We’ve called on the Federal Government to modernise small business capital gains tax (CGT) concession thresholds, warning outdated settings are putting family farm succession at risk across Australia.
In a letter to Federal Treasurer Jim Chalmers, the VFF welcomed aspects of the 2026–27 Federal Budget, including the exemption of primary production income from the new minimum tax on discretionary trusts, while urging the Government to address the erosion of small business CGT concession thresholds that have remained unchanged for nearly two decades.
VFF Acting President Peter Star said current thresholds no longer reflected the reality of modern farming businesses.
“Family farms are being locked out of concessions that were specifically designed to help them transition between generations.”
“Farmland values have increased dramatically over the past 20 years, but the thresholds governing access to CGT concessions have stayed frozen in time. We’re working off a framework that is no longer relevant,” Mr Star said.
The VFF said the $6 million maximum net asset value test and $2 million aggregated turnover test were introduced in 2007, while the $500,000 retirement exemption cap has not changed since 1999.
Using ABARES and ABS data, the VFF estimates the asset base of a typical family farm has increased around six-fold since 2007, driven by soaring land values and ongoing consolidation required to maintain commercial viability.
At the same time, farm profitability has remained extremely low.
“The average broadacre farm return on capital was just 0.6 per cent in 2023–24.”
“A farming family operating on margins like that simply cannot absorb the kind of CGT liabilities now arising when transferring a farm to the next generation,” Mr Star said.
The VFF is calling on the Government to reset and index the key concession thresholds, proposing:
- Increasing the maximum net asset value test from $6 million to $20 million;
- Increasing the aggregated turnover test from $2 million to $5 million;
- Increasing the retirement exemption lifetime cap from $500,000 to $2 million.
The VFF said the proposed figures represented a moderate and practical recalibration based on published economic data and should be indexed annually into the future.
“This is not about creating new concessions.”
“It’s about restoring the original intent of the law so genuine family farming businesses are not penalised simply because land values have risen over time.”
Mr Star said reform was essential to support farm succession, regional communities and long-term food and fibre production.
“We appreciate the Government’s willingness to consult on these reforms and we look forward to working constructively with the Treasurer and his office on practical solutions,” Mr Star said.