2026 Tax Reform: What the New CGT Rules Mean for You
The Albanese Government has released further details on CGT concessions for small businesses. Here's what PAYG workers and novated lease customers need to know.
The federal government has released further implementation details on its 2026 tax reform package, including expanded Capital Gains Tax (CGT) concessions for small businesses and startups. According to the Treasury Ministers announcement [Source 1], the changes are designed to provide more clarity for investors, more support for small businesses, and stronger incentives for innovation.
The headline figure: all 2.7 million active small businesses — covering 98 per cent of all active businesses in Australia — will be eligible for the updated CGT concessions [Source 1]. This follows an intensive round of post-Budget consultation and represents a significant step in the government's broader agenda to better align the tax treatment of labour income and asset income.
What this means for novated lease customers
At first glance, CGT reform and novated leasing don't share a lot of real estate. But context matters. The broader tax reform package — which includes cuts for workers and changes to how labour and asset income are taxed — shapes the environment in which salary packaging decisions are made.
If you're a small business owner or startup employee receiving a salary, the way your employer structures remuneration could be affected by how the business itself is taxed. A novated lease is one of the few tools that reduces your pre-tax income without requiring your employer to restructure anything complex — and that advantage holds regardless of how CGT rules shift around it.
For PAYG employees working inside small businesses, nothing in this announcement changes the fundamental mechanics of a novated lease: your employer deducts lease payments from your pre-tax salary, you pay less income tax, and the FBT liability is managed within the lease structure. The potential savings are real, but depend on your income, vehicle choice, and kilometres driven — which is why we run the numbers individually, not with generic projections.
Common questions
Does this tax reform change how novated leases are taxed?
Not directly. The announced changes focus on CGT concessions for small businesses and startups. The FBT and income tax treatment of novated leases remains governed by existing ATO rules, which have not been altered by this announcement.
I'm a small business owner — can I still use a novated lease?
Novated leases are available to employees on PAYG income, including directors and employees of small businesses. The eligibility criteria sit with your employment arrangement, not the size or tax profile of the business.
What's the connection between the broader tax reform and salary packaging?
The government's stated goal is to better align the tax treatment of labour and asset income. Novated leasing already sits at that intersection — it converts a post-tax expense (running a car) into a pre-tax one. As tax policy evolves, salary packaging strategies like novated leasing tend to become more, not less, relevant.
Is an EV novated lease still exempt from FBT under these changes?
Yes. The EV FBT exemption introduced in 2022 is separate legislation and has not been affected by this announcement. Battery electric and plug-in hybrid vehicles (where eligible) remain FBT-exempt when held under a qualifying novated lease.
Where can I read the full government announcement?
The Treasury Ministers media release is publicly available and linked in our sources section below. It includes details on the consultation paper and next steps for the reform package.