CGT changes in 2027: what sellers should know

The tax treatment of capital gains in Australia is changing, and if you are within a few years of selling a business it is worth understanding the shape of it. What follows is background, not advice.

Before you read this: what this article is and is not

This is a plain explanation of announced and legislated changes. It is not a recommendation about your situation, your timing or your structure. Those decisions belong with your accountant.

What is actually changing on 1 July 2027

For individuals, trusts and partnerships, the general 50 per cent capital gains tax discount is replaced by cost base indexation, with a 30 per cent minimum tax applying to the resulting real gain.

Indexation adjusts what you paid for an asset in line with inflation, so tax applies to the gain above inflation rather than the full nominal gain. Assets acquired before 20 September 1985 also come into the regime for growth after the commencement date.

Transitional rules mean gains accrued before 1 July 2027 keep their existing treatment.

What is not changing: the four small business concessions

The four small business CGT concessions are being retained. For many business owners these matter far more than the general discount, because in the right circumstances they can reduce a gain substantially or remove it entirely.

They remain subject to their own eligibility tests, which are detailed and unforgiving. Whether you satisfy them is an accountant's assessment, not a broker's.

The $10 million threshold, and the one concession it applies to

From 1 July 2027 the aggregated turnover threshold for the small business 50 per cent active asset reduction increases from $2 million to $10 million, bringing it into line with the instant asset write off threshold.

This is the point most commentary gets wrong, so it is worth being precise. That increase applies only to the 50 per cent active asset reduction. The other concessions continue to use their existing tests, including the $2 million turnover test and the $6 million maximum net asset value test.

Why timing a sale around tax rarely works on its own

Owners occasionally ask whether they should rush a sale to land before a tax change. It is the wrong question in isolation.

A business sold in a hurry, without preparation, with records that are not ready, typically attracts a lower price and more conditions. That discount is frequently larger than the tax difference being chased. Preparation moves price far more reliably than timing moves tax.

The sensible sequence is to understand your tax position with your accountant, understand your market position with a broker, and then decide.

What to ask your accountant before you go to market

Whether an asset sale or a share sale suits your circumstances. Whether you are likely to satisfy the small business concession tests. How the proceeds would be received and what that means. Whether anything in your current structure should be addressed before a contract exists rather than after.

Ask early. Some of it cannot be fixed late.

Where a broker fits, and where a broker does not

A broker's job is the market: what the business is likely to sell for, who the buyers are, how it is presented, and how the process runs confidentially. Tax is not a broker's job and you should be wary of any broker who tells you otherwise.

The useful arrangement is your accountant and your broker having the conversation in parallel, well before you go to market.