Australia is changing the way it taxes profits people make when they sell assets like property or business shares. Starting 1 July 2027, the government is replacing a simple tax break with a more complicated system. On 18 June 2026, the government announced some relief for small businesses to make the change less painful.

Right now, when Australians sell an asset they've owned for at least a year, they get a flat 50 per cent discount on the tax they owe on the profit. From next year, that disappears. Instead, the government will adjust the purchase price of the asset for inflation, and then charge a minimum tax of 30 per cent on what's left. The idea is that taxes should reflect actual profit, not just how long you've held something.

What Small Businesses Get to Keep

Small businesses get to use four existing tax breaks under the new system. These include a complete exemption if you sell after 15 years, a 50 per cent reduction if you're selling an active business asset, and two other options. The government kept these intact.

The bigger news is that the government raised the income threshold for using that 50 per cent reduction. It went from $2 million to $10 million in annual turnover. Prime Minister Albanese's office confirmed on 18 June 2026 that this now covers 98 out of every 100 Australian businesses. In plain terms, most small business owners selling an active business can use the 50 per cent reduction first, which cuts their tax bill significantly compared to what the basic reform would have done.

This $10 million threshold also matches a number already used in other parts of the tax system, fixing a mismatch that used to push some small operators into the wrong category.

What Changes and What Stays Uncertain

The government's $20,000 instant asset write-off expires on 30 June 2026. This is separate from the capital gains tax change, but if your business is buying equipment soon, you should know it won't be available after that date.

The government has about twelve months before the new rules start to pass the law through Parliament, write the detailed regulations, and let businesses understand how they'll work. That's a reasonable timeframe but not a long one.

The tricky part for accountants and tax advisers will be figuring out exactly how the inflation adjustment works. Does it use the inflation rate from when you bought the asset, or some other method? How do you handle assets bought at different times? The tax office hasn't released that guidance yet, and without it, nobody can give a final answer on how much tax people actually owe.

For small businesses using that higher $10 million threshold, the new rules are straightforward. For larger private companies, people selling investment properties, or other investors, the change is more disruptive. The old 50 per cent discount was easy to calculate. The new inflation-adjusted system is not, especially when you own multiple assets bought at different times.

The government has softened the impact on small business. Whether it has solved the complexity for everyone else is still an open question.