CGT on Selling a Business: What's Changing from 2027

Updated 6 October 2026. Since this article was first published, the Government has released draft detail on how the value of an asset at 1 July 2027 can be worked out, and on the proposed trust tax. We have revised the article to reflect it. In particular, the law makes market value just before 1 July 2027 the starting point. Treasury has published a draft formula-based alternative to market valuation. The ATO already provides general valuation guidance; as at 6 October 2026, we have not identified additional guidance specifically addressing the July 2027 CGT transition. Some of the detail is still being settled, and we will keep this page current as it is.

Before we start: this article is our interpretation of enacted legislation and of announced and draft measures, some of which are still being finalised. It does not constitute financial or tax advice. You should seek independent financial and taxation advice relevant to your circumstances. Legislative status checked 6 October 2026.

A tax date is one part of an exit decision. Business performance, buyer interest, the terms of a deal and your own plans matter too. This article sets out what is changing so you can have a better conversation with your adviser.

Why does the 2026 Federal Budget matter to business owners (not just property investors)?

Much of the coverage has focused on property and shares. Business assets, and shares in a private company, are covered by the same rules.

If you hold shares in your company personally, or your business sits in a family trust, the tax on a future sale can change. How much depends on your structure, your timing and whether you qualify for the small business concessions.

What are the two 2026 Budget measures affecting business exits?

There are two measures, at different stages. The CGT change from 1 July 2027 is law. A minimum tax on certain discretionary trusts from 1 July 2028 is still a proposal.

Measure 1: the CGT discount is replaced (from 1 July 2027)

Today, Australian resident individuals and trusts that hold an asset for more than 12 months can generally halve the taxable gain. From 1 July 2027, that discount is replaced by indexation, which adjusts the cost base for inflation, and a 30% minimum tax on the gain.

The 30% is a floor. If your marginal rate is higher, the higher rate applies. The top marginal rate is 47%, including the Medicare levy where it applies.

For an eligible asset you hold on 30 June 2027, the gain is split at 1 July 2027. Growth before that date can keep the old discount, where eligible. Growth after it falls under the new rules. That holds however long you keep the business.

Companies are not affected by this change. They never had the 50% discount.

Measure 2: a proposed minimum tax on discretionary trusts (from 1 July 2028)

The Government has proposed a 30% minimum tax on certain discretionary trusts from 1 July 2028, payable by the trustee. Some types of trust and some types of income are excluded.

The ATO states that the measure is not yet law. Consultation on the draft legislation closed in September 2026, and the detail may still change. Decisions that depend on it are best left until the legislation is settled.

Small Business CGT Concessions: What Changed and What Didn't

All four small business CGT concessions remain. Treasury states that the turnover threshold for the 50% active asset reduction rises from $2 million to $10 million from 1 July 2027. That increase applies to that concession.

• 15-year exemption. The whole gain can be disregarded if you have owned the asset for 15 years and you are 55 or older and selling in connection with retirement, or are permanently incapacitated. Other conditions apply.
• 50% active asset reduction. Reduces an eligible gain by a further 50%. It is separate from the general CGT discount that is changing.
• Retirement exemption. Exempts eligible gains up to a $500,000 lifetime limit. If you are under 55, the amount must be paid into a complying super fund or retirement savings account. Despite the name, you do not need to retire.
• Small business rollover. Defers an eligible gain if you acquire a replacement asset within the time allowed.

Where the 15-year exemption applies, the whole gain is disregarded, so the change to the discount does not affect it.

Who qualifies? You generally need to pass one of two tests, plus other conditions:

• Turnover test: aggregated turnover of less than $2 million, including connected entities. The $10 million threshold applies to the 50% active asset reduction from 1 July 2027. Whether the other three keep the $2 million figure is worth confirming with your adviser.
• Net asset value test: net CGT assets of not more than $6 million just before the sale, including connected entities and affiliates, and excluding your home and super.

Passing a threshold does not settle eligibility. Ask your accountant which concessions apply to the actual seller and the actual asset. Selling before 1 July 2027 does not guarantee access to them.

Does it matter whether your business is in a company?

Start with who owns the asset being sold. A company selling its business and an owner selling shares in that company are different transactions.

• A company selling its assets pays company tax on the gain, at 25% for base rate entities or 30% otherwise. The change to the discount does not apply to the company. How the money then reaches you needs its own advice.
• An owner selling shares held personally makes a personal capital gain, and the new rules can apply.
• A family trust may be affected by both measures: the CGT change, which is law, and the proposed trust tax, which is not.
• Partners can be affected on their share of a partnership's gains.
• Holding companies and layered structures add variables. Once proceeds reach an individual, personal tax rules apply.

If you own shares, the value that matters at 1 July 2027 may be the value of your shareholding, which can differ from the value of the whole business.

How does your planned exit timeline change the tax calculation?

For an ordinary sale, the CGT event generally happens when the contract is signed, not at settlement or when the cash arrives. Confirm the date that applies to your deal before relying on it.

Timing	What applies	What to focus on
Contract signed before 1 July 2027	The current rules	Preparation, and confirming which concessions apply
Sale in the few years after 1 July 2027	Growth before 1 July 2027 can keep the old discount, where eligible; growth after falls under the new rules	Evidence of what the business was worth at 1 July 2027
Sale five or more years out	The same split between eligible growth before 1 July 2027 and growth after it	Evidence of value at 1 July 2027, the 15-year exemption, and building value

The immediate exit (before 1 July 2027)

A sale takes months to prepare and negotiate. To fall under the current rules, the contract generally needs to be signed before 1 July 2027. Selling in a hurry to beat the date rarely suits a business that is not ready, and an earlier contract does not guarantee a particular tax result.

