Advocacy News

A win worth marking — and the work still ahead

When the Budget landed, the headline change worried a lot of us. From 1 July 2027, the 50% capital gains tax discount is set to be replaced by inflation indexation and a 30% minimum rate on realised gains. For a sector built on patient capital and long-odds bets, that math matters.

So this is worth pausing on: the Government listened. After sustained engagement from founders, investors and VC groups, Treasury has put forward an Innovative Business CGT Concession — a carve-out that lets investors in eligible startups choose to keep the 50% discount. To qualify, shares must be new equity in a company under 10 years old, with under $50 million turnover, held for at least five years. There’s also active consideration of a 15-year window for sectors like biotech and medtech that take longer to commercialise.

That’s a meaningful correction, and the right one. Our advocacy group made a submission to the consultation, and our argument was straightforward: the definition of “innovative” can’t be a narrow tech checkbox. Real innovation — and real capital efficiency — is happening across the economy, much of it outside the sectors current settings recognise. Get the definition right and Australia unlocks growth it’s currently leaving on the table.

I won’t overstate our hand. This outcome belongs to a broad ecosystem that spoke up together, and there’s a long way to go before a discussion paper becomes durable law. The detail — what counts as innovative, how the test is applied, where the thresholds land — is everything. That detail is exactly where capital gets either freed up or frozen.

Which is the whole point of this group. Our focus has always been singular: driving more capital into our sector. A workable concession does that. A vague or narrow one does the opposite.

Where we go from here

In the short term, our job is to win the detail. That means a definition of “innovative” that’s broad and principles-based rather than a narrow tech checklist; thresholds and a five-year hold that reward patient capital instead of scaring off the angel and early-stage investment that gets companies off the ground; and securing the longer 15-year window for deep tech, biotech and medtech, where commercialisation simply takes more time. We’ll keep making that case directly to Treasury, backed by evidence from our community.

Longer term, our ambition is bigger than one concession. We want startup investment treated as what it is — nation-building — through policy that is stable, predictable and globally competitive. Founders and investors make decade-long bets; they can’t do that against settings that change every Budget. The goal is a capital regime that holds steady, recognises innovation wherever it happens in the economy, and stacks up against the US, the UK and Singapore when a company is deciding where to build and who to raise from.

That’s the standard we’ll hold government to: policy designed with the sector, not retrofitted after the backlash. We’d rather be in the room early than fighting a clause late. Getting this concession right is the first proof point. The bigger prize is a permanent seat at the table — so the next reform starts with the question of how to pull more capital into Australian innovation, not how much to pull out.

The consultation closes 10 July. If you’ve got a view on how “innovative” should be defined, now is the moment it counts. Read our submission, add your voice, and let’s get this right while the door is open.

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