Australia's peak small business body is sounding the alarm over proposed federal tax reforms it believes could drastically hit independent retailers, family-run operations and other small entities across the country.
The Council of Small Business Organisations Australia (COSBOA) has warned that planned changes to capital gains tax (CGT) and discretionary trust taxation risk unfairly capturing genuine small operators.
COSBOA CEO Skye Cappuccio said the reforms failed to reflect how small businesses actually operate.
"These are not abstract tax settings for small business owners," Cappuccio said. "These decisions are deeply personal and directly tied to retirement planning, succession planning, family livelihoods and the future of businesses built over generations."
Of particular concern is a proposed minimum tax rate on discretionary trust distributions that COSBOA believes would exceed the existing 25 per cent small business company tax rate – a structure widely used by independent retailers for asset protection, income management and succession planning.
The organisation warned that even where rollover relief is on offer, many businesses could still face substantial legal, accounting and state-based transfer costs simply to restructure.
"Restructuring a small business is not simple, fast or inexpensive," Cappuccio said.
COSBOA has also flagged uncertainty around business valuations under the CGT changes, which are proposed to take effect from July 1, 2027, which could leave many operators unclear on how their business value would be assessed and recognised under the new regime.
Many small business owners, the body noted, have spent years reinvesting profits rather than drawing higher wages or topping up superannuation – banking on the eventual sale value of their business to fund retirement.
"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," Cappuccio said.
COSBOA is calling on the federal government to lift CGT concession eligibility thresholds to businesses with annual turnover under $10 million and net capital assets under $12 million, explore trust exemptions for genuine operating businesses similar to those available to primary producers, and commit to further sector consultation before any changes are implemented.
The warning comes as fashion and discretionary retail continues to navigate a challenging trading environment, with insolvencies elevated and many independent operators already under pressure from rising costs and subdued consumer confidence.