The medium-term exit (1 to 3 years)

A sale in 2028 or 2029 splits the gain at 1 July 2027. The value at that date sets the split.

If your deal includes an earn-out or deferred payments, ask your adviser how the payment terms affect the tax and its timing. Do not assume the date the cash arrives sets the tax year.

The long-term exit (5+ years)

Growth before 1 July 2027 can still keep the old discount, where eligible, however long you hold the business. Growth after falls under the new rules, so the 15-year exemption and building value matter more. So does evidence of what the business was worth at 1 July 2027.

Why does the value at 1 July 2027 matter?

1 July 2027 is where the gain is split between the old rules and the new ones. If you might sell after that date, what your business was worth on it matters.

Market value just before 1 July 2027 is the starting point. You can choose instead to use an apportioning method, and Treasury has released a draft one, described as "an alternative to obtaining a formal market valuation". Treasury has said the ATO is preparing guidance materials and tools to support the calculations.

The draft method may not suit every business. CPA Australia, in its submission on the draft, said that for shares or units with a nominal cost base, the method "allocates virtually none of the gain to the pre-1 July 2027 period". Many private companies are set up with $1 or $100 of share capital.

So it is worth planning for a valuation with your accountant. Some situations, such as signing a sale contract before 1 July 2027 or qualifying for the 15-year exemption, may make one unnecessary.

An illustration of why the growth history matters

Imagine two businesses that eventually sell for the same price. One had built its earnings and customer base before July 2027. The other did most of its growing after that date. The same sale price tells you little about what each was worth at the transition.

This is an illustration, not a tax calculation. It shows why the value at 1 July 2027, and the records behind it, matter.

When the valuation is done

The valuation date and the date the report is prepared are different. The choice of method is made in the tax return for the year of the sale, so there is no rule that a report must be finished by 1 July 2027. In recent industry discussions I have been part of, the expectation was that most of these valuations will be prepared after 30 June 2027, looking back to that date, and that valuers will be busy.

The ATO already provides general valuation guidance, which says a valuation must be "objective and supported with appropriate evidence". As at 6 October 2026, we have not identified additional guidance specifically addressing the July 2027 CGT transition. For practical steps on getting ready, see how to get your house in order before the CGT changes.

What if the business is owned through a trust?

The proposed trust tax would apply from 1 July 2028 to certain discretionary trusts, with some trusts and some income excluded. It is not a tax on every trust distribution or on every sale.

A three-year restructure rollover is also proposed from 1 July 2027, subject to conditions, for moving assets out of a discretionary trust to other types of entities. That window runs past the proposed start of the trust tax.

The rollover deals with federal tax. State and territory stamp duty is separate, and how it applies to these restructures has not been resolved. CPA Australia has raised the gap publicly.

The consistent advice in recent industry discussions was not to rush a restructure, or any election, while the detail is being settled. Ask your advisers to compare staying put with the alternatives, including stamp duty, finance, contracts and succession.

A trust may do more than save tax. Family trusts can provide asset protection, depending on how they are set up, so weigh that before changing anything.

The succession cliff: how the CGT changes add to a problem already running out of time

The CGT changes land on an existing succession problem. At the 2021 Census, 47% of small business owners were aged 50 and over, and the most common age was 50, up from 45 in 2006. Owners under 30 made up 8%, down from a peak of 17% in 1976.

When a business does not pass to a new owner, it often simply closes. The Reserve Bank has noted that, in the 15 years before the pandemic, roughly ten times as many firms exited by ceasing trade as entered formal insolvency. I made the case for closing the succession gap in my submission to the Productivity Commission.

As I wrote in Yahoo Finance, for many owners approaching retirement, the sale proceeds are not a bonus. They are the retirement plan.

My view is that tax planning belongs alongside the work of building a business a buyer can understand and run. Reliable financial information, relationships that transfer and a capable team are what make a sale possible. A tax plan alone cannot create a buyer.

What to do next

Start by knowing where you sit: what the business is worth today, how it is owned, when you might exit, and whether you are likely to qualify for the concessions. Those questions deserve real numbers rather than rules of thumb.

Take them to your accountant, and connect the tax advice to the commercial plan: the likely value, how ready the business is for a buyer, and how long preparation will take. I covered the common reasons a sale falls over before tax is even reached in SmartCompany.

If you want to understand what your business is worth today, that is the work Exit Advisory Group's independent business valuation service is built for, alongside your tax and legal advisers.

If the economic backdrop matters to your thinking, my conversation with Warren Hogan, Managing Director of EQ Economics and Chief Economic Adviser to Judo Bank, covers interest rates, the succession cliff and what owners with a two to three year exit horizon should watch.

Further listening: The Economy, the Succession Cliff, and Your Exit, Simon Bedard with Warren Hogan, Buy Grow Sell

ABOUT SIMON BEDARD

Simon Bedard is the Founder and Managing Director of Exit Advisory Group, a boutique Australian M&A advisory firm specialising in business sales, valuations, and exit and succession planning for businesses with enterprise value of $3M to $100M. He is the National Chair of the Australian Institute of Business Brokers, a Registered Business Valuer, a Licensed Business Broker, and the author of Exit Like an Expert (2026). Simon also hosts the Buy Grow Sell podcast.