Tax changes update: new concessions and incentives for small businesses and startups

The Prime Minister & Treasurer has issued a media release that outlines further implementation details for its tax changes that were announced in the recent federal budget. 

Expanded access to small business CGT concessions 

A key feature of the announcements is the expansion of eligibility for one of the existing capital gains tax (CGT) concessions. 

The Government proposes to increase the turnover threshold for the 50% active asset reduction from $2 million to $10 million. The eligibility criteria for the remaining small business CGT concessions are unchanged.  

New incentives for startups and early‑stage investors 

The Government has also released a consultation paper on a proposed Innovative Business CGT Concession. 

Under the proposal, early‑stage investors including founders and employee share scheme participants, could be eligible for a 50% CGT discount on qualifying startup investments.  

Clarification on trust taxation 

The announcement also provides clarification regarding the interaction of the broader tax changes with testamentary trusts. 

The Government has confirmed that income from all testamentary trusts, including discretionary testamentary trusts, will be exempt from the proposed 30% minimum tax on trust distributions.  

This approach is intended to improve transparency and provide greater certainty on how the changes to trust taxation will operate in practice. 

 What this means for clients 

Noting that these and the previous federal budget announcements are yet to be legislated, today’s media release does indicate a clear policy direction: 

• Broader access to the active asset exemption for mid‑sized businesses 

• New incentives for startup investment and employee participation 

• Greater clarity and certainty for testamentary trusts 

We will stay on top of these announcements and keep our clients informed.

Disclaimer

This information does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to these factors before acting on it. This information may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, WLF Accounting & Advisory and its related entities, does not accept any responsibility for the accuracy or completeness of, or endorses any such material. Except where contrary to law, we intend by this notice to exclude liability for this material.  You should seek specific tax advice from us as your registered tax agent or registered tax (financial) adviser.