The CGT 'backflip' is more tweak than transformation

The sustained noise, negative headlines and internet memes around Labor’s capital gains tax changes made a backdown feel inevitable. It was never just a matter of whether concessions would arrive but when, and how much they would erode the reform’s intent. For a government and prime minister that has often avoided confrontation, this became an early test of their commitment to hard, necessary policy change.

The adjustments announced on Thursday are best read as targeted tweaks rather than a wholesale reversal. The annual turnover threshold for small business CGT concessions will rise from $2m to $10m; a carve-out will let “innovative” start-ups access a 50% capital gains tax discount; all testamentary trusts, including those set up in future, will be exempted from the proposed 30% minimum rate; and some of the treasurer’s discretionary rule-making powers will be reduced.

The concessions are estimated to cost $475m over the forward estimates, against a package forecast to raise more than $8.1bn. Opponents responded predictably.

cgt, capital gains, labor government, small business, turnover threshold, start-ups, testamentary trusts, minimum rate, discretionary powers, cost estimates