My understanding is that the difference is in the Capital Gains Tax, which doesn't apply to the day-to-day running of the business or its profitability or the salaries it pays.

Again, my understanding is that the (only) difference is when the business is sold, and the 50% discount to CGT is no longer applied and instead there is an inflation adjustment instead (what I don't understand here is how to get an initial valuation, and would it be essentially $0, so the entire amount is capital gains? which feels somewhat unfair)

So it will be a hit at the time the business is sold, not at any point during the running of the business. My (potentially naive) take is that the hard work that goes into running and growing a business is about the provision of the goods or services, but if it's about maximising "the exit", then that feels to me like not the kind of incentive that it should be. The 'running' of the business being more important than the selling of it.

The 50% CGT discount has set a bad precedent. It should have been lower, or should have scaled over time. It has deformed the expected reward structure.

Can a business agree to be sold in tranches over time? If such a thing helps minimise tax then I can see that becoming the norm. I know that selling a house is a big, singular chunk of money that generally needs to be 'managed' in order to pay the minimum amount of tax. Maybe fractional selling is going to become a thing.

Wouldn't paying yourself a higher salary (since it's your own business) and/or putting more into superannuation offset the 'retirement' hit of not getting a golden exit parachute?