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Federal Budget 2026 Capital Gains Tax Australia: What Small Business Owners Need to Know

Capital gains tax changes in federal budget

If you own a business, investment property, or have held assets for decades, the federal budget 2026 capital gains tax changes are the most important tax developments in a generation. For the first time in 40 years, the rules around how capital gains are taxed in Australia are being fundamentally rewritten, and the clock is already ticking.

Here is what is changing, what it means for you, and what to do before the key deadlines arrive.

What Is Changing With Capital Gains Tax in the Australian Federal Budget 2026?

The federal budget 2026 introduces three major changes to the capital gains tax in Australia:

The 50% CGT discount is being replaced

From 1 July 2027, the longstanding 50% discount on capital gains for assets held more than 12 months will be replaced by cost base indexation, meaning only the gain above inflation is taxed, rather than half the total gain being exempt. Gains on assets sold before 1 July 2027 retain the existing 50% discount in full.

A 30% minimum tax on capital gains

From 1 July 2027, a minimum 30% tax will apply to net capital gains for individuals, trusts, and partnerships. This limits the benefit of timing a sale to a low-income year to reduce your tax rate.

Pre-1985 assets are no longer exempt

Assets acquired before 20 September 1985 have never been subject to CGT – until now. Under the budget 2026 Australia capital gain tax changes, gains on these assets accruing from 1 July 2027 will be taxable. After nearly 40 years of complete exemption, this is a significant shift for long-term business and property owners.

What Does This Mean for Small Business Owners Specifically?

For most SME owners, the practical impact falls into three areas.

Business sales and succession: If you are planning to sell your business or transfer ownership in the coming years, the post-July 2027 rules will apply to any gains realised after that date. Timing your exit carefully and structuring it correctly matters more than ever.

Investment properties and assets: The Australian budget 2026 capital gains tax changes affect any asset held personally, through a partnership, or through a discretionary trust. If you hold negatively geared investment properties or have a mixed asset portfolio, your planning assumptions need revisiting.

Long-held or inherited assets: If your business or any associated assets predate September 1985, you will need a formal market valuation as at 1 July 2027. This establishes the cost base going forward so that only gains accruing after that date are taxed. Without a valuation, determining the taxable portion becomes significantly more complex and potentially more costly.

The Good News: Small Business CGT Concessions Are Preserved

Importantly, the existing small business CGT concessions remain intact under the federal budget 2026 capital gains tax framework. Eligible businesses can still halve or completely disregard CGT on the sale of qualifying active assets – a vital protection for business owners approaching retirement or succession who have built their business over many years.

If your business qualifies, these concessions can substantially reduce or eliminate your CGT liability even under the new rules. For more information on how the federal budget 2026 affects business owners, read our blog here.

Key Dates for Capital Gains Tax Australia

  • Before 1 July 2027: Consider selling assets where the 50% discount is more favourable than indexation, or obtain formal valuations of pre-1985 assets
  • 1 July 2027: New CGT rules take effect; 30% minimum tax applies; pre-1985 assets enter the tax net
  • Now: Review your ownership structures, asset base, and succession plans with your adviser

Also read: Detailed guide on Australian Tax Reform and how it may impact small business owners.

FAQs: Australia Federal Budget 2026 Capital Gains Tax

Does the 50% CGT discount disappear entirely?
For most assets, yes – from 1 July 2027, it is replaced by indexation. Gains on assets sold before that date retain the full 50% discount. Investors in new residential property have the option to choose between the two methods going forward.
No. Only gains accruing after 1 July 2027 are taxable. A market valuation as at that date establishes your new cost base, so historical gains remain untaxed. Acting early to get that valuation documented is strongly advisable.
Yes. The government has confirmed these concessions are preserved under the new framework. Eligible small businesses can still access significant CGT relief on the sale of active assets.
The 30% minimum tax and the replacement of the CGT discount apply to individuals, trusts, and partnerships, not companies. Companies are already taxed at a flat rate and are largely unaffected by these specific changes.

The capital gains tax changes in the Australian budget 2026 will require careful planning well before the 1 July 2027 deadline. The right structure, the right timing, and the right advice can make a significant difference to your outcome. Talk to the Befree team to understand what these changes mean for your business specifically.