When the Federal Government first announced its tax reform agenda, the focus was clear: improve housing affordability and make the tax system fairer.
Since then, the proposals have evolved significantly.
Several measures have been refined, others expanded, and the political landscape has shifted following support from the Greens for key aspects of the package.
For business owners, investors and trustees, understanding what has changed is becoming just as important as understanding the original announcements.
Latest Update
Since the original announcements:
The Greens have indicated support for key CGT and trust reforms, increasing the likelihood that parts of the package will pass Parliament.
SMSFs will no longer be permitted to borrow to acquire residential property.
The turnover threshold for Small Business CGT Concessions is proposed to increase from $2 million to $10 million.
Elements of the trust and testamentary trust reforms have been refined following significant industry feedback.
The reforms now extend well beyond housing and have implications for investors, trustees, business owners and succession planning.
SMSF Borrowing Restrictions Introduced
One of the most significant developments is the decision to prohibit SMSFs from borrowing to acquire residential property.
The Government argues that SMSFs have become another source of competition in the residential property market and that reducing investor demand will improve housing affordability.
Whether the measure materially impacts property prices remains to be seen.
What is clear is that SMSFs are now firmly part of the housing affordability debate.
For trustees considering property as part of their retirement strategy, the rules have changed significantly.
Small Business CGT Changes: Not Quite the Windfall Headlines Suggest
One of the most publicised announcements has been the increase in the turnover threshold for Small Business CGT Concessions from $2 million to $10 million.
This has been promoted as a major win for small business.
However, many genuinely small businesses were already eligible under the existing $2 million threshold.
The businesses that stand to benefit most are those with turnover between $2 million and $10 million that previously fell outside the concession rules.
That doesn’t mean the change is unwelcome.
Many advisers have argued for years that the $2 million threshold no longer reflected modern business realities.
However, the practical benefit is narrower than the headlines suggest.
Many businesses under $2 million turnover gain little or no additional benefit because they were already eligible.
Trusts Continue to Face Scrutiny
Trust structures remain firmly in the spotlight.
While aspects of the original trust proposals have been refined following consultation, the broader direction remains clear.
Governments continue to focus on how income is distributed through discretionary trusts and how trust structures are used by family groups.
For many business owners, trusts are not simply tax structures.
They are succession planning tools, asset protection mechanisms and long-term family wealth structures.
The challenge for policymakers is balancing integrity measures with the legitimate role trusts play in Australia’s business landscape.
What Business Owners Should Be Watching
The reforms remain subject to legislative processes and further consultation.
However, several themes are emerging.
The Government is seeking to improve housing affordability.
It is also seeking to tighten aspects of the tax system it believes create inequitable outcomes.
Business owners should closely monitor:
Final CGT reform legislation.
Small Business CGT concession eligibility changes.
Future trust reform proposals.
The practical implications of SMSF borrowing restrictions.
Any further amendments resulting from industry consultation.
The package continues to evolve, and the final legislation may look different again before implementation.
What began as a housing affordability discussion is increasingly becoming a broader conversation about taxation, investment and business ownership in Australia.
