Labor changes course on trust changes, CGT concessions, increased turnover threshold

The new changes include the increase of the turnover threshold for active asset CGT reduction from $2 million to $10 million, a new innovative business CGT concession for start-up businesses – a 50 per cent CGT discount to early stage investors, including founders and employee share scheme participants of innovative start-up businesses, and minimum tax exemptions for income from all types of discretionary testamentary trusts if established for “genuine testamentary purposes”. 

“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,” Chalmers said. 

Chalmers confirmed that consultation papers for these changes would be released on 18 June.

He said that as a consequence of the government’s next steps, every one of the 2.7 million active small businesses in Australia will have access to CGT concessions, and that it will leave all four existing CGT concessions for small businesses in place while making one broader and more generous.

"We know [these changes are] in the interests of the Australian people. This is genuine reform. And genuine reform is often difficult. But it's the right thing to do, done for the right reasons," Albanese said at the press conference.

“We back Australian small businesses and the important role that they play in Australia. They're the blood running through the veins of our local communities, and they're vital for our economy. We also back innovators and startups, and we want them to thrive here, and we're certain that they can,” Albanese said.

“The next steps that we announced today are all about providing more clarity and confidence to investors, more support for small businesses, and more incentives for innovation,” Chalmers said.

Chalmers also announced changes to ministerial powers to “provide more certainty”.

"In terms of the changes or the details that we are providing today, when it comes to legislating where we can use some of those instruments, that is to provide more clarity and more certainty, to people who are interacting with the system," Chalmers said. 

“And wherever we can, we will remove ministerial powers that we no longer need to give effect to the government's policy intent … It's not unusual for big, ambitious tax reform like this to involve a lot of consultation, to involve primary legislation for the core elements, subsequent pieces of legislation as well,” Chalmers said.

“What we're doing is making sure that the tax system is fairer, that it treats income from assets more equally with income from work, which is overwhelmingly how working Australians earn their income and get by,” Albanese said.