The Proposal
Labor's budget plan replaces the 50% capital gains tax discount with cost-based indexation for assets held over 12 months, starting 1 July 2027. The change targets housing policy revenue but caught startups in the scope.
According to the Sydney Morning Herald, Treasurer Jim Chalmers is examining options to let qualifying startups keep the existing 50% CGT discount or something close to it. Ministers are still working through how to define "qualifying startup" for tax purposes.
Why It Matters
Founders and VCs have been lobbying hard, arguing the change would kill exit economics. When you build a company for seven years and sell it, the tax treatment on that exit determines whether you can afford to do it again. Industry Minister Tim Ayres has not ruled out changes, but his office has been non-committal on specifics.
Existing small business CGT concessions remain in place for eligible businesses, per a Treasurer's office spokesperson. The question is whether tech startups with VC backing qualify under those rules, or need a separate carve-out.
The Politics
This is not just tax policy. It is Labor navigating backbench unrest over whether government should be "picking winners" by exempting startups while other asset classes cop the full change. The startup lobby is well-connected and vocal. Whether that translates to actual policy remains to be seen.
Eligibility frameworks from existing startup programs and employee share scheme concessions are on the table as potential models. That would at least give founders something concrete to plan against, assuming the carve-out happens at all.
What We Are Watching
How they define "startup" for tax purposes. Who qualifies, who does not, and what the cliff looks like when you scale past eligibility thresholds. Also watching whether this carve-out actually ships or becomes another consultation paper that goes nowhere.
The deadline is July 2027. Plenty of time for more lobbying.