If you plan to sell your Australian small business, the calendar matters as much as the balance sheet. From 1 July 2027, the active asset threshold for the small business CGT concessions rises from $2 million to $10 million, while the 50% CGT discount is replaced by cost base indexation and a 30% minimum tax rate on gains. Those changes create a rare planning window in 2026. The four small business CGT concessions, the 50% active asset reduction, the 15-year exemption, the retirement exemption and the small business rollover, can reduce or eliminate tax on a sale. But they depend on eligibility tests that many owners fail simply because they never planned ahead. This tutorial explains why 2026 is the year to get sale-ready, what each concession does, the basic tests you must pass, what changes on 1 July 2027, how grandfathering works, and how founder exits differ from Main Street sales. You will also see a 2026 planning timeline, CGT estimate basics, Victorian sale considerations, and how verified financials and an instant valuation help you act before the deadline.

Why 2026 Is the Year to Get Your Business Sale-Ready

On 18 June 2026, the Prime Minister and Treasurer announced that the turnover threshold for the 50% active asset reduction rises from $2 million to $10 million, effective 1 July 2027. Treasury projects this brings 2.7 million active small businesses into scope, taking eligibility to 98% of all active businesses, with over 90% eligible for all four concessions.

Those four concessions are not being replaced. Treasury calls them "CGT safety nets" that reduce or remove tax when you sell an active business to retire, start something new or relocate. What changes is the discount itself: from 1 July 2027, the flat 50% CGT discount is replaced by indexation of the cost base plus a 30% minimum tax on real gains.

The critical detail is timing. The reform is prospective, so value built before 1 July 2027 keeps the old 50% discount regardless of when you settle. When value is created matters more than when you sign. That makes 2026 the year to document what your business is worth, and the year to treat a sale as a strategic business solution rather than a one-off event.

For anyone weighing the tax on selling a business in Australia, leaving planning until 2027 means reconstructing pre-reform value from memory, with no evidence to support it.

What the Four Small Business CGT Concessions Actually Do

The four concessions sit inside ATO's small business CGT concessions guidance, and each does something different to the same gain.

50% active asset reduction: halves the assessable gain on an active asset once the basic conditions are met. No retirement requirement, no replacement asset, no 15-year wait.

15-year exemption: removes the entire gain for a small business entity, or an individual, partner or trust, where the asset has been active and owned for 15 years and the retirement or permanent incapacity condition is satisfied.

Retirement exemption: shelters up to $500,000 of capital gain per individual over a lifetime, paid into a complying super fund or taken directly, subject to conditions.

Small business rollover: defers the gain rather than eliminating it. You acquire a replacement active asset within the timeframes in the rules, so the tax bill moves rather than disappears.

Order matters. The concessions apply in a set sequence, so the 50% reduction usually applies first and the retirement exemption or rollover is calculated on the remaining gain. That distinction between eliminating and deferring a gain is where most estimates go wrong.

Whether you qualify is a separate question, and the basic tests come next.

The Basic Eligibility Tests You Must Pass First

Those four concessions sit on a foundation of eligibility tests, and failing any one disqualifies the whole claim.

The small business entity turnover test. Aggregated turnover must sit under $2 million today. From 1 July 2027, the threshold for the 50% active asset reduction rises to $10 million, aligned with the instant asset write-off threshold. The 15-year exemption, retirement exemption and rollover keep the $2 million test.

The net assets test. The $6 million maximum net asset value test is unchanged by the announced reform. It counts the entity plus connected entities, with certain personal-use assets potentially excluded, confirm the current exclusions against the ATO's maximum net asset value test page.

The active asset test. The asset must be used, or held ready for use, in carrying on a business, with specified holding periods. Shares in a company or interests in a trust face separate conditions.

Aggregation catches owners out. A spouse's turnover or a related company's assets can push you over a threshold you believed you had passed.

