Who’s exempt from Albo and Jim’s capital gains tax and trust changes? PM and Treasurer announce changes to their property tax revolution

Prime Minister Anthony Albanese has unveiled carve-outs for small businesses and start-ups from the government’s sweeping tax changes, while also exempting discretionary trusts used in wills. 

Under the revised measures announced on May 12, the government will cut the capital gains tax discount from 50 per cent and replace it with a 30 per cent flat rate indexed to inflation.

But the government has now announced significant exemptions to the proposed reforms for small businesses and tech start-ups.

The government will significantly increase the threshold for small business capital gains tax concessions following strong backlash from industry groups over its budget reforms. 

‘Today we’re an we’re announcing that we will increase the turnover threshold for existing small business 50 per cent active asset CGT concession from $2 million to $10 million,’ Albanese said.

‘Obviously, we’ll increase the new threshold by five times, bringing into line with the threshold for small businesses, that’s there in a number of other features of the system.

‘We’re also proposing to introduce a new innovative business tax concession for startups, and we’ll release the consultation paper on the startup sector later this morning.’

The government says raising the threshold means 98 per cent of Australian businesses will qualify for the 50 per cent capital gains tax discount. 

Discretionary trusts will also be exempt from the minimum tax in cases where they are established for ‘genuine testamentary purposes’ – which had been nicknamed a ‘death tax’ by those in opposition. 

Around 10,500 discretionary testamentary trusts are active nationwide, allowing Australians to determine how income from their assets will be allocated after they pass away. 

‘We’re confirming the government will exempt income from all types of discretionary testamentary trusts from the minimum tax, provided they are established for genuine testamentary purposes,’ he said.

Treasurer Jim Chalmers will release a consultation paper  about the CGT carve-outs for the start-up sector.

‘We are also confirming that income from all types of testamentary trusts will be exempt from the minimum tax, with implementation details, including the details around integrity, to be included in further consultation,’ Chalmers said, adding that a consultation paper on trusts would also be released later.

‘When it comes to exempting all types of testamentary trusts from the minimum tax, we will release a consultation paper on the trust legislation, that is obviously not part of this first tranche before the Senate.’