CGT Changes From 1 July 2027: What Business Owners Should Do in FY2026-27

The CGT changes taking effect from 1 July 2027 are now law, and they reset how capital gains are taxed for individuals, trusts and partnerships. A number of other changes landed on 1 July 2026 — payday super, wages, compliance — but those are operational and manageable inside a quarter. The CGT reform is not. For anyone who expects to sell, transfer or restructure a business in the next few years, FY2026-27 is the year the groundwork gets done.

What changed on 1 July 2026

The 2026-27 financial year opened with an unusually dense set of reforms. Briefly, and in order of how much they are likely to affect a private business owner:

None of these is trivial, and payday super in particular has a genuine cash flow consequence worth modelling. But they are all matters of administration and process. They can be fixed inside a quarter. The reform discussed below cannot.

The change that actually matters: CGT reform from 1 July 2027

The 2026-27 Federal Budget, handed down on 12 May 2026, announced a fundamental reset of capital gains tax. From 1 July 2027, for individuals, trusts and partnerships, the general 50% CGT discount is replaced with cost base indexation — gains are uplifted by inflation so that tax applies to the real gain — together with a minimum 30% tax rate on net capital gains.

For a business owner, this is not an abstract policy question. For most private sellers, the proceeds of a sale flow to individuals or trusts, and it is at that point that the discount has historically done its work.

What is not changing

This is where a good deal of the commentary has been unhelpful, and it is worth being precise:

• The small business CGT concessions — the 15-year exemption, the 50% active asset reduction, the retirement exemption and the rollover — are carved out and remain available. For a large share of SME sellers, these concessions do far more work than the general discount ever did.
• Superannuation funds are unaffected; the one-third discount for assets held more than twelve months continues.
• Companies have never received the 50% discount, so a company's own position is unchanged. The question for company owners has always been what happens when the gain is distributed to shareholders.
• The main residence exemption remains.

Why FY2026-27 is nonetheless the year to act

The absence of a cliff does not mean the absence of urgency. It relocates it.

Because the transitional regime apportions a gain around 1 July 2027, the value of the business at that date becomes a number with real tax consequence. Everything built up to that point is treated more favourably than everything built after it. That has three practical implications for an owner.

First, valuation stops being optional. An owner who reaches 1 July 2027 without a defensible, evidence-based view of what the business was worth on that date is relying on a reconstruction years later, at a time when the ATO's interest in the number will be considerably greater than their own records support. Establishing that position contemporaneously is far easier than arguing it retrospectively.

Second, structure decisions have a shelf life. Whether a sale is best executed as a share sale or an asset sale, whether the small business concessions are available at all, and whether the current ownership structure serves the eventual exit are questions with eligibility conditions that cannot be satisfied retrospectively. The Government has flagged three years of rollover relief from 1 July 2027 to assist small businesses wanting to restructure — but rollover relief is a mechanism, not a strategy, and it rewards owners who know what they are restructuring towards.

Third, the trust question is now on the clock. A minimum 30% tax on discretionary trusts is proposed from 1 July 2028, with some exceptions. A great many Australian private businesses distribute through discretionary trusts. If that describes your structure, the distribution strategy that has served you for a decade may need rethinking, and the time to model that is now.

What is settled, and what is still moving

The core reform is not a proposal. The ATO has confirmed that the negative gearing and CGT measures announced on 12 May 2026 are now law, given effect by the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 and the Income Tax Rates Amendment (Tax Reform No. 1) Act 2026. The replacement of the 50% discount with cost base indexation and a 30% minimum rate from 1 July 2027 is legislated.

What continues to move is the detail at the edges. In June 2026 the Government announced refinements to how the new arrangements apply to small businesses, start-ups and trusts, and consultation on those aspects has continued. The direction is fixed; some of the mechanics that matter most to private business owners are still being settled.

That is a reason to plan with advice rather than on assumption — but it is not a reason to defer. The preparation that makes sense under these reforms is, almost without exception, the same preparation that makes sense without them: clean financial records, a defensible view of value, an ownership structure that matches the intended exit, and concession eligibility that has been tested rather than assumed. That work is covered in more depth in our 2026 Business Health Check and our 2026 Seller Guide.

What to do this financial year

Quinn M&A operates within The Quinn Group, which means sellers have direct access to in-house accounting, tax and legal advisers throughout a transaction. Structuring conversations happen alongside transaction strategy rather than after it — which, in a year like this one, is precisely where they belong.

CGT changes 2027: common questions from business owners

Should I sell my business before 1 July 2027?

Not for CGT reasons alone. The new rules apply only to gains that accrue after 1 July 2027, and growth up to that date retains the 50% discount under the transitional arrangements. Selling a business a year early to avoid a tax change that does not apply retrospectively is usually a worse outcome than selling well. The reasons to sell should be commercial and personal first, with tax structured around them. Our article on why business sales fall over covers what actually determines a result.

Do the CGT changes affect the small business CGT concessions?

The four small business CGT concessions — the 15-year exemption, the 50% active asset reduction, the retirement exemption and the rollover — sit in a separate part of the tax law and are not removed by this reform. For many SME sellers they matter more than the general discount. Eligibility still turns on the existing tests, which is exactly why they should be checked rather than assumed.

Why does my business's value at 1 July 2027 matter?

Because the transitional rules split the gain at that date. The growth before it is treated under the old regime and the growth after it under the new one. That makes the value of your business on 1 July 2027 a figure with direct tax consequence — and one far easier to establish contemporaneously, with evidence, than to reconstruct years later.

Are the CGT changes actually law?

Yes. The ATO has confirmed the measures announced in the 2026-27 Federal Budget are law, with effect from 1 July 2027. Some of the detail affecting small businesses, start-ups and trusts has been refined since announcement and remains subject to further work.

What happens to businesses that distribute through a discretionary trust?

A minimum 30% tax on discretionary trusts has been announced from 1 July 2028, with exceptions, and the detail has been refined since the Budget. If your business distributes through a trust, the position is worth modelling now rather than in 2028 — restructuring takes time, and rollover relief has been flagged for three years from 1 July 2027 for owners who need it. Our guide to preparing your business for sale sets out how structure fits the wider pre-sale review.