Australia's capital gains tax system is being restructured from 1 July 2027, and the Albanese government locked in targeted relief for small businesses and startups on 18 June 2026 that materially softens the headline reform's impact.

The core change, announced in the 2026 Budget, abolishes the flat 50 per cent CGT discount available to individuals and replaces it with two mechanisms: an inflation-based discount that adjusts the cost base of an asset, and a 30 per cent minimum tax rate floor on capital gains. Treasurer Jim Chalmers introduced the enabling legislation — the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 — in a second reading speech on 28 May 2026. The structural logic ties tax relief more tightly to real economic gain rather than rewarding the time an asset was held.

The carve-outs announced on 18 June matter because the original reform drew sustained pushback from business groups worried about its impact on founders selling stakes in closely held companies and on small operators holding illiquid assets. Chalmers was in active consultation with those groups as recently as 15 June, according to ABC reporting from that date.

What the Small Business Carve-Outs Cover

Four existing small business CGT concessions—the 15-year exemption, the active asset reduction, the retirement exemption, and the rollover—are being retained in full under the new framework. This preserves a set of exit-planning tools that operators and their advisers have relied on for decades.

More substantively, the government lifted the turnover threshold for the small business 50 per cent active asset reduction from $2 million to $10 million. Prime Minister Albanese's office confirmed on 18 June 2026 that this expanded concession now covers 98 per cent of all Australian businesses by count. In practice, owner-operated enterprises selling active business assets can apply a 50 per cent reduction before the 30 per cent minimum rate floor takes effect, which substantially compresses the effective tax rate compared to what the headline reform suggested.

The $10 million threshold aligns the active asset concession with the existing small business entity threshold used across the tax system, eliminating a longstanding mismatch that had pushed some small operators into the general CGT discount regime despite otherwise qualifying for small business treatment.

What Expires and What Remains Unclear

The Temporary $20,000 Instant Asset Write-Off expires on 30 June 2026. Its lapse is unrelated to the CGT changes but matters for any small business doing near-term capital expenditure planning; the two operate on different timelines and should not be treated as one.

The 1 July 2027 commencement date leaves roughly twelve months for the Treasury Laws Amendment Bill to pass the Senate, for draft regulations to be exposed for comment, and for businesses and their advisers to model outcomes under the new rules. That window is workable but tight.

The interaction between the inflation-based discount and the 30 per cent minimum rate will be the technical crux for most tax practitioners. The exact methodology for calculating the inflation adjustment—whether it uses CPI from the acquisition date or a rolling average, and how it applies to assets with mixed holding periods—will almost certainly require detailed ATO guidance before advisers can give reliable opinions. No guidance has been released yet.

For transaction structuring purposes, the increase in the active asset threshold to $10 million is a genuinely durable change for the businesses it reaches. For assets and taxpayers outside that expanded concession—larger private companies, investment properties held by individuals, listed equities—the reform as currently drafted introduces real complexity. The flat 50 per cent discount was simple and predictable. Inflation-adjusted cost bases are neither, particularly when assets have been held for varying periods across a diverse portfolio.

The government has managed political risk with the 18 June package. Whether it has resolved the structural complexity for taxpayers outside the small business concession is an open question, and one the Senate crossbench will likely test.