold gives small businesses greater certainty and confidence
Australia's peak broker association, the Mortgage and Finance Association of Australia (MFAA), has welcomed the announcement of major capital gains tax (CGT) carve-outs for small businesses.
On Thursday, prime Minister anthony Albanese confirmed that the CGT concession threshold for small businesses will be lifted from $2 million to $10 million in annual turnover – marking a fivefold increase in the concession.
"We are announcing details to allow more small businesses access to the capital gains tax concessions," Albanese told reporters.
In comments sent to MPA, MFAA chief executive Anja Pannek (pictured, left) said: "We welcome the decision to increase the turnover threshold for small businesses to access the 50% CGT discount. This is a positive outcome that will give many small business owners greater confidence to invest, grow, plan for succession and make long term decisions about their future.
"Mortgage and finance brokers work closely with small business owners every day and have seen firsthand the uncertainty these proposed changes created. Through our advocacy, submission to the Senate inquiry underway and support of COSBOA's Fair Go campaign, the MFAA consistently highlighted the importance of providing certainty for small businesses planning for the future."
Industry voices back change
The Council of Small Business Organisations Australia (COSBOA) launched its Fair Go campaign earlier this month to give Australia's small business community a direct channel to policymakers as debate continues over reforms that could significantly impact business investment, succession planning and retirement outcomes.
Small businesses have criticised Labor's contentious CGT overhaul, with industry groups warning the reforms risk undermining the retirement plans of thousands of founders.
COSBOA chief executive Skye Cappuccio (pictured, right) 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.”
COSBOA also welcomed the concessions announced, calling them an important step forward for thousands of growing Australian small businesses.
Cappuccio said the organisation had consistently argued that the existing thresholds no longer reflect modern business conditions, and that updating them had become urgent in light of the proposed changes to the broader CGT system.
"It's encouraging to see recognition that the current thresholds are outdated and that many growing small businesses have been caught between eligibility settings that no longer reflect the realities of running a business in Australia," Cappuccio said. "The change announced today is particularly important for the approximately 180,000 small businesses with annual turnover between $2 million and $10 million.
"These are often family-owned businesses, manufacturers, professional services firms, transport operators, retailers and trades businesses that employ local people, invest in their communities and continue to face the same challenges as other small businesses.
"Importantly, this modification means those businesses will be able to access a 50% discount on their capital gains from eligible active assets held for more than 12 months. This is in addition to other legislated approaches to determine the taxable capital gain.
"That provides greater certainty for many business owners planning for growth, succession or retirement."
Calls to go further
Cappuccio called on Labor to go further still: "We believe the thresholds should be updated to include businesses with annual turnover under $10 million and net capital assets under $12 million so the concessions continue to reflect contemporary business conditions.
"While today's announcement is a positive step, we remain concerned about the impact the broader CGT changes could have on investment, entrepreneurship and productivity."
Pannek added: "Today's announcement delivers that certainty and recognises the vital contribution small businesses make to Australia's economy, communities and employment."
Labor Treasurer Jim Chalmers denied that the announcement amounted to a budget backflip. "This is the outcome of the consultation that we flagged in the Budget papers themselves," he told Sky News.
"We're putting out this consultation paper on start-ups, we're making sure that 100% of the 2.7 million active small businesses have got access to the CGT concessions and carve-outs, and we're announcing a whole range of implementation details, as we flagged on the night, and so this is consistent with that," Chalmers added.
