CGT Discount Reform 2026: What Business Sellers Need to Know Before Budget Night

Every Australian business owner who built something and is now thinking about exit has a legitimate question right now: will a CGT discount cut change what I walk away with?

The short answer is: it depends — and in a more nuanced way than most articles are explaining.

The coverage you are seeing in the financial press is almost entirely written for property investors. Business sellers face a different set of rules, different eligibility thresholds, and different risks. This article separates those two conversations.

What is being proposed?

Since 1999, Australians who sell an asset held for more than 12 months have been entitled to a 50% discount on their capital gain before it is included in their taxable income. This applies to shares, investment property, and business interests.

Treasury has been reviewing this discount for some time. Following a Senate inquiry, the Albanese Government is expected to announce a reduction on Budget Night — with the most commonly cited options being a cut to 33% or 25%.

At a marginal tax rate of 47%, the current 50% discount saves $235,000 in tax on a $1 million capital gain. At 33%, that saving drops to $155,000. The difference is real and material — particularly for larger transactions.

Where business sellers differ from property investors

The general CGT discount is not the only protection available to business owners. The ATO provides four separate concessions specifically for small business — and for many sellers, these concessions are far more powerful than the general discount.

The small business CGT concessions

If your business meets the eligibility criteria (more on that below), you may be entitled to one or more of these:

• 15-Year Exemption — if you have owned the active asset continuously for 15 years and are 55 or older (or permanently incapacitated), the entire gain can be tax-free.
• Active Asset Reduction — a further 50% reduction on the capital gain, on top of the general CGT discount.
• Small Business Retirement Exemption — up to $500,000 of the capital gain can be excluded from tax if the amount is paid into superannuation (or if you are over 55, taken directly).
• Small Business Rollover — defer the gain by rolling proceeds into a new active asset within two years.

These concessions are stacked, not mutually exclusive. A qualifying seller can apply the active asset reduction (50%) on top of the general discount (currently 50%) to reduce a capital gain by 75% before the retirement exemption is even considered.

In many cases, a qualifying small business sale results in zero or near-zero tax — regardless of what happens to the general CGT discount.

So why does the discount reform still matter for business sellers?

Two situations where it matters directly:

1. You do not qualify for the small business concessions. To access them, you generally need either annual turnover under $2 million OR net assets under $10 million. Many profitable Australian businesses sit above these thresholds. For them, the general discount is their primary protection — and a cut to that discount has direct dollar impact.
2. You qualify for some concessions but not all. Eligibility is fact-specific. You might access the active asset reduction but not the 15-Year Exemption. In those cases, the general discount forms part of your layered tax position — and a cut affects your residual exposure.

The practical risk: knowing which category you are in

Here is how to think about your position before May 12:

Should you rush to sell before Budget Night?

Almost certainly not — and here is why.

A business sale takes time to do well. Preparing financials, normalising EBITDA, finding the right buyer, negotiating terms, and running due diligence typically takes six to eighteen months for a well-prepared owner. Compressing that to beat a Budget date nearly always produces a worse outcome: lower sale price, worse deal structure, or a buyer who senses urgency and extracts it in the price.

The more useful response to Budget uncertainty is not to rush — it is to know your numbers. If you understand what your business is worth and what your tax position looks like under different scenarios, you can make a clear-headed decision about timing. If you don't have those numbers, you're either paralysed or guessing.

Owners who have done a valuation assessment are in a fundamentally stronger position right now. They know whether a sale timeline of 12 months versus 24 months changes their tax outcome materially. They know which concessions they are likely to qualify for. They know what the deal needs to look like to get there.

A second change worth watching: coordinated sale valuations

A recent Full Federal Court ruling (noted in April 2026 tax updates) addresses how the ATO values individual interests when a business is sold as a coordinated transaction. The court found that when owners sell together, minority discounts may not apply — each owner's interest may be valued as a straight percentage of the total sale price.

For family businesses and businesses with multiple shareholders, this can affect the tax maths significantly. If you own 30% of a business sold in a coordinated transaction, the ATO may treat your gain as 30% of the full sale price — not 30% of a discounted minority stake. Combined with potential CGT discount changes, this is worth getting specific advice on before any deal proceeds.

What to do in the next 38 days

You cannot control what the Budget announces. You can control how prepared you are when it does. The steps that actually matter:

1. Get a current valuation range. Not a formal report — an indicative range based on your financials and industry multiples. Enough to know what you're dealing with.
2. Test your small business CGT concession eligibility. With your accountant. Check the active asset test, the relevant threshold you qualify under, and whether your ownership structure creates any complications.
3. Model the scenarios. What is your after-tax outcome at 50% discount? At 33%? Does the difference change your preferred timeline?
4. Don't act on urgency you haven't tested. A Tax change that saves you $80,000 in tax is not worth a sale that costs you $300,000 in enterprise value because you rushed.

The bottom line

A CGT discount cut from 50% to 33% is not a reason to panic-sell a business you're not ready to exit. But it is a signal worth taking seriously — particularly if you are in the $5M–$20M revenue range, where the small business concessions may or may not fully protect you.

The owners who will handle this best are not the ones who react fastest. They're the ones who already know their numbers. If you don't, now is a good time to find out.

This article provides general information only and does not constitute financial or tax advice. Your situation will depend on your specific business structure, asset profile, and eligibility for available concessions. Consult a qualified tax adviser before making any decisions based on anticipated Budget changes.

Further reading: How the small business CGT concessions work · How much tax will I pay when I sell my business? · Division 296: the super tax change hitting business owners in July 2026