Some welcome budget news for small business electrical contractors. After strong pushback from MEA and other industry groups, the Federal Government has agreed to wind back some of the tax changes it announced in the Federal Budget.  

To recap the original proposals in the federal budget:  

After the backlash, the Government has changed course. Here's what it now plans to do:

• More businesses can access the 50% CGT discount – The turnover limit to qualify for the small business 50% active asset reduction is rising from $2 million to $10 million. In plain terms, that means many more electrical businesses will be able to halve the tax on the gain when they sell business assets. This threshold applies to this concession only – the remaining three small business CGT concessions keep the existing $2 million limit.

What this means for you 

If your turnover is less than $10m, you'll still get the 50% CGT discount. And passing assets on through a genuine will is shielded from the new trust tax. If any of this is on your horizon, it'sworth a chat with your accountant about how the higher threshold could work in your favour.

• Family estate (testamentary) trusts are protected – If a trust is set up through a genuine will to pass on a deceased person's estate, its income will be exempt from the proposed 30% minimum tax – as long as that income comes from the estate's assets. For trusts created on or after 1 July 2028, this exemption will only apply where the beneficiaries are individuals or organisations that don't pay income tax (such as charities).

The Government has released explainer material on the budgetary announcements and how they will operate for small businesses.  Click here to access them.  

MEA opposed these tax changes from day one. We told the Government they would push up tax bills, add red tape, and make it harder for hard-working electrical contractors and family businesses to plan their succession and retirement. We also flagged a potential licensing issue for small business owners looking to change their structure to a company to avoid heavy taxes. We're pleased the Government has listened and wound back key parts of the package. We'll keep pushing for a tax system that rewards investment and makes it easier, not harder, to grow your business and one day hand it on. 

We'll keep a close eye on these reforms as they move through Parliament and will keep advocating for practical tax rules that support small electrical businesses. 

You can read the Government's full announcement here.