The Federal Government has lifted the eligibility thresholds for one of the Small Business Capital Gains Tax (CGT) concessions, a move that was praised as a step forward for the small business community.
Prime Minister Anthony Albanese said during a press conference in Sydney that the turnover threshold for the existing small business 50 per cent active asset CGT concession will increase from $2 million to $10 million.
“Obviously, we’ll increase the new threshold by five times, bringing it into line with the threshold for small businesses, that’s there in a number of other features of the system, Albanese said. “We’re also proposing to introduce a new innovative business tax concession for startups.”
The announcement follows ongoing consultation between the Council of Small Business Organisations Australia (Cosboa) and the Government on the impact of the proposed CGT changes on small business owners.
Cosboa said the latest decision is an important step forward, as the existing thresholds no longer reflect modern business conditions.
“The change announced today is particularly important for the approximately 180,000 small businesses with annual turnover between $2 million and $10 million,” said Cosboa CEO Skye Cappuccio.
“Importantly, this modification means those businesses will be able to access a 50 per cent discount on their 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.
“That provides greater certainty for many business owners planning for growth, succession or retirement,” she added.
While the announcement was a positive development, Cappuccio said it only addressed one of the four existing Small Business CGT Concessions, and that the broader concerns regarding the CGT reforms remain.
“We believe the thresholds should be updated to include businesses with annual turnover under $10 million and net capital assets under $12 million so the concessions continue to reflect contemporary business conditions.
“Australia needs a tax system that gives business owners confidence to invest, employ local people and continue contributing to the communities they serve,” she said.
