The May 2026 Federal Budget and Your Business Sale: What Sellers Need to Know

Why this budget matters more than most for business sellers

Most federal budgets don't move the needle for business owners thinking about succession. This one could.

Treasurer Jim Chalmers has described the May 12, 2026 budget as "ambitious" — with confirmed signals around CGT reform, business tax restructuring, and productivity incentives. Combined with the already-legislated Division 296 super tax (starting 1 July 2026), there are multiple moving parts that could affect the after-tax proceeds of a business sale.

This article maps the key items to watch — and what you should do now, before the budget lands.

1. The CGT discount review

The most directly relevant signal for business sellers is the review of Australia's 50% CGT discount. Under current law, capital gains on assets held for more than 12 months are halved before tax is applied. For a business owner selling with a $1.5 million capital gain, that discount is worth roughly $337,000 in tax savings.

Chalmers has repeatedly said the CGT discount is "a matter for cabinet" — political language for: it's under active consideration but nothing is confirmed. Senator David Pocock has publicly backed reform. Property industry groups have already modelled the impact and released it to the media.

What could change: The discount could be reduced (from 50% to 25% or 33%), restructured (e.g., retained for primary residences but not investment assets), or left unchanged. Implementation date — if anything is announced — would likely be 1 July 2026 or 1 July 2027.

What this means for business sellers: The 50% discount is separate from the small business CGT concessions. If you qualify for the concessions (15-year exemption, retirement exemption, etc.), the general discount is secondary. But if you don't qualify — because your business is too large, you haven't owned it long enough, or the active asset test isn't met — the general discount is your main tax lever. A reduction would meaningfully increase your tax bill.

The asymmetry is simple: if the discount is unchanged, owners who planned around it gave up nothing. If it's cut, owners who didn't plan face a permanent increase in their tax on exit.

We've written a detailed breakdown of the CGT discount review here — including how it interacts with the small business concessions and what action is worth taking now.

2. Division 296: already legislated, starts July 1

Division 296 is not budget-dependent — it has already passed parliament. From 1 July 2026, superannuation earnings on balances above $3 million will be taxed at 30% (up from the standard 15%). Unrealised gains are included in the calculation.

For business sellers, this creates a timing consideration that most haven't thought through:

• Many owners plan to use the CGT retirement exemption to contribute up to $500,000 of sale proceeds into super, tax-free
• If that contribution pushes a super balance above $3 million after 1 July 2026, Division 296 will apply to future earnings on the excess
• The tax rate is 30% on earnings (including unrealised gains) — not 15%

This doesn't mean you shouldn't use the retirement exemption. It means the structure of how and when you make contributions needs to be modelled against the new threshold. A contribution that was clearly optimal in 2025 may need to be re-examined in 2026.

Read our full analysis: Division 296 and Your Business Exit: What to Consider Before July 1.

3. Business tax reform: investment incentives

The second business-focused signal from Chalmers is a productivity reform package — essentially, incentives for businesses to invest in equipment, machinery, and capital assets. The design looks similar to previous instant asset write-off schemes, extended or made permanent.

For business sellers, this is less directly relevant — you're not planning to invest in the business, you're planning to exit it. But there are two indirect implications worth noting:

• Buyer appetite: If buyers can claim accelerated depreciation on assets purchased in a business acquisition, the after-tax cost of acquisition falls — which can improve buyer appetite and potentially support higher multiples in sectors with significant tangible assets (manufacturing, trade)
• Timing of capex: If you have deferred maintenance or capital expenditure you were planning to do before sale, understanding the write-off rules under new legislation could affect whether you make those investments before or after settlement

4. What's not changing (that you might worry about)

Based on current signals, the following are not under active review for the May budget:

• Small business CGT concessions — the four concessions (15-year exemption, active asset reduction, retirement exemption, rollover) are not flagged for change
• The $10 million net asset threshold — the eligibility ceiling for small business CGT concessions is not in the budget discussion
• GST going concern treatment — no signals of change to how business sales are treated for GST
• Stamp duty on business sales — a state-level issue, not federal budget

The small business CGT concessions remain the single most valuable tax structure available to qualifying sellers. They are not affected by the CGT discount review — they operate independently.

5. What should you actually do before May 12?

The budget date is not a hard action deadline — you cannot complete a business sale in 7 weeks, and the May 12 announcement will trigger a period of parliamentary process before any legislative changes take effect.

What is worth doing now:

1. Get your indicative valuation done. Understand what your business is worth under current market conditions. This is the foundation for any tax modelling.
2. Model your after-tax position under current rules. Ask your accountant to run the numbers: what do you net after CGT (with and without concessions), after Division 296 if applicable, after working capital adjustments?
3. Check your super balance against the $3M threshold. If you're planning to use the retirement exemption, model the contribution against the new Division 296 rates before assuming it's the right structure.
4. Don't let budget uncertainty delay preparation. The businesses that sell well in 2026 started preparing in 2024 or 2025. Waiting for budget clarity before beginning preparation is the wrong order of operations.

The broader context: a busy second half of 2026

Whatever the May 12 budget contains, the second half of 2026 was already shaping up as a significant period for Australian business owners:

• Division 296 super tax starts 1 July 2026
• Payday super (superannuation paid with wages, not quarterly) starts 1 July 2026
• SBSCH (Small Business Superannuation Clearing House) closes 1 July 2026
• AML/CTF Tranche 2 regime expansion takes effect

For business owners, the practical implication is that the compliance and structural environment is changing significantly. Transactions that straddle the 1 July date will need to account for these changes in the sale and purchase agreement.

Summary: what to watch for on May 12

Item	Status	Impact on sellers
CGT discount (50%)	Under review	High — affects sellers not using small business concessions
Division 296 super tax	Legislated — starts 1 Jul 2026	Medium — affects contributions strategy above $3M
Business investment incentives	Flagged — details TBC	Low–medium — indirect effect on buyer appetite
Small business CGT concessions	No change signalled	None (currently)

Related reading

• Australia's 50% CGT Discount Is Under Review: What Business Owners Need to Know
• Division 296 and Your Business Sale: Timing Considerations Before July 1
• The Small Business CGT Concessions Explained
• How Much Tax Will I Pay When I Sell My Business?