Australia’s New CGT Rules: What Business Owners Need to Know Before Selling

For years, Australia’s Capital Gains Tax (CGT) system rewarded long-term asset ownership with a simple and highly valuable benefit — the 50% CGT discount.
That’s about to change.
Following the Federal Budget announcements on 12 May 2026, the government is reshaping how capital gains are taxed in Australia, with major implications for business owners planning an exit, succession, or to sell a business over the next few years.
If you own a business — especially one with significant goodwill value — these reforms could materially impact how much tax you pay when you sell.
Here’s what the changes mean in practical terms.

The Biggest Change: The 50% CGT Discount Is Being Removed

Under the current rules, if you hold an asset for more than 12 months, you receive a 50% discount on your capital gain.

Example under the current system:
If you sell a business and make a $1 million capital gain:
• Only $500,000 is taxable
• The remaining 50% is exempt

That system remains in place until 30 June 2027. From 1 July 2027, however, the 50% discount will be scrapped and replaced with:

• Inflation indexation adjustments
• A minimum 30% tax on capital gains

In simple terms:
• You will no longer automatically halve your gain
• You’ll only reduce the gain for inflation
• You’ll still pay at least 30% tax, regardless of your personal tax rate

For many business owners, this represents a significant increase in the effective tax paid on exit.

Transitional Rules: Timing Will Matter

One of the most important aspects of the reform is how transitional rules will apply.
Gains before 1 July 2027: these still qualify for the existing 50% discount.
Gains after 1 July 2027: these fall under the new indexed system and minimum tax regime.
Assets held across both periods: these may require a “hybrid” calculation splitting gains between the old and new systems.
For business owners considering an exit, timing could become one of the most important strategic decisions over the next 12–18 months.

Why Business Owners Will Feel This More Than Most

When a business is sold, CGT commonly applies to:
• Goodwill
• Shares
• Intellectual property
• Commercial property interests

In many SME transactions, the largest component of value is goodwill — and goodwill often has a very low or even zero cost base.
That creates a major issue under the new rules. Why?
Indexation only helps when there’s an original cost base to adjust for inflation. Goodwill frequently doesn’t have one. That means many business sales could face substantially higher taxable gains after July 2027.

Retirement and Exit Timing Strategies Become Less Effective

Historically, many owners structured their exits around lower-income years or retirement planning.

For example:
• Selling after stepping back from operations
• Delaying a transaction until personal income dropped
• Smoothing gains across years

The new 30% minimum tax reduces the effectiveness of many of these strategies. The result is less flexibility around:
• Retirement timing
• Income planning
• Deferred sale strategies
• Personal tax optimisation

For many owners, proactive planning will become more important than reactive tax management.

Small Business CGT Concessions Become Even More Valuable

There is some good news. The existing small business CGT concessions remain unchanged. These include:
1. The 15-Year Exemption: potentially eliminates CGT entirely in qualifying situations.
2. The 50% Active Asset Reduction: provides an additional reduction in taxable gains.
3. Retirement Exemption: allows eligible owners to disregard up to $500,000 of gains.
4. Rollover Relief: can defer gains when restructuring or replacing assets.

These concessions remain incredibly powerful and, in some cases, can still reduce tax to zero.

The Catch: Fewer Businesses Qualify

The problem isn’t the concessions themselves. The issue is the thresholds. Key eligibility tests include:
• $2 million turnover
• $6 million net asset value

Those thresholds have remained largely unchanged for nearly two decades despite inflation and rising business values. As a result, more businesses are being pushed outside the eligibility criteria each year. So while the concessions still exist, they’re becoming harder to access.

Trust Structures Are Also Under Pressure

Another important development is the proposed introduction of a 30% minimum tax on discretionary trusts from 2028. For many SME owners using traditional structures such as:
• Family trusts
• Bucket companies
• Trust distribution strategies
…the effectiveness of those arrangements may diminish significantly. This could lead many businesses to reconsider whether a company structure is more appropriate moving forward.

What This Means for Business Buyers and Investors

The reforms are designed to reduce tax-driven investment behaviour and encourage more economically rational decision-making. In practice, however, we may see investors:
• Hold assets for shorter periods
• Demand higher returns
• Reassess business valuations
• Become more selective around acquisition structures

For sellers, this could influence deal negotiation dynamics over time.

The Key Questions Business Owners Should Be Asking Now

1. Should I sell before July 2027?
For some owners, bringing forward an exit could preserve access to the existing 50% discount.

2. Does my structure still make sense?
Trusts, companies, and holding structures should all be reviewed.

3. Do I qualify for small business concessions?
Understanding your eligibility now is critical — especially around turnover and net asset thresholds.

4. Is my business structured correctly for exit?
Active asset tests, ownership structures, and goodwill allocation all matter.

The earlier these issues are addressed, the more options you typically have.

The new CGT regime represents one of the most significant shifts in business exit taxation in years.
The changes:
• Remove the simple 50% CGT discount
• Introduce a 30% minimum tax
• Potentially increase tax on business sales — particularly goodwill-heavy businesses

The bottom line is clear: Australia’s new CGT framework marks a fundamental shift in how business exits will be taxed, and the financial impact for many owners could be substantial. With the removal of the 50% discount, the introduction of a 30% minimum tax, and tightening access to key concessions, the window for optimising outcomes is narrowing. Business owners who take the time now to review their structure, assess their eligibility for concessions, and map out a strategic exit timeline will be far better positioned than those who wait. Early, informed planning is no longer just prudent — it’s essential to protecting the value you’ve built.

ABBA Group business brokers are ready to assist business owners to better understand the latest changes and how they may impact their business. Contact our team of business brokers today for a confidential discussion.