Australia Tax Update: Startup Tax Bill Heads to Parliament With New CGT Concession Rules

TITLE: Startup Tax Concessions Head to Parliament Next Week: What Founders Need to Know

Friday, 23 October 2026

What founders need to know before next week

Treasurer Jim Chalmers has confirmed that legislation covering startup capital gains tax concessions, R&D Tax Incentive changes and venture capital incentives is expected to be introduced to Federal Parliament next week. He made the announcement in Sydney at the Citi A50 Australian Economic Forum on Friday.

This is the implementation stage of reforms detailed in September’s exposure draft, not enacted law. The bill could change during its passage, and the Senate crossbench may influence its final form. For now, founders and investors should prepare their records without treating the proposed concessions as guaranteed.

The Startup Daily report covers today’s announcement. The government’s 11 September Treasury release sets out the key proposals. Consultation on the exposure-draft package closed on 28 September.

Understand the proposed startup CGT concession

The Innovative Business CGT Concession (IBCC) would provide a 50% CGT discount for qualifying early-stage investments in innovative start-ups. The exposure draft includes a $50 million turnover threshold, innovation requirements and a 15-year company eligibility requirement across all firms.

Under the revised proposal, qualifying equity would need to be held for at least three years before sale, rather than the initially proposed five. The proposed $10 million lifetime cap has also been removed. Treasury estimates the concession would cost $160 million over the forward estimates and plans to release a draft legislative instrument to help companies self-assess the innovation requirements.

These are proposed conditions, not a blanket discount for every investor or Australian company. The precise rules will depend on the introduced bill and any amendments made before it passes.

Keep the CGT changes separate

The IBCC is distinct from the broader CGT overhaul scheduled to take effect from 1 July 2027, involving cost base indexation and a 30% minimum tax on capital gains. Do not assume the startup concession changes those broader rules or applies automatically to a particular share sale.

For context on the wider reform, see our earlier update on CGT overhaul rules for trusts and funds. Check the final legislation and current ATO tax law and policy updates before relying on any proposed treatment.

Note the R&D and venture capital timelines

The proposed R&D Tax Incentive changes would apply from 1 July 2028. The September draft includes:

• Core R&D offsets increased by up to around 50%.
• The intensity threshold for the non-refundable offset lowered to 1.5%.
• The maximum expenditure threshold for that offset raised to $200 million.
• Refundable offset access generally limited to firms operating for fewer than 10 years, with a higher $50 million turnover threshold.
• Refundable offset access for biotech and medtech firms extended to up to 15 years.

The government says the changes could unlock around $400 million in additional R&D by young firms each year. The biotech and medtech measure is estimated to cost $60 million over the forward estimates.

From 1 July 2027, proposed venture capital incentive expansions would include raising the maximum size of Early Stage Venture Capital Limited Partnerships from $200 million to $270 million. The exposure-draft package also covered electric vehicle FBT settings and the option to report and pay PAYG instalments monthly.

Start building your evidence file now

Eligibility may depend on historical facts. That means it will be harder to prove later if you have not retained records as your company grows or ownership changes. Start with this checklist:

1. Keep shareholding records. Retain share registers, subscription documents, issue dates, transfer records and investor agreements. These help establish who held qualifying equity and for how long.
2. Document company age and structure. Keep incorporation records and dated documents showing any restructures, mergers or changes in ownership.
3. Track turnover evidence. Save reconciled accounts, sales reports, invoices and supporting records that show turnover for relevant periods.
4. Record innovation evidence. Keep dated product or service development documents, technical specifications, project plans and testing records that support the company’s innovation activities.
5. Reconcile R&D records. Preserve project costs, staff and contractor records, invoices, calculations and supporting documents used for R&D claims. Clear records help substantiate calculations and filings.
6. Pause before a share sale or restructure. Confirm the transaction documents, holding period and relevant company records are complete before proceeding. The proposed rules may not survive unchanged, so check the enacted legislation before applying them.

Prepare for the bill, not just the announcement

The bill is expected in Canberra next week. Until it is introduced and passes both houses, treat the September exposure draft as a proposal. Monitor the ATO’s latest tax law and policy updates and review the final text before filing on the basis of a new measure.

Sterlinx Global operates as a Global Tax Compliance Suite, supporting Australian entities with bookkeeping, tax calculations, lodgments and year-end filings. You provide your business data; we manage compliance delivery on an ongoing basis. Contact us to discuss structured compliance support for your business.

FAQs

What is the Innovative Business CGT Concession?

It is a proposed 50% CGT discount for qualifying early-stage investments in innovative start-ups. The exposure draft includes innovation, turnover, company-age and shareholding requirements. The final rules depend on the legislation and its passage through Parliament.

Does the startup CGT concession apply to every Australian company?

No. The proposal sets eligibility conditions, including a $50 million turnover threshold, innovation requirements and a 15-year company eligibility requirement. It should not be treated as an automatic concession for every company or share sale.

What records should a start-up keep to support eligibility?

Keep shareholding and share-issue records, incorporation documents, turnover evidence, and dated documents showing innovation activity. Retain supporting records for R&D expenditure and any share sale or restructure so the relevant facts can be checked against the final rules.