Anthony Albanese has unveiled carve-outs for small businesses and start-ups from his government’s sweeping tax changes, while also backing down on a measure critics labelled a ‘death tax’.
Labor’s initial proposal included removing the existing 50 per cent capital gains discount and replacing it with inflation indexation of the cost base, as well as a minimum 30 per cent tax.
However, following widespread backlash, Albanese on Thursday announced a series of exemptions aimed at shielding small businesses, start-ups and family trusts.
One of the biggest changes relates to testamentary discretionary trusts, which are created through a person’s will and allow assets and income to be distributed after death.
The government has scrapped plans to apply its 30 per cent minimum tax to these trusts, a measure critics had dubbed a ‘death tax’.
About 10,500 testamentary trusts are active across Australia.
‘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,’ Albanese said.
The government has also increased the threshold for small business capital gains tax concessions, allowing many more businesses to qualify for the tax break.
Prime Minister Anthony Albanese has unveiled carve-outs for small businesses and start-ups from his government’s sweeping tax changes, while also backing down from the ‘death tax’
‘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.
The government said lifting the threshold means 98 per cent of Australian businesses will be eligible for the concession.
Start-ups are also set to benefit, with Albanese announcing a new tax concession after concerns were raised by tech leaders, including Atlassian co-founder Scott Farquhar.
‘We’re also proposing to introduce a new innovative business tax concession for start-ups, and we’ll release the consultation paper on the startup sector later this morning,’ Albanese said.
He brushed aside claims the CGT reversal was driven by mounting pressure from young Australians running businesses.
‘Young Australians who’ve been able to get into their first home, both them and their parents and their grandparents are saying that for the first time… that they’re finally getting a fair go,’ Albanese said.
‘This Saturday, when first home buyers go along to an auction, if it’s an existing home they won’t be competing as much with investors, of course, they may still will be investing in existing homes, but they won’t be able to use negative gearing going forward. They see that as a very positive thing.’
