$2 Million in 2026, $5 Million in 2029: Why Timing Could Matter for Business Sales and Tax

Business owners should start planning now for how value is built and documented before 30 June 2027, while also considering how any gain realised after that date may be treated if the proposed Capital Gains Tax (CGT) changes are enacted. 

What are the proposed CGT changes and how could they affect your business sale? 

For example, if a business is worth $2 million in 2026 and grows to $5 million in 2029, the additional $3 million in value created after 1 July 2027 may be taxed differently if the proposed reforms proceed. Based on the current announcement, gains accruing up to 30 June 2027 would remain subject to the existing rules, and therefore potentially eligible to access CGT discounts of 50%. Later gains may fall under the new regime, subject to the final legislation and any transitional measures. The new regime proposes no concessions (other than indexation for certain taxpayers) on gains and will also remove pre-CGT status on otherwise eligible assets. In additional, capital gains will be taxed at a minimum of 30%. 

How does the small business CGT concession threshold change affect your eligibility? 

Importantly, recent policy announcements to increase the small business CGT concession turnover threshold from $2 million to $10 million may expand the number of businesses eligible to access those concessions. However, this change primarily affects eligibility, not the timing of how gains are assessed across different tax regimes. 

Why does the timing of your business growth matter for CGT? 

In simple terms, it is not only the sale date that matters, but also when value is created in the business. If more growth occurs before 1 July 2027, a greater portion of the gain may remain subject to the current CGT settings. If more growth occurs after that date, a greater portion may fall under the proposed CGT changes, which could produce a different tax outcome. For investments in businesses and trusts that are pre-CGT, the allocation of value between business assets can also be critical. 

What can business owners do before 30 June 2027 to prepare for the CGT changes? 

Because many private business valuations are influenced by EBITDA and related market multiples, business owners may wish to consider the following strategies before 30 June 2027: 

• Lock in longer-term client contracts to improve revenue visibility and support stronger earnings multiples. 

• Systematise operations to reduce owner dependency and make the business more transferable. 

• Normalise earnings by removing one-off items and reducing discretionary expenses where appropriate. 

• Consider whether admitting a minority investor before 30 June 2027 could help demonstrate market value and support broader succession or transaction planning. 

• Evaluate whether a partial exit or staged sale could better align commercial objectives, succession goals, and the timing of any tax consequences. 

• Review any proposed restructure or holding company arrangement early so tax, duty, and rollover issues are assessed before implementation. 

• Bring forward growth capital expenditure where it is likely to strengthen earnings capacity or market positioning before 30 June 2027. 

• Review asset ownership to determine whether operating assets, intellectual property, and property should be held separately. 

• Model post-2027 scenarios as well, because not all gains should necessarily be accelerated before the proposed rules commence. 

• Assess eligibility for the small business CGT concessions, as these may have a greater impact than timing alone. 

What are the most common CGT planning mistakes business owners make before a sale? 

• Leaving planning too late and only addressing these issues shortly before 30 June 2027. 

• Assuming sale timing alone determines the outcome without considering when value is created. 

• Overlooking valuation drivers, as tax outcomes will often follow how value is built and evidenced. 

• Failing to model alternative scenarios before committing to a transaction or restructure. 

• Implementing a restructure without first assessing potential CGT, duty, and rollover consequences. 

How should business owners prepare for the CGT change ahead of 30 June 2027? 

With 30 June 2027 likely to become an important planning date, business owners may wish to seek valuation and tax advice early to assess their position and consider any appropriate steps ahead of the proposed CGT changes. Speak to the Vincents Valuations experts to navigate these proposed changes with confidence. 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to your circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.