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By: David Montani, Paul Banister
23 Jun 20266 min read
On 18 June 2026, the Prime Minister and Treasurer issued a media release setting out several changes to the package of tax measures announced in the 12 May 2026 Budget. This comes off an intense period of public discourse since the Budget, and consultations over the proposed changes. You can refer to our previous comments on the Budget measures as announced here.
The announced revisions are:
Accessing the small business CGT concessions requires meeting a series of conditions. One of those conditions is having either group-wide turnover below $2 million, or overall net wealth (excluding private assets, the family home and superannuation) under $6 million. You need satisfy only either one.
Per the recent changes, the $2 million threshold will increase to $10 million, for the purpose of access to the 50 per cent active asset reduction concession only. Thus, a qualifying capital gain on a business asset may be reduced by the 50 per cent discount and/or inflation adjustment, and then reduced by the 50 per cent active asset reduction.
It is noted that the change makes no difference for a business with group-wide turnover of $2 million to $10 million that also happens to satisfy the $6 million net wealth test in any case.
Called the ‘Innovative Business CGT Concession’, the consultation paper sets out a 50 per cent discount for early-stage investors "including founders and employee share scheme participants of innovative start-up businesses”.
The eligibility requirements include that:
Recognising that biotech and medtech innovations can take longer to commercialise, the Government will consider extending eligibility to companies up to 15 years old.
The post-1 July 2027 component of capital gains will be subject to a minimum 30 per cent tax impost (before adding Medicare levy). Concerns had been raised about a detrimental impact on charitable giving funded from such capital gains subject to the minimum 30 per cent tax impost. The concern was that a reduced amount would now be available to give, after the 30 per cent minimum tax impost.
After consultations, deductible gifts and donations will now reduce these capital gains. Accordingly, the ability to give will not be diminished by the 30 per cent minimum tax on capital gains.
Discretionary testamentary trusts (comprising the vast majority of testamentary trusts) created after 12 May 2026 were to be subject to the new 30 per cent tax on trusts. However, such testamentary trusts now will be excluded from the new tax, provided they are established for ‘genuine testamentary purposes’.
The exclusion will be limited to income from assets of the deceased estate. For discretionary testamentary trusts established on or after 1 July 2028, the exclusion will apply only to trusts that can only benefit individuals and income tax exempt entities.
The legislation tabled in Parliament containing the changes to negative gearing and capital gains tax left a number of measures to be implemented via legislative instrument. The details were unknown, however some of these will now be incorporated into the legislation to provide more certainty.
The Government intends to release a consultation paper in the coming weeks on the implementation of the minimum 30 per cent tax on discretionary trusts. A number of concerns have been raised about this change, including the denial of any credit on income distributed to a corporate beneficiary, and inequities arising when a family trust distributes to other family trusts or beneficiaries within the ‘family group’ who have losses or deductions.
We continue to consider how these changes will impact our clients, and will continue to monitor developments as they unfold. We are developing approaches to address the changes in order to ensure clients are in the best possible position, noting that the likely prudent approach will be to delay taking any actions until the proposals become law.
In the meantime, please contact your trusted Grant Thornton advisor to discuss these developments.
On Wednesday 10 June 2026 Treasurer Chris Steel handed down his second budget, alongside Chief Minister Andrew Barr. The Treasurer noted a difficult economic environment due to global instability.
On 10 June 2026 the High Court found that a trust’s unpaid present entitlement (UPE) to a company is not treated as a ‘loan’, and potentially subject to tax as a deemed dividend under Division 7A.
Explore how the Federal Budget 2026–27 reshapes M&A in Australia, with CGT changes, trust tax reforms and implications for deal structuring and transaction timing.
