Australia’s proposed capital gains tax reforms spark backlash from small businesses and start-ups
Consensus Summary
Australia’s federal government is facing intense backlash over proposed capital gains tax reforms that replace the existing 50% discount with an inflation-indexed model and a 30% minimum tax rate. The changes, announced in the 2026 budget, aim to address property speculation and wealth inequality but have drawn criticism from small businesses, start-ups, and opposition parties. Labor officials, including cabinet secretary Andrew Charlton and Treasurer Jim Chalmers, acknowledge concerns about the impact on businesses with low capital bases, particularly tech start-ups, which could face higher tax rates under the new system. The Coalition has vowed to repeal the reforms, accusing the government of poor planning and economic mismanagement. While Labor defends the changes as fairer and more consistent across asset classes, critics argue the reforms will discourage investment, stifle job creation, and make Australia’s CGT regime less competitive globally. The debate has also highlighted the role of trusts in tax planning, with Charlton denying their use is primarily for tax avoidance while opponents suggest otherwise.
✓ Verified by 2+ sources
Key details reported by multiple sources:
- The federal government’s proposed CGT reform will replace the existing 50% discount with an inflation-indexed model applying to all asset classes (including investment properties, shares, and businesses), with a 30% minimum tax rate.
- Labor cabinet secretary Andrew Charlton acknowledged the new CGT regime may not suit businesses with a 'really low capital base' and that the government is consulting on concerns from small businesses and start-ups.
- Treasurer Jim Chalmers stated that start-ups, particularly in the tech sector, could face higher tax bills under the new inflation-adjusted model, with some high-growth firms potentially taxed up to 47% compared to a maximum of 23.5% under the old system.
- The Coalition has vowed to repeal the CGT changes if they pass parliament, with Opposition Leader Angus Taylor accusing the government of 'no plan' and claiming the reforms will disincentivise small businesses and start-ups.
- Labor’s reforms aim to promote fairness in the tax system and address concerns about property speculation and wealth inequality, though critics argue the changes will discourage investment and productivity.
- Andrew Charlton admitted he had used a trust for asset protection, denying it was a tax workaround, and stated that trusts are commonly used by small business owners for legitimate purposes.
Points of Difference
Details reported by only one source:
- Andrew Charlton defended the reforms as fairer overall, stating that across his own assets, he would neither gain nor lose significantly, with some assets treated more generously and others less favorably under the new regime.
- Charlton claimed comparisons between Australia’s CGT regime and foreign regimes (e.g., New Zealand) are invalid because they do not account for inflation adjustments.
- Shadow housing spokesperson Andrew Bragg stated he has never had a trust, contrasting with Charlton’s admission.
- A social media campaign featuring AI-generated images of Anthony Albanese shaking hands with founders depicted the government as a 'business partner' due to the high potential tax rate on start-ups.
- Seek founder Paul Bassat called the CGT changes a 'jobs destroyer' and argued they would discourage investment in productive areas of the economy.
- David Turner, who advises small businesses, noted that while higher CGT could slow investment, the budget included measures like R&D incentives, instant asset write-offs, and a loss carry-back scheme to support start-ups.
- Jessy Wu, a venture capitalist, argued that the binding constraint for start-ups is upfront capital and cash flow, not the tax treatment of future windfalls, and that Labor’s reforms on venture capital and superannuation would increase available capital for risk-takers.
Where the reporting differs
Details that conflict, or appear in only some outlets:
- Andrew Charlton claims the new CGT regime will be 'more generous' for assets with long-term inflation exposure, while critics like Paul Bassat argue Australia’s proposed CGT rate will be higher than 'essentially any other developed economy in the world'.
- Charlton insists trusts are primarily for asset protection, not tax avoidance, but critics like the Coalition imply trusts are being used as tax workarounds under the new regime.
- The Coalition claims Labor’s reforms will cost the private sector $200 billion, while Labor dismisses the opposition’s proposed tax indexing as an uncosted, unfounded plan that would add a quarter of a trillion dollars to national debt.
- Charlton states that the new regime is fairer overall, while business figures like Paul Bassat argue the reforms are a 'bad idea at any time' and will discourage start-ups and small businesses.
Source Articles
Huge CGT call amid small business backlash
Labor cabinet secretary Andrew Charlton has made a big concession on the impact of the new CGT changes on some small businesses.
‘It’s a jobs destroyer’: Backlash over CGT tax hit for businesses goes viral
Seek founder Paul Bassat, who sits on the AFL commission, said the change would have a “profound” effect on the economy.
‘Reject it’: Minister grilled over trust, start-up
A Labor minister has admitted to using a trust and has been grilled over the sale of his start-up while defending Labor’s CGT reforms.