Independent MP Allegra Spender is pushing back against the government's proposed $10 million lifetime cap on capital gains tax concessions for startup investors.
The cap is part of Labor's plan to exempt innovative startups from broader CGT reforms announced in the 2026-27 budget. Under the carve-out, gains from qualifying startup investments would keep the existing 50% CGT discount rather than moving to the new indexation model.
Spender's concern: the $10 million cap hits exactly the people who keep Australia's startup ecosystem running.
"Australia's startup ecosystem owes a great deal of its success to recycled capital and talent on behalf of a small handful of successful company founders, investors and employees," Spender wrote in her Treasury submission.
The policy matters because it affects how startup exits flow back into the market. A founder who sells for $30 million and wants to back five new ventures could hit the cap quickly. Same for early employees at Canva or SafetyCulture who cash out options and become angel investors.
Context: Spender has separately proposed cutting the general CGT discount from 50% to 30% as part of broader tax reform. That proposal would hit all capital gains, not just startups. Labor's carve-out is the government's response to sector pushback about applying the new indexation model to venture-backed companies.
The consultation follows meetings between government and investors from Blackbird, Canva, SafetyCulture, and other major players in the ANZ tech sector. Those conversations focused on protecting startup investment incentives while still reforming the broader CGT system.
Worth noting: the $10 million cap applies per individual, not per investment. For VCs writing multiple cheques or founders who exit and reinvest, that ceiling arrives faster than it sounds.
The Treasury consultation closes soon. No word yet on whether the government will adjust the cap or stick with the proposed limit.