CANBERRA — Prime Minister Anthony Albanese announced capital gains tax reforms, which include exemptions for all 2.7 million small businesses in Australia. The government also intends to introduce inflation-linked discounts instead of the current flat 50 percent rate.

Carve-outs from the proposed reforms will apply to startups and testamentary trusts. Treasurer Jim Chalmers stated that the annual turnover threshold for CGT concessions will increase to $10 million and that 98 percent of active businesses would receive concessions under the amendments.

"There are four existing concessions for businesses in the CGT system. We’re leaving all four in place, but we’re making one of them substantially broader and significantly more generous at the same time," he said. The planned amendments are projected to cost the budget $475 million over forward estimates.

"To put that into context, the negative gearing, capital gains and trust changes are expected to raise about $8.1bn over the course of the forward estimates," he said. A Treasury paper detailed the government's stance on CGT carve-outs for startups. "We do consider there to be a special case for businesses with low or no start-up costs, and that necessitates this different treatment in the tax system," he said.

Testamentary trusts, which manage income distribution from deceased estates, will be exempt from a proposed 30 percent minimum tax on discretionary trusts. Details concerning the trust carve-out will be provided in a forthcoming consultation paper. Amendments regarding the trust carve-out will not be part of the first tranche of legislation presented to the Senate.