CGT carve-outs for startups and small businesses revealed | The Business | ABC NEWS

Founders, employees and early investors in startups will be mostly carved out of the government's changes to capital gains tax. More small businesses are also eligible to claim the 50 per cent discount when they sell active assets. While the $475 million tax concessions, which also exempt testamentary trusts, are designed to stamp out the budget backlash, business groups say they don't go far enough.

The details of the carve-out for startups is still being worked through, but an Innovative business CGT concession is being proposed. The 50 per cent tax discount would be applied to capital gains on shares held by founders, employees, early investors and venture capital partners. Companies, foreign investors and super funds will be excluded. The stocks must be issued from July 2027 by an unlisted, independent, innovative start-up that has an annual turnover of less than $50 million and been going for less than 10 years. The government is considering expanding this to 15 years for biotechs. Shares must be held for at least five years, and the 50 per cent discount is caped at lifetime gains of $10 million per person. For small businesses, the government will increase the turnover threshold from $2 million to $10 million for those claiming a 50 per cent reduction on gains of active assets. The Prime Minister Anthony Albanese said "this is one of the four concessions that we have said would continue. It is the most widely used of those four CGT concessions." Treasurer Jim Chalmers said "every one of the 2.7 million active small businesses in this country will have access to generous CGT concessions and 98% of all active businesses will be eligible for these concessions."

Independent economist Saul Eslake says it's not usual for governments to make compromises to get legislation through Parliament. He thinks the new proposals are sensible and are not a backdown in response to pressure from business groups.
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