Small-Scale Property Development Part 2: Do You Need to Pay GST?

Which tax concessions can help a startup attract employees, secure investment and fund innovation? Australia’s startup tax settings offer different forms of support depending on who is intended to benefit. Employee Share Scheme startup concessions can help businesses preserve cash and align employees with an eventual exit, Early Stage Innovation Company concessions can improve the investment proposition for qualifying companies, and the R&D Tax Incentive can support eligible company expenditure. However, the requirements are technical, often time-sensitive and increasingly important as the broader CGT landscape changes. In this episode of Explain That by Velocity Legal, Andrew Henshaw is joined by Special Counsel Ani Tuna to discuss the main tax concessions available to startups and innovative businesses, and how proposed CGT reforms could affect founders, employees and investors. The discussion covers: how startup tax concessions can be viewed through the separate lenses of employees, investors and the company itself; how Employee Share Scheme startup concessions can help preserve cash and align employees with a future exit; the treatment of discounted shares and the timing of tax under the startup Employee Share Scheme rules; the tax offset and CGT exemption potentially available to qualifying ESIC investors; why ESIC eligibility should be considered before shares are issued and why share transfers do not qualify; how the R&D Tax Incentive can support eligible companies undertaking research and development; the effect of the proposed replacement of the general 50% CGT discount with indexation; the key features of the proposed Innovative Business CGT Concession; why innovation tests can be subjective and evidence-intensive; and the importance of contemporaneous evidence and proactive structuring. A practical discussion for startup founders, investors, employees, accountants and advisers considering employee equity, capital raising, R&D expenditure or the tax consequences of an eventual exit. For advice on startup tax concessions, ESIC eligibility, Employee Share Schemes or the R&D Tax Incentive, contact Ani Tuna or Velocity Legal’s Tax team.

Does the proposed increase to the turnover threshold really make the small business CGT concessions more accessible? From 1 July 2027, the aggregated turnover threshold is proposed to increase from $2 million to $10 million for access to the 50% active asset reduction. But the change is narrower than the headline suggests. The higher threshold does not extend to the 15-year exemption, retirement exemption or small business rollover, and the practical benefit may depend heavily on the taxpayer’s ownership structure and how the business is sold. In this episode of Explain That by Velocity Legal, Andrew Henshaw is joined by Ani Tuna to discuss the proposed expansion of the small business CGT concessions, who is most likely to benefit and why important limitations remain. The discussion covers: the existing turnover and maximum net asset value gateways for the small business CGT concessions; the proposed increase from $2 million to $10 million for access to the active asset reduction; why the higher turnover threshold applies to only one of the four concessions; which businesses within the $2 million to $10 million turnover range are most likely to benefit; the conditions that must still be satisfied, including the active asset test; why the outcome may differ between an asset sale and a share sale; why passive shareholders may be unable to rely on the expanded turnover gateway; the difficulty of extracting sale proceeds from a company after applying the active asset reduction; unfranked dividends, members’ voluntary liquidations and shareholder-level CGT consequences; similar extraction issues for unit trusts, including CGT event E4; and why the transaction structure and ultimate distribution of the proceeds should be considered before a sale proceeds. A practical discussion for business owners, accountants, tax advisers and private groups considering a business sale, share sale, asset sale or claim under the small business CGT concessions. For advice on the expanded active asset reduction, small business CGT concession eligibility or the tax structure of a proposed transaction, contact Ani Tuna or Velocity Legal’s Tax team.

