Two weeks on from the budget, the fight over the capital gains tax overhaul has moved to startups and venture capital.
Published 28 May 2026
Two weeks after the 2026-27 Federal Budget, the political fight over its capital gains tax overhaul has narrowed to an unexpected front: startups and venture capital. After founders and investors mounted a noisy campaign against the changes, Treasurer Jim Chalmers and the government have signalled they are open to special consideration for the sector, even as the broader reform remains firmly on the table.
Handed down on 12 May 2026, the budget proposed replacing the longstanding 50% CGT discount with CPI cost base indexation plus a 30% minimum tax, applying to gains that accrue after 1 July 2027. It also proposed abolishing negative gearing on established residential properties bought after budget night. Existing owners and those already under contract are grandfathered, and eligible new builds remain exempt, keeping access to both negative gearing and the current discount. The government has framed the package around housing and intergenerational fairness.
| Element | Current rule | Proposed from 1 July 2027 |
|---|---|---|
| CGT discount | 50% for assets held 12 months | CPI indexation plus a 30% minimum tax |
| Negative gearing | Available on established homes | Removed for established homes bought after budget night |
| Existing holdings | n/a | Grandfathered under current rules |
| New builds | Standard treatment | Exempt, keep negative gearing and 50% discount |
Venture-backed companies depend on capital gains in a particular way. Returns usually arrive years later when a company is acquired or lists, and the shares are illiquid in the meantime. Founders and investors argued that reducing the CGT concession would blunt the incentive to back risky early-stage Australian companies and could push capital offshore. In the fortnight after the budget, that argument spilled onto social media, with tech founders using AI-generated images to mock the government, a campaign The Guardian reported had complicated Labor's efforts to sell the package.
Rather than dismiss the complaints, the government left the door open. According to reporting, it has acknowledged the "unique characteristics" of the tech sector and indicated it will consult on how the new CGT rules sit alongside existing early-stage tax incentives. The Guardian has reported that some Labor MPs expect the government to make eventual concessions for startups following the backlash. No carve-out has been legislated, and ministers have stressed that the central goal, in the words the government has used repeatedly, is to reshape housing opportunities and address intergenerational unfairness rather than to target any one industry.
For now the design is unsettled. The measures still need to pass Parliament, with a proposed start date of 1 July 2027, and any startup or venture capital concession would be worked out through consultation before then. Polling cited by The Guardian suggests the government has not yet won the public argument on its housing and tax changes, which is part of why the messaging battle, and the lobbying over a possible carve-out, has been so intense. Anyone affected should treat the current details as proposals and watch for the final legislation.
Disclaimer: This article reports on proposed measures and public debate and is general information, not tax or financial advice. The reforms described are proposals that may change before becoming law. For the official detail see the 2026-27 Federal Budget and the ATO, and seek advice for your own circumstances.