Build a business. Hold it long enough to sell well. Buy an investment property to leave something behind for the kids. That’s the playbook a generation of Australian SME owners have followed. The 2026 federal budget trips them up at every possible step.

The cash flow measures look fine if you stop reading there. Permanent $20k instant asset write-off, loss carry-back, a $1,000 standard deduction… operators get a small win. Most operators are also owners. As owners, here’s the four things that changed this week:

1. Selling the business

From 1 July 2027, the 50 per cent CGT discount is gone. Replaced with inflation indexation and a 30 per cent minimum tax floor. Forty years of retirement planning was built around that discount. A lot of business owners are about to work out, painfully, that their exit number just shrank.

2. Pre-1985 assets

Family farms, founder shares, legacy holdings they’ve sat outside CGT since 1985. From 1 July 2027 they’re inside it. Anyone holding one needs a defensible market valuation at that date, on file, before they sell or transfer.

3. Family trusts

From 1 July 2028, a 30 per cent minimum tax on distributions. Streaming income to spouses, adult children, parents, the workhorse of family business tax planning for decades, gets blunted.

4. Investment property for the kids

Established property bought after 12 May 2026 can’t be negatively geared against wages or business income. The same property is caught by the new CGT regime when sold. The “buy a place for the kids” play just got narrower and more expensive on the same day.

The political pitch is intergenerational fairness. Read the government’s own budget papers and the framing falls apart.

Budget Paper No. 1, Table 7.7: net debt rises from $556 billion in 2025-26 to $768 billion by 2029-30. Gross debt liabilities pass $1.26 trillion in the same year. Treasury will point out net debt is now forecast lower than at the last MYEFO — true, and not the point. Net debt is still rising every year of the government’s own forward estimates while they tax Australian SME owners harder on the way out. Every Australian born this year inherits roughly $30,000 of net government debt before they take their first breath.

So, the story is this – tax the people building family businesses and passing down assets harder, with retrospective edges to fund a debt position that grows every year of the forward estimates. The parents are taxed more. The kids inherit less from their families and more debt from their country. The honest word for that is intergenerational inequality. It’s not the word being used.

Meanwhile, the easy revenue stays untouched. Offshore gas exporters are mid-boom and paying comparatively little tax. The PRRT was reviewed, modelled, quietly not reformed. Treasury’s own forecasts have PRRT revenue falling during the boom. Billions in resource rent walks out the door each year while Aussie SMEs are asked to make up the gap.

If you’re an entrepreneur deciding where to build a global product, the maths is now obvious.

Effective tax on a successful exit lands close to double the equivalent in the US, Canada, the UK, or New Zealand. New Zealand has zero CGT. None of this happens in a vacuum, capital travels, ideas travel, and the people who own them travel too. The early signal is already in the founder commentary.

Australia just made itself a harder country to build in.

This budget asks Australian SME owners to bankroll a government that won’t tax the easy revenue and won’t shrink the spending. The reward is a smaller exit, a bigger tax bill on the way out, and the same debt to leave the next generation.

If you own a business or hold an asset you plan to pass on, and you haven’t booked your accountant and your lawyer in the next two weeks, make an appointment, right now.

Because it’s just become more important than ever to build a resilient business that can deliver sustained dividend return over many years but be led by the next generation.

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