The Government has updated one of four small business CGT concessions. COSBOA CEO Skye Cappuccio explains what it means and what’s still missing.
A long-standing frustration for tens of thousands of Australian small business owners has been partly addressed, with the Federal Government announcing an update to eligibility thresholds for one of the Small Business Capital Gains Tax concessions.
The Council of Small Business Organisations Australia welcomed the move while making clear it does not consider the job done. The update affects one of the four existing Small Business CGT Concessions, adjusting eligibility thresholds that COSBOA has long argued no longer reflect modern business conditions.
Under the change, small businesses with annual turnover between $2 million and $10 million will be able to access a 50 per cent discount on capital gains from eligible active assets held for more than 12 months. This is in addition to other legislated approaches to determine the taxable capital gain.
COSBOA CEO Skye Cappuccio said the existing thresholds had become increasingly out of step with the reality of running a small business in Australia, particularly in the context of broader proposed CGT changes.
“It’s encouraging to see recognition that the current thresholds are outdated and that many growing small businesses have been caught between eligibility settings that no longer reflect the realities of running a business in Australia,” Ms Cappuccio said.
Who it helps
The change is most significant for the approximately 180,000 small businesses sitting in the $2 million to $10 million annual turnover band, a group that has effectively been caught in a gap between thresholds that no longer match what it costs or takes to run a viable small business today.
Ms Cappuccio described the businesses most affected. “These are often family-owned businesses, manufacturers, professional services firms, transport operators, retailers and trades businesses that employ local people, invest in their communities and continue to face the same challenges as other small businesses,” she said.
For owners in this category who are planning for growth, considering succession, or approaching retirement, the update provides more certainty around how capital gains on eligible active assets will be treated. “That provides greater certainty for many business owners planning for growth, succession or retirement,” Ms Cappuccio said.
What’s still missing
The welcome comes with a clear condition. The updated threshold applies to only one of the four existing Small Business CGT Concessions, and COSBOA is explicit that the remaining three need the same treatment. “This is an important and welcome step in the right direction, but it does not go far enough,” Ms Cappuccio said.
COSBOA is continuing to advocate for eligibility thresholds to be modernised across all four concessions, arguing they should be updated to include businesses with annual turnover under $10 million and net capital assets under $12 million.
The bigger picture
The threshold update sits within a broader and more contested CGT debate. COSBOA and three other peak business bodies recently issued a joint statement opposing the Government’s proposed wider CGT reforms, calling on Parliament to reject legislation they described as rushed and potentially damaging to investment and productivity.
Ms Cappuccio acknowledged the positive step while holding firm on those broader concerns. “While today’s announcement is a positive step, we remain concerned about the impact the broader CGT changes could have on investment, entrepreneurship and productivity,” she said.
“Australia needs a tax system that gives business owners confidence to invest, employ local people and continue contributing to the communities they serve. This announcement moves us in the right direction, but there is still more work to do.”
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