- The reform is enacted and applies to gains accruing from 1 July 2027, not before.
- The 50% CGT discount is replaced by cost-base indexation plus a 30% minimum tax for individuals, trusts, and partnerships.
- All four small business CGT concessions are retained, and the 50% active asset reduction now reaches businesses up to A$10M turnover.
The 2026 capital gains tax reform is now law in Australia, and for business owners it changes how gains on assets, shares, and business sales are taxed from 1 July 2027.
The headline change replaces the long-standing 50% CGT discount with cost-base indexation and a 30% minimum tax rate for individuals, trusts, and partnerships. The good news for most small business owners: the four small business CGT concessions have been kept, and one has been widened.
Working with an accountant like Sleek early is how you plan around it rather than get caught out.
What does the CGT reform mean for business owners?
It means the way your capital gains are taxed is changing from 1 July 2027, though the exact impact depends on your structure and what you sell. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 passed Parliament on 25 June 2026 and received Royal Assent the next day, so this is settled law, not a proposal.
For an owner selling active business assets, the retained small business concessions often matter more than the headline change. For an owner selling shares or investment assets held personally or in a trust, the shift from a flat 50% discount to inflation indexation is the part to model carefully.
What is actually changing?
The core change is the removal of the 50% CGT discount for individuals, trusts, and partnerships, replaced by two mechanisms working together. Companies and super funds are not affected by this change.
- Cost-base indexation: your asset’s cost base is lifted in line with inflation (CPI), so you are taxed only on the real, above-inflation gain.
- 30% minimum tax: after indexation, the resulting gain is taxed at a minimum rate of 30%, even if your marginal rate is lower.
- Timing: the changes apply to gains accruing on or after 1 July 2027. Gains built up before that date keep the current 50% discount treatment.
- Pre-CGT assets: assets acquired before 20 September 1985, long exempt, are drawn into the net for gains accruing from 1 July 2027.
- Limited exceptions: investors in new residential dwellings can choose either the 50% discount or the new indexation-plus-minimum-tax regime, and the up-to-60% discount for qualifying affordable housing is retained.
You can see how indexation interacts with property gains in our property capital gains tax guide.
Who does the reform affect most?
The owners most exposed are those selling assets with a low or zero cost base, because indexation gives little relief when there is almost nothing to index. A founder who built a business from nothing and sells their shares is the classic example.
Under the old 50% discount, half that gain was tax-free. Under indexation, with almost no cost base to lift, close to the whole gain can be taxable at a minimum of 30%. Owners holding investment property or shares personally or in a trust are also affected, which is worth reviewing alongside negative gearing planning.
What is being retained for small businesses?
The four small business CGT concessions in the tax law survive the reform unchanged, and remain the most valuable levers for eligible owners selling active business assets. They are:
- The 15-year exemption, which can eliminate the gain entirely.
- The 50% active asset reduction.
- The retirement exemption, with a lifetime cap.
- The rollover concession, which defers the gain.
The government also widened access: the 50% active asset reduction now applies to businesses with turnover up to A$10M, lifted from A$2M, bringing many more small businesses into scope. The other three concessions keep the existing sub-A$2M turnover (or under-A$6M net asset) tests.
What should you consider before and after the change?
The main planning question is timing: whether a sale sits before or after 1 July 2027 changes which regime applies to the gain. This is exactly where a professional review pays off, and nothing below is advice for your situation.
- Model both regimes: compare the old 50% discount outcome against indexation plus 30% minimum tax for any planned sale.
- Check your cost base: low-cost-base assets are hit hardest, so know your numbers before deciding.
- Confirm concession eligibility: the four small business concessions can dwarf the headline change if you qualify.
- Keep records and valuations: you may need an asset value as at 1 July 2027, so documentation matters.
Our tax strategy explainer covers how structure choices interact with these decisions.
An illustrative scenario (figures for illustration only)
Imagine an owner selling active business assets after 1 July 2027 for a A$1M gain, with a negligible cost base. Under the old rules, the 50% discount alone would have halved the taxable gain before any small business concession.
Under the new rules, indexation gives little relief on a near-zero cost base, so the general position is harsher. But if the owner qualifies for the small business concessions, the 15-year exemption or the 50% active asset reduction can still dramatically cut or remove the tax. The lesson: eligibility for the retained concessions often matters more than the headline change. These figures are illustrative only, your outcome depends on your specific facts.
If you are within a few years of selling, map your expected sale date against 1 July 2027 now. The regime that applies to your gain hinges on when it accrues, not simply when you sign the contract.
How Sleek helps you plan for the CGT reform
Sleek pairs registered tax agents with cloud accounting so you can model a sale under both regimes, check your eligibility for the retained small business concessions, and keep the records the new rules demand. We help owners plan around the change rather than react to it after a sale.
Accounting starts from A$275/month for a Pty Ltd.
Our registered tax agents can help you model different scenarios and prepare for the new tax rules with confidence.
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FAQs about the CGT reform 2026
Does the reform remove the small business CGT concessions?
No. All four small business CGT concessions are retained: the 15-year exemption, the 50% active asset reduction, the retirement exemption, and the rollover concession. The 50% active asset reduction was actually widened, with its turnover threshold lifted from A$2M to A$10M, so more businesses now qualify.
How does cost-base indexation work?
Indexation lifts your asset’s cost base in line with inflation (CPI) over the holding period, so you are taxed only on the real gain above inflation. It replaces the flat 50% discount for individuals, trusts, and partnerships. It gives strong relief on high-cost-base assets but little on assets with a low or zero cost base.
What is the 30% minimum tax on capital gains?
After indexation is applied, the remaining real gain is taxed at a minimum rate of 30% for individuals, trusts, and partnerships, even if your marginal rate would be lower. It removes the benefit of timing a sale for a low-income year. Income-support recipients are exempt and continue at their marginal rate.
Are companies affected by the CGT changes?
No. The indexation and 30% minimum tax changes apply to individuals, trusts, and partnerships, not companies or super funds. Companies already pay tax on capital gains at the company tax rate, 25% for a base rate entity or 30% otherwise, and that treatment continues unchanged under the reform.
Should I sell my business before 1 July 2027?
Not automatically. The right timing depends on your cost base, your eligibility for the small business concessions, and your projected gain, and rushing a sale for tax reasons can backfire. Model both regimes with a registered tax agent before deciding, rather than acting on the headline change alone.
