2026 Budget Tax Changes

Three Key Changes You Need to Know

On 18 June 2026, Prime Minister Anthony Albanese and Treasurer Jim Chalmers confirmed a number of changes designed to refine the Government's proposed tax reforms while maintaining its broader objective of restructuring Australia's tax system.

For business owners, investors, family trusts and estate planning clients, these changes may create new opportunities while also reducing some of the uncertainty that followed the original Budget announcements.

Here are the three key changes:

1. Expanded Small Business CGT Relief

One of the most significant changes affects small business owners looking to sell business assets or transition towards retirement.

The Government has proposed increasing the turnover threshold for the Small Business Capital Gains Tax (CGT) Concessions from $2 million to $10 million.

This change means substantially more Australian businesses may qualify for the valuable 50% Active Asset Reduction.

Under the concession, eligible business owners can reduce the taxable capital gain arising from the sale of qualifying business assets by 50% before applying any other available CGT concessions.

For many family businesses, trades, professional practices and growing enterprises, the increase in the turnover threshold could significantly reduce the tax payable when selling a business, commercial property or other active business assets.

The proposal acknowledges that many businesses have grown beyond the previous $2 million threshold due to inflation and economic growth, yet still operate as genuine small or medium-sized enterprises.

For business owners considering succession planning, retirement or future business sales, this change may provide valuable tax-saving opportunities.

2. New Concessions for Innovative Start-Ups

The technology and innovation sector was one of the most vocal critics of the original Budget proposals.

In response, the Government has announced a new Innovative Business CGT Concession designed to encourage investment in Australian start-ups and high-growth businesses.

Under the proposal, eligible investors will be able to choose between:

• A 50% CGT discount; or
• An inflation indexation adjustment under the new minimum tax framework.

To qualify, investments must be held in an unlisted independent company that:

• Has annual turnover below $50 million;
• Is less than 10 years old;
• Meets the Government's innovation criteria; and
• Is held for at least five years.

The concession will apply to gains accrued from 1 July 2027.

The measure aims to maintain incentives for investors to support emerging Australian businesses while ensuring the broader capital gains tax reforms continue to operate.

For entrepreneurs, angel investors, and start-up founders, the announcement provides welcome certainty that long-term investment in innovation will continue to receive favourable tax treatment.

3. Testamentary Trusts Receive an Exemption

Following widespread feedback from the legal, accounting, and financial planning professions, the Government has now confirmed that income distributed through discretionary testamentary trusts will be exempt from the proposed minimum tax.

The exemption applies where the trust has been established for genuine testamentary purposes following the death of an individual.

This is an important outcome for many Australian families.

While the exemption provides reassurance, families with more complex trust structures should still seek professional advice. Some broader anti-avoidance provisions and future integrity measures may continue to affect certain arrangements involving multiple trusts, companies or sophisticated estate planning structures.

What Happens Next?

While these announcements represent a significant shift from the original Budget proposals, legislation will still need to pass through Parliament before the changes become law. Further consultation and drafting are expected over coming months.

How Cashflow Financial Can Help

The proposed changes may create planning opportunities for business sales, succession strategies, estate planning, and investment structures.

If you're unsure how these reforms could affect your business, trust, SMSF, or personal tax position, now is the ideal time to review your arrangements.

At Cashflow Financial, our team can help you understand the implications, identify opportunities, and ensure your structures remain effective under the evolving tax landscape.

Contact Cashflow Financial today to discuss how the proposed Budget changes may affect your financial future. We have offices in Sutherland and the Wollongong suburb of Fairy Meadow.