Timing decides outcomes. These tests are applied at the time of the CGT event, so an early restructure or an asset transfer out of the business can quietly cost you the concessions you were counting on. Before you plan anything, see what is actually for sale in the current market with our guide to businesses for sale in Australia.

Concession 1: The 50% Active Asset Reduction

With the eligibility tests behind you, concession one is where the arithmetic starts.

The 50% active asset reduction cuts the capital gain on an active asset in half. Check the ATO guidance on ordering before applying it alongside other concessions. According to ATO guidance, the small business 50% active asset reduction is available to a small business entity, a partner in a small business partnership, and an individual who holds shares in a small business company or an interest in a small business trust.

It is the workhorse concession: no retirement condition, no 15-year ownership period, no replacement asset to acquire. That is precisely why lifting the turnover threshold to $10 million on 1 July 2027 brings more sellers into scope.

Illustrative example (check against ATO guidance): sell active business assets for a gain of $800,000 and the reduction leaves $400,000 assessable. That $400,000 is the figure then tested against the retirement exemption cap or rolled over into a replacement asset.

What it does not do matters just as much. It halves the assessable gain. It does not touch the sale proceeds or your cost base, and it does not exempt the remaining half from tax.

For long-held assets, the next concession can remove the gain entirely.

Concession 2: The 15-Year Exemption

Where the 50% reduction halves the gain, the 15-year exemption removes it entirely. It applies where you have owned an active asset continuously for at least 15 years and either turn 55 and retire, or meet the permanent incapacity condition. Entity structure changes how this works: for a company or trust, a shareholder or beneficiary must satisfy those individual conditions, and the entity itself must be a small business entity at the relevant time.

That full exclusion makes it the strongest concession for long-held family businesses, and the one most often claimed incorrectly. Most failed claims turn on the active asset test or record keeping: 15 years of ownership, use and asset history must be documented, and memory is not evidence.

For incorporated sellers, confirm separately whether the retirement exemption is accessible at the entity level, consult your accountant and check current ATO guidance. Check the 15-year position before you structure the sale, not after.

Concession 3: The Retirement Exemption

Unlike the 15-year exemption, this small business CGT concession does not wipe out the gain. The retirement exemption shelters up to $500,000 of capital gain per individual, measured across a lifetime rather than per sale. Claim $200,000 today and only $300,000 remains for the next disposal.

Your options depend on age. Under 55, the exempt amount must be paid into a complying superannuation fund. From 55, you can take it as a cash lump sum instead. Each route carries its own lifetime limit, so the choice is not free.

Access is wider than the 15-year rule allows: individuals, partners in a partnership, and shareholders or beneficiaries can all use it, provided the company or trust on-sells the gain within the timeframes set out in the rules.

Two Checks Before You Claim

Superannuation mechanics come first. The contribution treatment differs from ordinary super contributions, confirm the applicable caps with your adviser before contributing.

Then sequencing. The 50% active asset reduction applies to the gain first; the retirement exemption is then worked out on the reduced amount. Applying the retirement exemption before the 50% reduction may affect how much of the $500,000 cap is consumed, confirm the correct order with your accountant.

Concession 4: The Small Business Rollover

Where the retirement exemption caps what you can shelter, the small business rollover changes when the tax is paid rather than whether it is paid.

Under the rollover, you can choose to defer all or part of a capital gain by acquiring a replacement active asset within the period set out in the rules. The replacement must be used in carrying on a business, or be a share or interest in a small business company or trust. The acquisition window is fixed, running from one year before to two years after the relevant CGT event.

Miss that window and CGT event J5 can trigger the deferred gain, often in a year when your other income is higher and the tax cost exceeds what you would have paid by simply taking the gain upfront.

Rollover suits sellers moving from one business to another, or upgrading premises or plant, rather than exiting the workforce. It is frequently paired with the other concessions, so part of a gain might be rolled over, part reduced by the 50% active asset reduction and part exempted. That stacking is why a single calculator figure rarely tells the whole story, and why buyers on the other side of a deal should apply the same scrutiny, as our checklist before buying a business in Australia sets out.

