The Council of Small Business Organisations Australia (COSBOA) is warning that proposed Budget reforms could leave businesses buried in extra compliance and out of pocket at retirement.

The organisation says proposed changes to capital gains tax (CGT) and discretionary trusts are already causing headaches for business owners trying to figure out what it all means for retirement plans and the future of businesses that they’ve spent years building.

Small business owners caught in the net

COSBOA CEO Skye Cappuccio said many small business owners have spent decades tipping money back into their businesses instead of building large super balances and now that strategy is going to implode.

“These are genuine small businesses that employ Australians, support local communities and have often been built over decades through significant personal and financial sacrifice,” Cappuccio said.

Cappuccio said for many owners, the business itself is the retirement plan.

“These are not abstract tax settings for small business owners. These decisions are deeply personal and directly tied to retirement planning, succession planning, family livelihoods and the future of businesses built over generations.”

COSBOA says the government’s planned changes risk taking some of the appeal out of backing yourself and starting a business.

“Small business owners take risks, accept uncertainty and often sacrifice stable income to build businesses that employ others and contribute to the economy,” Cappuccio said.

“If the reward for that risk is reduced or made more uncertain, Australia risks sending exactly the wrong message to people who are creating jobs, investing in their communities and building productive enterprises.”

More time spent on compliance

COSBOA is also worried about the practical fallout. should the reforms go ahead, especially around how businesses would be valued from 1 July 2027.

Discretionary trusts are also a big issue.  Many family-run businesses use trusts for asset protection and succession planning. COSBOA says the proposed minimum tax rate on trust distributions could end up higher than the current 25 per cent small business company tax rate, leaving owners facing expensive restructuring decisions.

“The reality is that restructuring a small business is not simple, fast or inexpensive. For some small businesses, the cost of understanding and implementing these changes alone will be substantial. That is money and time being pulled away from jobs, technology, growth and productivity,” Cappuccio said.

COSBOA says it wants the Government to modernise existing small business CGT concessions, consider exemptions for genuine operating businesses using trusts, and spend more time consulting with the sector before pushing ahead with any changes.

“Australia cannot build productivity by increasing the tax burden on small business,” Cappuccio concluded.

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