The Bill
Treasurer Jim Chalmers confirmed legislation covering startup CGT concessions, R&D Tax Incentive changes and expanded venture capital incentives will hit parliament next week. The bill follows September's exposure drafts, which closed consultation last month.
The revised proposal cuts the minimum holding period for eligible shares from five years to three, scraps the proposed $10 million lifetime cap and extends company eligibility from 10 years to 15. The IBCC (Innovative Business CGT Concession) would retain a 50% discount for qualifying early-stage investments, subject to innovation requirements and a $50 million turnover threshold.
What Actually Changed
After sustained criticism from founders, investors and the tech ecosystem, Treasury softened several contentious features. The earlier version would have created uncertainty around pivots: if a startup moved away from an "innovative" activity, investors could face the higher minimum-tax regime instead of the 50% discount.
That risk still exists in the revised proposal. Ai Group warned this could create uncertainty for companies whose business models evolve, which is most of them.
The Sales Angle
A separate measure announced in the 2026-27 Federal Budget would let eligible startup companies with aggregated annual turnover below $10 million convert losses from their first two years into a refundable tax offset, limited to fringe-benefits tax and PAYG withholding on Australian employee wages.
This matters for sales-led startups with substantial early hiring costs. If you are building an SDR team and burning cash on ramp periods, the offset could improve cash flow during the period when you are building pipeline but not closing deals. It is not a substitute for revenue or external funding, but it helps with the timing mismatch between hiring sales reps and seeing ROI.
The Broader Tax Context
The government's broader CGT reform would replace the existing 50% discount with cost-base indexation and a 30% minimum tax rate from 1 July 2027. The startup carve-out is designed to protect early-stage innovation from that change.
Whether the final legislation includes additional startup sector feedback is unknown. The consultation period closed, but Treasury has not confirmed what, if anything, changed between the exposure draft and the bill hitting parliament next week.
Small businesses below the existing $2 million turnover or $6 million net-asset thresholds continue to have access to the four established small-business CGT concessions. This is ecosystem-wide policy, not a specific company announcement.