Albanese announces ‘generous’ capital gains tax exemptions for small businesses after budget backlash

Prime minister Anthony Albanese had been under pressure from industry groups over Labor’s proposed CGT changes. Photograph: Hollie Adams/Reuters View image in fullscreen Prime minister Anthony Albanese had been under pressure from industry groups over Labor’s proposed CGT changes. Photograph: Hollie Adams/Reuters Albanese announces ‘generous’ capital gains tax exemptions for small businesses after budget backlash Startups and testamentary trusts to receive carve outs after criticism of Labor’s CGT changes Follow our Australia news live blog for latest updates Get our breaking news email , free app or daily news podcast All of Australia’s 2.7m small businesses will receive “generous” exemptions from capital gains tax, as Anthony Albanese flagged startups and testamentary trusts would be carved out of the government’s contentious tax reforms. The concessions failed to appease business groups and the opposition, who demanded that Labor scrap the reforms altogether, while the Greens warned there was “still a way to go” before they agreed to back the legislation, which is before the Senate. Australian housing was already cooling before the budget – but how cold it gets depends on two key factors Read more The prime minister’s announcement on Thursday follows weeks of sustained criticism from industry groups and the opposition, who have labelled the move from a flat 50% CGT discount model to an inflation-linked approach as a “tax on growth”. The proposed changes are: Small businesses with annual turnover of up to $10m will be eligible for existing CGT exemptions – which include an extra 50% discount – up from the current threshold of $2m. The founders of “genuinely innovative” startups with very low or zero cost bases, alongside their early investors and employees paid with shares in the business, will be able to stick with the existing 50% flat CGT discount. Testamentary trusts used to manage the income paid to beneficiaries from a deceased estate will be exempted from the proposed 30% minimum tax rate on discretionary trusts. Treasury has released a consultation paper on its innovative business CGT concession inviting feedback over the coming three weeks, while the government also flagged it would consult further on the proposed carve-out for the roughly 10,000 testamentary trusts. Jim Chalmers said the planned changes in their entirety would cost the budget an estimated $475m over the forward estimates. “To put that into context, the negative gearing, capital gains and trust changes are expected to raise about $8.1bn over the course of the forward estimates,” the treasurer said. The increase in the annual turnover eligibility threshold to $10m was in line with how small businesses were defined elsewhere in the system, Chalmers said. “There are four existing concessions for businesses in the CGT system. We’re leaving all four in place, but we’re making one of them substantially broader and significantly more generous at the same time.” The announceme