We've still got a way to go, and the government could have been so much braver
In the long negotiation between governments and the economies they govern, Australia finds itself at a familiar crossroads: a reform meant to modernise the tax system now requires its own reform to survive. Prime Minister Albanese has offered exemptions to 2.7 million small businesses — raising eligibility thresholds, carving out startups, and shielding testamentary trusts — in hopes of rescuing legislation that would raise $8.1 billion but has drawn fire from nearly every direction. The concessions cost $475 million and have satisfied almost no one, leaving the bill's fate in the hands of the Greens and a parliamentary clock ticking toward a July 2 winter recess.
- Weeks of industry and opposition pressure forced the government's hand, producing last-minute carve-outs that critics immediately dismissed as damage control rather than genuine reform.
- Business groups called the announcement a rushed patch-up job, warning that the underlying shift from a flat CGT discount to an inflation-indexed model still threatens investment and entrepreneurship.
- The Coalition has abandoned the legislation entirely, demanding the government scrap the bill and restart the budget process — leaving Albanese with no path to the Senate that doesn't run through the Greens.
- Greens leader Larissa Waters welcomed minor concessions on regulatory powers but signalled her party is not yet ready to vote yes, keeping the government in tense deal-making mode.
- With parliament breaking for winter on July 2, the government has roughly a fortnight to secure Greens support or watch the legislation stall indefinitely.
Prime Minister Anthony Albanese announced capital gains tax exemptions for Australia's 2.7 million small businesses on Thursday, attempting to defuse weeks of sustained criticism over the government's plan to replace a flat 50% CGT discount with an inflation-indexed approach. The concessions raise the small business eligibility threshold from $2 million to $10 million in annual turnover, carve out innovative startups and their early investors, and exempt testamentary trusts from a proposed 30% minimum tax on discretionary trusts.
Treasurer Jim Chalmers framed the $475 million cost of these exemptions as modest against the broader package, which is projected to raise $8.1 billion through changes to negative gearing, capital gains treatment, and trust taxation. He argued the government was preserving four existing CGT concessions while making one significantly more generous.
The business community was unmoved. The Australian Chamber of Commerce and Industry called it a rushed patch-up job, while the Council of Small Business Organisations Australia welcomed relief for the 180,000 businesses newly covered by the higher threshold but remained worried about the reforms' broader impact on investment and productivity.
The Coalition dismissed the concessions entirely. Opposition leader Angus Taylor demanded the whole bill be scrapped, arguing even the new threshold would punish business growth. With the Coalition's support gone, the government now depends entirely on the Greens to pass the legislation before parliament rises for winter on July 2.
Greens leader Larissa Waters welcomed the winding back of some discretionary regulatory powers but said the party was not ready to support the bill, pushing for bolder action on housing. The coming fortnight sets up as a high-stakes negotiation, with the Greens holding the deciding vote and the parliamentary calendar leaving little room for delay.
Prime Minister Anthony Albanese announced a suite of capital gains tax exemptions for Australia's 2.7 million small businesses on Thursday, hoping to quiet weeks of sustained outcry from industry groups and opposition lawmakers who have hammered the government's shift away from a flat 50% discount toward an inflation-indexed approach. The concessions—which raise the annual turnover threshold for small business eligibility from $2 million to $10 million, carve out genuinely innovative startups and their early investors, and exempt testamentary trusts from a proposed 30% minimum tax on discretionary trusts—came too late to satisfy anyone demanding real change.
Treasury estimates the exemptions will cost the budget $475 million over the forward estimates period. Treasurer Jim Chalmers framed this as modest against the broader tax package, which is expected to raise $8.1 billion over the same timeframe through changes to negative gearing, capital gains treatment, and trust taxation. He argued the government was leaving four existing CGT concessions in place while making one substantially broader and more generous. The new $10 million threshold aligns with how small businesses are defined elsewhere in the tax system, he said.
But the business community rejected the olive branch. Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, called the announcement a "rushed patch-up job" that merely tried to ameliorate damage rather than address the underlying problem. Skye Cappuccio, CEO of the Council of Small Business Organisations Australia, welcomed the news for the roughly 180,000 businesses with turnover between $2 million and $10 million, but said her organisation remained concerned about the wider reforms' impact on investment, entrepreneurship, and productivity.
The Coalition opposition dismissed the concessions outright. Opposition leader Angus Taylor demanded the government scrap the entire bill and start the budget process over, arguing that even the new $10 million threshold would discourage business growth. The government, having already lost the Coalition's support, now depends entirely on the Greens to pass the legislation through the Senate before parliament breaks for winter on July 2.
Greens leader Larissa Waters signalled the party would not yet back the bill, though she welcomed the government's decision to wind back some discretionary regulatory powers that had alarmed her party. "We've still got a way to go," she said, criticizing the government for tinkering at the edges rather than tackling the housing crisis with real boldness. The stage is set for tense negotiations over the coming fortnight, with the government racing against the parliamentary calendar and the Greens holding the deciding vote on whether these tax changes become law.
Notable Quotes
The federal government is trying to ameliorate the damage of these CGT changes, but that is all it does.— Andrew McKellar, CEO of the Australian Chamber of Commerce and Industry
Scrap it, scrap the bill, start the budget again, because they simply got it wrong.— Angus Taylor, opposition leader
The Hearth Conversation Another angle on the story
Why did the government feel compelled to announce these exemptions now, rather than waiting for Senate feedback?
The timing is everything. Parliament breaks for winter on July 2, and the government wants to pass this bill before that happens. Weeks of criticism had already damaged the proposal's credibility, so they needed to show movement—to prove they were listening—before the Senate inquiry report lands and the Greens dig in harder.
But the business groups still rejected it. What would actually satisfy them?
The Coalition wants the whole thing scrapped. The business community wants certainty that growth won't be punished. The government is caught between raising revenue and not spooking investors. There's no middle ground that makes everyone happy.
So the Greens are the real power here?
Completely. Without them, this dies in the Senate. But the Greens aren't interested in small tweaks—they want the government to be bolder on housing and inequality. They're using this moment to extract concessions on the regulatory powers, but they're signalling they might demand more.
What happens if negotiations fail?
The bill doesn't pass, the tax changes don't happen, and the government loses $8.1 billion in expected revenue. It's a high-stakes game of chicken, and the clock is ticking.
Is there a real chance the Greens walk away?
Waters said they're "still got a way to go." That's not a yes. It's a negotiating position. But yes, they could walk away if the government doesn't move further on their priorities.