Summary – From 1 July 2027, Australia’s capital gains tax (CGT) rules will change for capital gains that accrue from that date. The current 50% CGT discount will move to an inflation-based approach, alongside a 30% minimum tax rate on relevant real capital gains. However, the existing small business CGT concessions will remain available, subject to eligibility requirements.
For Australian small business owners, the changes make business valuation, tax planning, financial forecasting and exit planning more important well before 2027.
What Are the 2027 CGT Changes?
The Federal Government’s CGT reforms are designed to change how future capital gains are taxed from 1 July 2027.
Under the new approach, the existing general 50% CGT discount will no longer apply to capital gains accruing after 1 July 2027. Instead, an inflation-based calculation will apply, together with a minimum 30% tax rate on relevant real capital gains.
Importantly, the reform is prospective. The portion of a capital gain that relates to value accrued before 1 July 2027 is intended to retain the existing 50% discount treatment.
This distinction could become particularly important for owners who have built significant value in their businesses over many years.
Will Small Business CGT Concessions Still Apply?
Yes. The Government has confirmed that the four main small business CGT concessions will continue:
- 15-year exemption
- 50% active asset reduction
- Retirement exemption
- Small business rollover
From 1 July 2027, the turnover threshold for accessing the 50% active asset reduction is also set to increase from $2 million to $10 million, subject to the relevant eligibility conditions.
This means the CGT reforms do not simply mean that every small business owner will suddenly pay substantially more CGT. The final outcome will depend on the business structure, asset ownership, eligibility for concessions, timing of the gain and how much of the gain relates to periods before and after 1 July 2027.
Why Could Business Valuation Become More Important?
Business valuation could become an important part of CGT planning for owners who are considering selling, restructuring or transferring their business.
A valuation can help establish a defensible picture of what a business was worth at a particular point in time. This may be particularly useful when assessing the value created before and after the reform commencement date.
For example, imagine a business valued at $3 million before 1 July 2027 that is later sold for $5 million. Understanding how the $2 million increase should be treated under the applicable CGT rules may require careful financial and tax analysis.
A business valuation for CGT can therefore support better decision-making rather than relying on assumptions about what the business was worth years earlier.
Should You Sell Your Business Before July 2027?
Not necessarily.
The 2027 CGT reforms should not automatically be treated as a reason to sell a business early. Selling too soon could mean accepting a lower price, losing future growth opportunities or making a major business decision primarily for tax reasons.
Instead, owners should compare different scenarios.
For example:
Scenario A: Sell before 1 July 2027
Scenario B: Continue operating and sell after 1 July 2027
Scenario C: Restructure or transfer ownership before an eventual sale
The right option depends on the business’s expected growth, valuation, tax position, ownership structure, cash flow and long-term objectives.
This is where strategic financial planning and business advisory can provide valuable perspective.
How Can Business Owners Prepare for the CGT Changes?
Business owners can start by reviewing five areas:
- Understand your current business value
Knowing what your business may be worth today provides a useful starting point for future planning. - Review your ownership structure
Companies, trusts and individual ownership can produce different tax outcomes. Any restructuring should be considered carefully with professional advice. - Check your CGT concession eligibility
Do not assume you qualify—or that you do not qualify. Review the relevant small business CGT requirements early. - Forecast cash flow and tax liabilities
A potential business sale can create significant tax and liquidity requirements. Cash flow management and financial forecasting can help owners prepare. - Model different exit dates
Compare the potential financial outcomes of selling before and after 1 July 2027 rather than making the decision based on the headline CGT change alone.
How Can an Accounting and Advisory Firm Help?
Preparing for the 2027 CGT changes often requires more than completing a tax return.
An experienced Accountants & Business Advisors in Australia can bring together Accounting & Financial Reporting, Virtual CFO services, Business Advisory, Taxation, Business Valuation, Strategic Financial Planning, Cash Flow Management and Business Performance Improvement.
For example, a Virtual CFO can help management understand projected cash flow and financial performance, while business advisory and valuation work can help owners assess growth opportunities and potential exit scenarios.
Tax professionals can then examine the applicable CGT rules, concessions and compliance requirements.
The benefit is a more complete financial picture before making a major decision.
What Should Australian Small Business Owners Do Now?
The biggest mistake is waiting until 2027 to start planning.
If you own a business in Melbourne, Sydney, Brisbane, Perth, Adelaide or elsewhere in Australia, start by understanding your current business value, ownership structure, CGT position and likely exit strategy.
The 2027 reforms may affect different businesses in very different ways. Early analysis gives owners more time to consider their options, improve business performance and make informed decisions.
For small business owners, the goal should not simply be to “beat” the CGT changes. It should be to build a financially stronger business and choose an exit or ownership strategy that makes sense from both a tax and commercial perspective.
Frequently Asked Questions
Will the 50% CGT discount disappear in 2027?
The general 50% CGT discount is being replaced for gains accruing from 1 July 2027, with an inflation-based approach and a 30% minimum tax rate on relevant real capital gains.
Are small business CGT concessions being removed?
No. The four existing small business CGT concessions are being retained, subject to eligibility requirements.
Should I sell my business before July 2027?
Not automatically. The best timing depends on valuation, growth prospects, tax position, structure, cash flow and your broader exit strategy.
Why should I consider a business valuation?
A valuation can help establish the value of a business at a particular point in time and support more informed CGT, succession and exit planning.
When should I start planning for the 2027 CGT changes?
Ideally, well before 1 July 2027. Early planning provides more time to review your business structure, valuation, tax position, financial performance and potential exit options.
