The Albanese Government has secured a crucial deal with the Greens to pass its landmark tax reform package through the Senate, marking one of the most significant changes to Australia’s tax system in decades.
After weeks of political negotiation and industry backlash following the May Budget, the government softened several controversial measures while introducing new concessions aimed at supporting small businesses and workers.
For business owners, investors, and families using trust structures, the final package delivers important tax changes that could affect investment decisions, succession planning, and future capital gains tax obligations.
Key Changes Included in the Tax Reform Package
Small Business CGT Concessions Expanded
One of the biggest wins for small business owners is the expansion of the Capital Gains Tax active asset discount eligibility threshold.
Under the revised legislation, businesses with annual turnover of up to $10 million can access the 50% active asset CGT discount, up from the previous $2 million threshold.
This change significantly broadens access to CGT relief and is expected to benefit around 180,000 Australian businesses when selling business assets or planning succession strategies.
Testamentary Trusts Exempt from Minimum Tax
The government has also abandoned plans to apply a minimum 30% tax rate to discretionary testamentary trusts.
These trusts are commonly used in estate planning to protect family wealth and support beneficiaries after death. Their exemption provides certainty for families concerned about the potential impact of the proposed reforms.
Treasurer’s Discretionary Powers Removed
Another major change is the removal of provisions that would have allowed the Treasurer to determine which asset classes qualified for CGT discounts.
Business groups and tax professionals criticised the proposal, arguing it created uncertainty and excessive ministerial power. The final legislation now removes this discretion, providing greater predictability for investors and taxpayers.
Greens Secure Additional Housing and Superannuation Reforms
As part of the Senate agreement, the Greens secured additional amendments targeting property investment through Self-Managed Super Funds (SMSFs).
The reforms will prohibit future Limited Recourse Borrowing Arrangements (LRBAs) from being used to acquire residential property within superannuation funds.
Supporters argue the measure will help reduce investor competition in the housing market and improve affordability for first-home buyers.
Additional Tax Relief for Australian Workers
The package also introduces measures aimed at easing cost-of-living pressures.
These include:
- A $250 Working Australians Tax Offset.
- A new $1,000 instant tax deduction for eligible workers.
- Simplified tax reporting requirements for millions of Australians.
What Happens Next?
With the Greens now backing the legislation, the tax reform package is expected to pass the Senate before Parliament rises for the mid-year break.
While the reforms are being promoted as a way to improve housing affordability, encourage productive investment, and modernise Australia’s tax system, debate continues over whether the changes go far enough.
For small business owners, investors, and families, the final legislation delivers greater certainty than originally proposed and highlights the importance of reviewing existing tax, business, and estate planning strategies.
As implementation approaches, taxpayers should seek professional advice to understand how the new rules may impact their personal and business circumstances.
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