Federal Budget 2026: What the Latest Tax Changes Mean for Small Business
The 2026–27 Federal Budget measure have undergone significant revision following strong backlash from business groups, investors, and tax professionals. Prime Minister Anthony Albanese and Treasurer Jim Chalmers have now introduced targeted tax carve-outs and exemptions, softening some of the more controversial reforms.
What Changed?
The government’s original proposal included major capital gains tax (CGT) reforms, including replacing the 50% CGT discount with an inflation-based model and introducing a minimum tax on gains. Concerns quickly emerged that these changes would discourage investment and hurt small businesses and startups.
In response, several key concessions have now been introduced.
Key Measures
Expanded Small Business CGT Concessions
One of the biggest wins for business owners is the expansion of the 50% active asset CGT reduction
- The turnover threshold will increase from $2 million to $10 million
- Now covers around 2.7 million Australian small businesses
- Ensures many businesses still benefit from concessional tax treatment when selling assets
Impact: More businesses can access concessional tax treatment when selling or restructuring.
New Startup and Innovation Concessions
To address fears that innovation would be stifled, the government is introducing a new “innovative business” CGT concession:
- Proposed 50% CGT discount for:
o Startup founders
o Early-stage investors
o Employee share scheme participants
- Designed to support high-growth and technology-driven businesses
Whilst this is a positive step, this concession is limited and there will be start-up businesses that don’t meet the specific requirements and will still be subject to higher tax on sale.
Testamentary Trust Exemptions
Another key adjustment is the treatment of testamentary trusts (commonly used in estate planning):
- These trusts will be exempt from the proposed 30% minimum tax
- Applies where they are established for genuine estate distribution purposes
Impact: Provides certainty for families using trusts in estate planning.
What Should You Do Now?
While not all measures are finalised, the direction is clear: tax planning is becoming more complex and more important.
We recommend that clients:
- Review current business structures and eligibility for CGT concessions
- Reassess succession and exit strategies
- Evaluate investment and asset-holding structures
- Stay informed as legislation progresses
Final Thoughts
The government’s rapid response highlights just how critical small businesses, startups, and family investors are to the Australian economy. While policy uncertainty remains, the expanded concessions provide some relief and renewed opportunities.
As always, the key is proactive planning.
If you’d like guidance on how these changes may impact your business or personal situation, our team is here to help.
Date: 19/05/2026
The Macro Group Limited AFSL: 485843 Tax Agent Number 24 76 5236.
The information in this article contains general information only. We have not taken into consideration any of your personal objectives, financial situation or needs. Before taking any action, you should consider whether the general advice contained in this communication is appropriate to you having regard to your circumstances and needs and seek appropriate professional advice if you think you need it. We recommend that you consult a licensed or authorised financial adviser if you require financial advice that takes into account your personal circumstances