CGT carve-outs won't fix talent drain, startup founders warn government
Labor carved out startups from its CGT overhaul, but founders say it won't stop talent heading offshore.
The May budget replaced the 50% CGT discount with inflation indexation and a 30% minimum tax rate. After backlash, Treasury added carve-outs: "innovative businesses" keep the 50% discount, and small business active asset reduction eligibility expanded.
Not enough, according to founders. The changes still hit employee share schemes and founder equity harder than overseas markets.
Why this matters for sales teams
Startups compete for AEs and SDRs with equity, not just cash. Less capital than enterprise means lower base, higher equity weighting. If the exit gets taxed at 47% instead of 23.5%, that equity comp loses half its value.
One founder, speaking off the record: "We were already playing catch-up on cash comp versus established firms. Now the equity story is weaker too."
The math: under the old rules, a $100k equity grant at exit paid $76.5k after tax. Under the new rules, $53k. That is a 30% pay cut on the equity component.
The offshore problem
ANZ tech sales comp already lags US markets by 20-30% on base. Equity was the catch-up mechanism. Singapore and US startups don't have this CGT issue. For senior sales talent weighing offers, the after-tax outcome matters.
Treasury argues existing small business concessions remain. Founders counter that venture-backed startups are not traditional small businesses. The cost base is near zero at founding, so indexation does nothing. The real gain is the entire exit value.
What startups are doing
Public campaigning for better carve-outs. Some are already structuring offshore entities for equity grants. Others are front-loading cash comp and cutting equity offers, which changes the risk-reward profile for early hires.
The government is still consulting on startup-specific exemptions. Until then, comp planning for ANZ startup sales teams just got harder.