13/05/2026
*What The 2026 Budget Means For Business Sellers*
So you've probably seen the headlines about yesterday's federal budget.
A lot of the coverage has focused on property investors and negative gearing. But there are bigger implications for business owners that aren't getting much airtime.
I wanted to give you a heads up on what's actually changing, because if you've ever thought about selling your business in the next few years, this matters.
The good news first: your retirement pathway is protected.
The small business CGT concessions are completely unchanged. That includes the 15-year exemption, the 50% active asset reduction, the retirement exemption, and the rollover provisions. If your business qualifies for these concessions, that tax treatment is still there.
This is the most important thing to understand, because it means the core tax benefits of selling a qualifying small business remain intact.
What is changing from 1 July 2027:
- The general 50% CGT discount is being replaced with an indexation model plus a 30% minimum tax on capital gains. This applies to individuals, trusts, and partnerships.
- For business owners, the transition rule is designed to be fair. If you sell after 1 July 2027, you'll still get the old 50% discount on the portion of your business value that existed before that date. Only the growth after 1 July 2027 falls under the new rules.
- So there's no cliff. A sale on 2 July 2027 versus 30 June 2027 makes almost no difference for most businesses.
Where timing does start to matter is if you were planning to hold for another 3-5 years.
The longer you hold past 1 July 2027, the larger the share of your eventual sale price that gets taxed under the new system rather than the old one.
The trust situation is different.
If your business operates through a discretionary trust, there's a second change that creates a genuine decision point.
From 1 July 2028, discretionary trusts will pay a minimum 30% tax on income before distributions. That kills the income-splitting benefit that's been the main reason to use a trust structure.
You'll have three options:
1. Restructure to a company (there's a three-year rollover relief window from 1 July 2027 to 30 June 2030 that waives CGT on the conversion)
2. Sell the business (small business CGT concessions still apply)
3. Stay as a trust and accept materially higher tax
There are around 840,000 Australian businesses operating through discretionary trusts. Most are in trades, professional services, dental, allied health, and family-run SMEs. Every one of those owners now has a forced choice to make by mid-2028.
There's a one-time optimisation opportunity at 1 July 2027.
When you sell a business after 1 July 2027, you can elect to have it formally valued at 1 July 2027 to establish the dividing line between old rules and new rules. For most business owners, commissioning a defensible valuation around that date could be worth having, because the default Treasury formula uses linear apportionment which is rarely optimal.
If you're considering a sale anytime between now and 2030, that valuation is probably worth doing. It's a one-time chance to lock in a baseline that could swing your after-tax outcome.
What you should consider doing now:
Talk to your accountant. Show them this post if it helps frame the conversation.
The questions worth asking are:
- How is my business structured, and am I affected by the trust changes?
- If I was planning to exit in the next 5 years anyway, does bringing that forward make sense given these changes?
- Should I commission a formal valuation at 1 July 2027 to optimise my tax position?
These changes don't force anyone to rush a sale. But they do create a window where certain decisions need to be made deliberately rather than deferred indefinitely.
If you're in the camp of business owners who were already thinking about an exit in the next few years, the math has probably shifted slightly in favour of moving sooner rather than later...
Not dramatically, but enough to be worth running the numbers with someone who knows your specific situation.
We're here if you decide that's the direction you want to go. But the first conversation should be with your accountant, not with us.
Feel free to reach out if you have questions about any of this or want to start the process of selling.
Have a great week.
- Kurt