What Changes on 1 July 2027: The $10M Threshold and the New CGT Discount

Those concession mechanics are set against a changing tax backdrop. From 1 July 2027, the 50% active asset reduction threshold rises from $2 million to $10 million (aligned with the instant asset write-off); the other three concessions keep the $2 million/$6 million tests. The flat 50% CGT discount is replaced by indexed cost base plus a 30% minimum tax on real gains.

The split calculation for gains accruing before and after 1 July 2027 is still being finalised in legislation. Value accrued before that date is treated differently from value accrued after it, so a split calculation becomes unavoidable for any asset held across the boundary.

The safety nets survive. The announcement expands access; it does not abolish the four concessions.

Separately, Treasury is consulting on an Innovative Business CGT Concession, a proposed 50% discount for early-stage investors including founders and employee share scheme participants. It sits outside the four small business concessions.

Because these measures will be amended in the Senate rather than by legislative instrument "to provide certainty", watch the exposure draft and enactment dates alongside 1 July 2027. For a seller weighing a 2026-27 exit against a 2027-28 one, this is the difference between a flat 50% discount and an inflation-adjusted calculation with a tax floor.

The Grandfathering Rule: Why Value Built Before 1 July 2027 Keeps the Old Discount

The practical challenge is the split calculation: a post-2027 sale must separate pre-boundary from post-boundary gains, and Treasury's consultation is still working through exactly how to do that, so the mechanics are not yet settled in the drafting.

For sellers, the practical implication is that the pre-boundary portion keeps the existing treatment, including the 50% discount where it applies, while the post-boundary portion faces indexation and the 30% minimum tax on real gains. The earlier you can document value, the cleaner that split becomes.

That is why a valuation, current financial statements and an asset register matter now. They stop being routine admin and become the evidence base for the grandfathered portion. Reconstructing value in 2028 from memory is not a defensible position.

If you are considering an exit, start with our guide to selling your business in Australia in 2026. It walks through the valuation and financial records you need before the deadline does the planning for you.

Founder Exits vs Main Street Sales: Why Your Cost Base Decides the Outcome

Grandfathering rewards evidence; the cost base is the number that decides what the post-2027 regime actually does to you. Two sellers with identical sale prices can face opposite outcomes.

A founder who built the business from nothing often carries a near-zero cost base. Indexing zero produces zero, so the 30% minimum tax on real gains lands on almost the entire gain. A buyer who purchased an established business carries a genuine, indexable cost base, and indexation can cut the taxable real gain meaningfully. One unverified Senate submission estimate suggests effective tax rates on founder exits could rise from roughly 23.5% to 47%, treat this as an indicative illustration, not confirmed data.

The gap exists inside a single sale. Goodwill built organically over 20 years usually has minimal cost base, while plant, equipment and improvements carry real cost base that indexation can work on. That is why first-generation owner-operators feel the 30% minimum tax hardest: small cost base, large gain.

Establish your cost base before assuming 2027 helps or hurts you. It includes original cost, capital improvements, incidental costs of acquisition and disposal, and for many owners, components far larger than expected. If you're comparing an exit against building something new, see How to Start a Business in Australia: A Complete Guide.

A 2026 Sale Planning Timeline: What to Do and When

Once your cost base is documented, timing matters as much as the numbers. Work backwards from 1 July 2027.

Now. Confirm small business entity status for each concession you intend to rely on, and check whether aggregated turnover and net assets sit within the applicable thresholds.

Within six months. Commission a professional valuation of the business and its assets. That figure becomes documented evidence of your pre-1 July 2027 grandfathered value, not a guess reconstructed in 2028.

Six to nine months out. Meet your accountant about sequencing. Ask how the 50% active asset reduction, retirement exemption and rollover would apply to your facts, and whether a restructure or asset transfer would help or hurt eligibility.

