Farmers across the region are set to benefit from a major Federal Government backdown on capital gains tax changes, after months of pressure from agricultural and business groups forced a significant lift in the small business threshold.
The Government has confirmed it will increase the turnover threshold for the small business 50 per cent active asset CGT reduction from $2 million to $10 million, bringing the concession within reach of 2.7 million active small businesses nationally and an estimated 99 per cent of Australian farm businesses.
For a region built on capital-intensive agriculture, where machinery, land and livestock values have climbed steeply in recent years, the change is being welcomed as recognition that the old threshold no longer reflected how modern farm businesses actually operate.
NSW Farmers President Xavier Martin said the move was a significant win for the sector after sustained advocacy.
“A lot of NSW farmers will welcome this with considerable relief. Updating the threshold recognises the scale, cost and capital intensity of agriculture today.”
Martin said the change could not be viewed in isolation from the broader cost pressures already weighing on farm businesses.
“CGT doesn’t land in isolation, it lands on top of fuel, fertiliser, finance, regulatory and wage pressures already compressing farm businesses. This change matters.”
Nationally, the National Farmers’ Federation said the shift would bring around 8,700 additional farm businesses into the concession system. NFF President Hamish McIntyre described it as one of the most consequential wins the organisation had secured for its members.
“This is a meaningful result for farmers. It provides greater confidence when making long-term decisions about their business and their future.”
McIntyre said the threshold change reflected the realities of running a farm across generations.
“Farming is capital-intensive and often spans generations. These changes recognise that reality and ensure more farming families can access the support they need when transitioning assets, investing in productivity or planning for succession.”
The change was secured through what McIntyre described as sustained, collaborative engagement between the NFF, its members, the Treasurer’s office and other small business groups.
“This is a clear example of what can be achieved when farmers speak with one voice, and when government listens and works collaboratively with industry.”
The win extends beyond agriculture. Business NSW, which represents 50,000 businesses across the state, said the change would benefit more than 61,000 NSW businesses with turnover between $2 million and $10 million, a group its analysis found is highly likely to include significant numbers of employers.
Business NSW Regional Director for the Mid North Coast Rod Barnaby said the backdown came at a critical time for small and medium business confidence.
“Small and medium businesses are facing the lowest levels of businesses confidence since 2009 and cannot absorb more costs in the current climate.
“The Federal Government should be commended for listening to the business community and walking back some of these changes announced in the federal budget last month.”
But Barnaby said the Government needed to go further, and called for full removal of the broader changes flagged in the Budget along with wider consultation.
“However, the changes should go much further, and we urge the government to consult more widely.
“Many small business owners pay themselves modest wages while carrying significant financial risk. These changes would have been a tax bomb and could see owners hit with massive tax bills in a single transaction after decades of work.”
Barnaby pointed to declining business ownership rates as evidence the broader tax settings were already discouraging entrepreneurship, citing ABS figures showing the share of business-owning employers in NSW had fallen from 8 per cent in 2000 to below 5 per cent today, a record low.
“These changes have created significant uncertainty and risk making us internationally uncompetitive and incentivise people to set up businesses outside of NSW and Australia.”
For farmers specifically, NSW Farmers said the threshold lift was welcome but not the final word. Martin said the real test of the reform package would be whether it made it easier to pass farms on to the next generation, with a minimum 30 per cent tax on inflation-adjusted gains still set to apply to some farm transfers after 1 July 2027.
“Farming is a long-term, intergenerational business. The question is whether these changes make it easier to pass a farm to the next generation, that’s the measure we’ll apply before congratulating the Government.”
NSW Farmers said it would continue to engage with the Federal Government as further detail on the reforms is worked through, including consultation flagged by the Treasurer on the final design of the package.
“This is what constructive engagement looks like, and we intend to hold the Government to that standard as the detail is worked through.
“Farmers have spoken with one voice on this. The threshold has moved. Now we need to make sure the full system supports continuity for the next generation.”
Got something you want to say about this story? Have your say on our opinion and comment hub, New England Times Engage