The proposed 30% minimum tax on discretionary trusts has moved from a Federal Budget announcement to exposure draft legislation, bringing greater detail—and considerably more complexity. In this episode of Explain That, Andrew Henshaw is joined by Velocity Legal director Rajan Verma to examine how the proposed regime would operate, how the trustee-level tax and beneficiary credit would interact with the existing trust taxation rules, and why the changes could materially affect the use of discretionary trusts by families and private businesses. The discussion also explores the proposed Excluded Election Trust regime, or EET. The election may allow an existing discretionary trust to remain outside the minimum tax by nominating beneficiaries and fixing their respective shares of trust income and capital. Rajan explains why that apparent solution may create its own problems, including a loss of flexibility, potentially severe consequences if the nomination is breached, and unresolved questions about trust law and transfer duty. Andrew and Rajan also consider the proposed restructuring rollover, the potential state duty costs of moving assets or businesses out of a trust, the treatment of franking credits and corporate beneficiaries, and the difficult timing decisions facing trustees and advisers before the proposed commencement date. The discussion covers: how discretionary trusts are currently taxed as flow-through vehicles; how the proposed 30% trustee-level minimum tax and non-refundable beneficiary credit would work; the potential effect on lower-taxed beneficiaries and corporate beneficiaries; exclusions for genuine discretionary testamentary trusts and certain classes of income; the operation and limitations of the proposed EET regime; rollover relief, transfer duty and the practical costs of restructuring; and why trustees may need to begin planning before the final policy and political position is known. The exposure draft was released on 3 September 2026. Treasury describes the proposed regime as applying from 1 July 2028, with a fixed-distribution election and three years of rollover relief from 1 July 2027.

Is your property development profit taxed as a capital gain or as income? For small-scale property developments, that distinction can materially change the tax outcome. A one-off development is not automatically treated on capital account, and whether the CGT rules apply can depend on the taxpayer’s intention, the nature of the development and the evidence supporting their position. In Part 1 of this two-part series on tax and property development, Andrew Henshaw is joined by Tom Warrington, Associate in Velocity Legal’s Tax team, to discuss the revenue versus capital distinction and why it matters. The discussion covers: when a property sale may be treated as the mere realisation of a capital asset; when a development may instead be treated as a profit-making undertaking or scheme; why a one-off development can still be taxed on revenue account; the importance of the taxpayer’s intention when acquiring the property; the factors that may give a development a commercial character; the role of contemporaneous evidence in supporting a taxpayer’s position; the Morton case and its relevance to the capital versus revenue distinction; what can happen when a taxpayer’s intention changes over time; and why documenting a change in intention can become particularly important where a property is sold soon after development. A practical discussion for property owners, small-scale developers, accountants and advisers considering the income tax and CGT consequences of property development. Part 2 turns to the GST implications of small-scale property developments, including taxable supplies, the enterprise test, the margin scheme and new residential premises. For advice on the tax treatment of property developments, contact Tom Warrington or Velocity Legal’s Tax team.

What is a heads of agreement, and is it legally binding? Heads of agreement are commonly used at the beginning of a business sale, acquisition or other commercial transaction to record the key terms before a formal contract is prepared. Although they are often treated as preliminary or non-binding documents, poor drafting can create legal obligations, restrict negotiations and affect a party’s position before due diligence is complete. In this episode of Explain That by Velocity Legal, Lauren Gross, Senior Associate in Velocity Legal’s Commercial team, discusses how heads of agreement work, when they should be used, and the legal and commercial risks businesses should consider before signing one. The discussion covers: what a heads of agreement is; the difference between heads of agreement, term sheets, memoranda of understanding and non-binding indicative offers; when a heads of agreement may be legally binding; which provisions are commonly binding, including confidentiality and exclusivity; the role of due diligence before and after a heads of agreement is signed; the risks of agreeing to a purchase price before due diligence is complete; how exclusivity periods operate in business sale negotiations; termination provisions and what happens if negotiations break down; who should prepare the formal sale agreement; how heads of agreement can help manage transaction timelines and deal fatigue; and the Victorian Court of Appeal decision in Delaney v Delaney and what it demonstrates about binding preliminary agreements. The episode also considers when a heads of agreement may not be necessary and when proceeding directly to a formal contract may be more efficient. A practical discussion for business owners, accountants, advisers, buyers and sellers involved in business sales, acquisitions, share sales or other commercial transactions. For advice on heads of agreement, business sales, acquisitions or commercial contracts, contact Velocity Legal’s Commercial team.