Australian Labor Government Faces Startup Backlash Over Capital Gains Tax Overhaul

The Australian Labor government, led by Treasurer Jim Chalmers, is pursuing a major reform of the capital gains tax (CGT) system. The proposal would replace the existing 50% discount for assets held over 12 months with a cost‑base indexation model and introduce a 30% minimum tax on net capital gains, alongside broader changes such as adjustments to negative gearing.

Start‑up founders, investors and venture‑capital groups have launched a coordinated backlash, arguing the reforms could undermine Australia’s innovation ecosystem by reducing the attractiveness of employee share schemes and prompting companies to relocate abroad. In response, the government is reportedly examining a carve‑out that would allow qualifying startups to retain the current 50% CGT discount or a similar concession. Details on eligibility criteria are still being worked out, with references to existing startup incentive frameworks.

The issue is being scrutinised by a Senate inquiry, with submissions closing on the same day the carve‑out was reported. Public hearings are scheduled for 15‑16 June, and a final report is due on 19 June.