The Federal Government came out yesterday and announced changes to several proposed tax measures, providing greater certainty for business owners, investors and families undertaking estate planning.

While some of the proposals are still subject to consultation and legislation, the latest updates offer a clearer picture of how these reforms may affect Australians in the years ahead.

Good News for Estate Planning

One of the most welcome announcements is that testamentary trusts established through a Will will be excluded from the proposed 30% minimum tax on discretionary trusts.

For many families, testamentary trusts remain an effective way to pass wealth to future generations while providing asset protection and tax planning benefits. The Government’s decision means these structures can continue to play an important role in estate planning strategies without being impacted by the proposed trust tax changes.

If you have an existing estate plan, or are considering updating your Will, this change provides greater certainty around the future use of testamentary trusts.

More Small Businesses May Benefit from CGT Concessions

The Government has also increased the turnover threshold for the Small Business Capital Gains Tax (CGT) 50% Active Asset Reduction from $2 million to $10 million.

This change may allow more business owners to access valuable tax concessions when selling business assets. However, it’s important to note that the increase applies only to this specific concession. Other small business CGT concessions will continue to be subject to the existing eligibility rules.

If you’re considering selling a business or business asset in the future, it may be worthwhile reviewing your position to understand what concessions may be available to you.

New Incentives for Start-Up Investment

To encourage investment in innovative Australian businesses, the Government has proposed a new CGT concession for eligible start-up investments.

Under the proposal, qualifying investors may be entitled to a 50% discount on capital gains when investing in eligible early-stage businesses. While further details are still to come, the measure is designed to support entrepreneurship and innovation across Australia.

More Changes Still to Come

The Government has also announced further consultation on a number of housing and property-related measures, including:

  • The treatment of newly built properties under proposed capital gains tax changes.
  • Future negative gearing arrangements for newly acquired properties.
  • Potential exemptions for certain housing investments.

As consultation continues, the final outcome of these measures may differ from the current proposals.