Rumoured amendments to capital gains tax, negative gearing, and trust distributions would be better described as tax tweaks than genuine reform, said the CEO of Australia’s leading small business lobby, ahead of the highly-touted 2026-27 federal budget.
In the weeks leading to Tuesday’s federal budget, the business press has swirled with claims Treasurer Jim Chalmers could oversee tax changes intended to bolster what he calls “intergenerational fairness”.
Nothing is certain before Chalmers’ fifth budget since Labor took office in 2021.
But the Treasury is reportedly considering changes to the capital gains tax discount, reducing the tax break enjoyed by investors selling long-term assets that have appreciated in value.
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Limiting the benefits offered by negative gearing is another proposal causing buzz around Canberra, along with modelling that, if enacted, could reduce the income-splitting benefits of discretionary trusts.
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Speaking to SmartCompany on Friday, Skye Cappuccio, CEO of the Council of Small Business Organisations Australia (COSBOA), said those changes fall short of necessary tax reform.
“From a small business perspective, what we would really love to see from the government is comprehensive tax reform that takes very seriously the need to get small business productivity back on track,” she said.
“I think a lot of the things that we’ve heard leaked or mooted in the media are probably best described as tax changes, and probably don’t meet that threshold for the comprehensive reform that we are looking for.”
COSBOA asked the Treasury for a litany of measures in its 2026-27 pre-budget submission, including a reduction in the small business tax rate from 25% to 20% and GST reform.
Cutting company tax rates while broadening the GST base would amount to one of the most significant tax reforms since the GST was introduced in 2000.
The lobby hopes for a “holistic review, and a holistic plan for change, rather than piecemeal changes or tweaks at the edges,” said Cappuccio.
“Obviously, we are keen to see a focus on small business productivity, and what we really need to make Australia, and the tax conditions within Australia, a good place to start and grow a business.”
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Cappuccio did welcome some touted changes, including reports the federal government could push for a permanent instant asset write-off — something the Opposition, accounting groups, and small business leaders have called for over several years.
The COSBOA proposal would be to grant the measure for assets worth up to $150,000, but reports indicate Treasury has considered retaining the current limit of $20,000.
“We would very much welcome” making the measure permanent, said Cappuccio, but a higher asset limit would be “more aligned” with the needs of small businesses making heavy capital expenditures.
Framing all of those decisions is the economic outlook, which is tarred by persistent inflation that fuel prices have only exacerbated.
Indeed, the Labor government has previously defended its year-long extensions to the instant asset write-off by saying they respond to the economy of the time.
Without confirming any position on the write-off, Small Business Minister Anne Aly last week told SmartCompany that “we are always looking at measures that will assist them”.
“The Albanese Government is hard at work on the May Budget, with a focus on addressing inflation, productivity, and global uncertainty,” she added.