If a sale is likely, list early. Due diligence, contract conditions and settlement take months. A contract dated 30 June 2027 is not a settled sale in the same financial year, so list well before the deadline.

Decide what you are selling. Assets, shares or units. The entity you sell from often determines which concessions are available and who can access them. Step 1: Decide If Now Is the Right Time to Sell pairs well with this timeline.

Each step costs far less than discovering a failed eligibility test after signing.

How to Estimate Your CGT: Capital Gains Tax on Business Sale Calculator Basics

With the entity decided, run the numbers in the correct order.

Start with the cost base, not the sale price: the original acquisition price, capital improvements, and the incidental costs of acquiring and disposing of the asset, such as legal fees, stamp duty, valuation costs and agent commission.

Then work out the gain: proceeds less cost base. The small business CGT concessions apply to the gain, never to the proceeds, so an estimate built on the sale price alone will overstate your tax and mislead your planning.

Watch apportionment. Where an asset was partly used privately, or the sale bundles goodwill, stock and equipment, each component can be taxed differently, and that split often drives the outcome more than the headline price. It is the same discipline buyers apply when verifying what they are buying: How to Do Due Diligence When Buying a Business in Australia.

A capital gains tax on business sale calculator produces an estimate, not advice. It cannot tell you whether the active asset test, the 15-year ownership condition or the connected entity rules are satisfied on your facts, and those tests decide eligibility.

Use it as a sense check and to compare scenarios, such as a 2026-27 sale against 2027-28, then take the numbers to your accountant. A free instant business valuation gives you the business value figure to feed in.

Selling a Business in Victoria: State Rules and Marketplace Reality

A calculator estimate still leaves one layer untouched: Victoria adds its own rules on top of the federal CGT regime.

Generally speaking, land transfer duty applies to business real property, not to goodwill or plant, while land tax sits on the land you own. Where a sale includes commercial premises or a long lease, confirm duty treatment and GST against State Revenue Office guidance and with your accountant before signing anything binding.

Payroll tax thresholds move with your Australian taxable wages, so a growing wage bill can trigger registration mid-year. As a general rule, payroll tax liabilities, WorkCover obligations and employee entitlements must be cleared or transferred in the contract. Left off the page, they surface at settlement as a buyer problem, which becomes a price reduction for you.

Anecdotally, Victorian listings often concentrate in hospitality, retail and the trades. In those sectors buyers scrutinise two things above all: goodwill value and the reliability of your financial records. Browse businesses for sale in Victoria to see how listings in these sectors are positioned.

State considerations are additional, never an alternative to meeting the federal tests.

How Verified Financials and an Instant Valuation Help You Sell in 2026

Victorian quirks aside, the federal clock applies to every seller, and the fastest way to lose the 2026 window is a listing buyers cannot trust.

Revenue figures on many directory-style platforms are entered by the seller without independent verification. Buyers know it. That is where negotiations stall, discounts appear, and deals quietly die before due diligence even starts.

Bizzie connects directly to Xero, so a listing's revenue and profit come straight from real accounting data. For a seller working to a 1 July 2027 deadline, removing that verification friction shortens the gap between enquiry and offer when weeks matter.

Listing on Bizzie is free for individual sellers and business brokers alike. No subscription, no listing fee, no cap on active listings, so a CGT-driven exit is never held up by the cost of advertising it.

Bizzie's free instant valuation tool gives you a defensible starting figure for business value, which is also the number the 1 July 2027 grandfathering split will ultimately be measured against.

The pattern is consistent: businesses with records and financials sale-ready in 2026 close; the rest sit on the market while the deadline approaches.

Get your financials verified and your valuation documented before you list. The next section sets out your action checklist.

Conclusion: Your Action Checklist Before 1 July 2027

Records and financials in order are your starting line, not your finishing one. Before 30 June 2027, work through this checklist.

The four small business CGT concessions reward preparation, so treat this window as a deadline rather than a prompt.