From 1 July 2027, far more Australian business owners will be able to halve a capital gain on the sale of a business asset. The aggregated turnover threshold for the small business 50 per cent active asset reduction rises from $2 million to $10 million on that date, under legislation that is already law. The timing is no accident: it lands on the same day the general 50 per cent CGT discount is replaced for individuals, trusts and partnerships.

For owners of growing family businesses, the change could be worth a great deal when they sell. But it is narrower than some coverage suggests.

What actually changed

Australia has four small business CGT concessions: the 15-year exemption, the 50 per cent active asset reduction, the retirement exemption and the small business rollover. The Budget explainer confirms all four are kept under the new CGT regime.

Only one of them has changed. On 18 June 2026, in a post-Budget announcement, the government said the turnover threshold for the 50 per cent active asset reduction would rise from $2 million to $10 million.

The $10 million figure is already the key small business entity threshold for other purposes, including the $20,000 instant asset write-off, which was made permanent from 1 July 2026 for businesses with aggregated turnover under $10 million.

The measure was included in the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June 2026. Holding Redlich's summary says the higher threshold applies "from 1 July 2027".

Why the concession matters more after July 2027

Until now, many small business owners who sold an asset after holding it for at least 12 months could combine the general 50 per cent CGT discount with the small business concessions.

From 1 July 2027, the general discount is replaced by cost-base indexation plus a 30 per cent minimum tax rate on capital gains for resident individuals. The minimum tax is a floor, not a flat rate. The changes apply only to gains that accrue after that date.

That shift makes the remaining small business concessions more valuable. In his second reading speech on the Tax Reform No. 2 Bill, Treasurer Jim Chalmers said all 2.7 million active small businesses and 98 per cent of active businesses would remain eligible for "generous CGT concessions".

How the active asset reduction interacts with indexation and the minimum tax in every scenario is technical, so the precise outcome will depend on individual circumstances.

Who benefits

Under the existing basic conditions, a taxpayer can generally access the small business CGT concessions either as a small business entity with aggregated turnover below $2 million, or by passing a $6 million maximum net asset value test.

The clearest winners are businesses with aggregated turnover between $2 million and $10 million that fail the net asset test. That could include established trades, professional practices, retailers and family businesses whose premises, equipment and goodwill have grown in value.

Aggregated turnover includes the turnover of connected entities and affiliates, so group structures need to be checked carefully. The asset must also still pass the active asset test, and the other basic conditions continue to apply.

Because the higher threshold applies only to the 50 per cent reduction, businesses in the $2 million to $10 million band will not automatically qualify for the 15-year exemption, the retirement exemption or the rollover on turnover grounds alone.

A worked example

This is a simplified, hypothetical illustration only.

A family business with aggregated turnover of $6 million and net assets of $9 million sells an active asset, such as goodwill, in 2028. Assume the capital gain that accrues after 1 July 2027 is $1 million.

Under the old $2 million threshold, the business would fail both the turnover test and the $6 million net asset test, so none of the small business concessions would be available.

With the threshold at $10 million, the 50 per cent active asset reduction could, subject to the other conditions, cut that $1 million gain to $500,000 before other concessions and the new indexation and minimum tax rules are applied.

Gains that accrued before 1 July 2027 are handled separately. Assets held on that date are deemed sold and reacquired at market value, with the earlier gain deferred until sale and still eligible for the 50 per cent discount.

What this change is not

The change does not preserve the general 50 per cent CGT discount for businesses with turnover under $10 million. That discount is replaced for individuals, trusts and partnerships regardless of business size, from 1 July 2027.

Nor should it be confused with the proposed Innovative Business CGT Concession, also announced on 18 June 2026. That would give a 50 per cent discount to founders, employees and early investors in eligible start-ups: unlisted companies under 10 years old (15 for biotech and medtech) with turnover below $50 million, where shares are held at least five years. It is not yet law.

Companies and super funds keep their existing CGT settings.

Key dates to watch

The higher threshold takes effect on 1 July 2027, alongside indexation and the minimum tax. A CGT event that happens before that date will generally fall under the existing $2 million threshold, and for many sales the CGT event occurs when the contract is signed rather than at settlement.

Many small businesses operate through discretionary trusts, which face a proposed 30 per cent minimum tax from 1 July 2028, with restructure relief proposed from 1 July 2027. That measure is still in draft.

Legislation for the start-up concession is also pending. Owners planning a sale, succession or restructure over the next few years may benefit from advice from a registered tax agent.