A mid-tier accounting firm has welcomed the Albanese government’s announcement to exempt small businesses from the 2026 federal budget capital gains tax (CGT) changes, but suggested the $6 million maximum net asset value (MNAV) threshold requires further examination.
To this end, the $6 million threshold at which small businesses are eligible for CGT concessions on the sale of their business, or a business asset, is not indexed for inflation and has not changed for nearly 20 years.
Last week, the government confirmed it would retain existing Division 152 concessions that allow eligible businesses to reduce CGT on the sale of business assets. It also declared it would increase the turnover threshold for the 50 per cent active asset CGT discount from $2 million to $10 million.
“The government’s announcement last week is positive for small businesses, but the bigger issue for many business owners is what has not changed: the $6 million MNAV threshold remains in place,” HLB Mann Judd Sydney tax partner Peter Bembrick noted.
Bembrick pointed out an increase to $10 million or $12 million would be a reasonable update and help more business owners access these concessions.
“For those considering a business sale, especially share sales, this unchanged asset threshold may still be the real barrier,” he indicated.
He also called on the government to provide further clarification on how the exemptions will work, in particular on the higher turnover threshold for the 50 per cent active asset reduction.
“It remains unclear whether the higher turnover threshold for the 50 per cent active asset reduction from $2 million to $10 million will apply only to that particular tax concession or whether it will also extend to the 15-year exemption, retirement exemption and rollover,” he said.
According to Bembrick, it currently looks like the $10 million threshold is just for the 50 per cent active asset reduction, but further clarity is needed on the other Division 152 concessions.
“Until the draft legislation is released, business owners planning a sale, succession event or restructure should avoid assuming the headline announcement will automatically open up the full suite of Div 152 concessions,” he advised.
