Medical, Tech Sectors Warn Labor’s CGT Change Could Send Australian Innovation Offshore

The Tech Council of Australia warns the country already falls behind the US, Singapore, and Canada on CGT rates.

In this photo taken on May 5, 2026, research scientist Daria Kornienko places cortical and hippocampal cells on a cell culture plate into a CL1 unit before being placed in server racks and available to study via the internet, at Cortical Labs' Physical Containment Level 2 (PC2) laboratory in Melbourne. William West/AFP via Getty Images

Australian innovation will suffer as a result of sweeping changes to the capital gains tax (CGT) regime, technology company representatives have told the Senate Economic Committee.

The committee is hearing feedback on Labor’s Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, which will impose a minimum CGT rate of 30 percent, as well as sweeping changes to negative gearing and taxation on trusts.

Kate Cornick, chief executive of the Tech Council of Australia, warned the country already lagged other jurisdictions, and Treasurer Jim Chalmers’ initiative could result in more innovation being lost.

“[In] the United States they’ve got a qualified small business stock scheme, which exempts up to 100 percent capital gains,” she said.

“In Singapore, there’s actually no CGT regime, same in New Zealand. In Canada, they have got a lifetime capital gains exemption for buying small business shares, and ... in the UK, the business asset disposal relief provides 18 percent for founders and shareholders.

“[There are] certainly schemes that we can look to overseas that drive competition. Many countries are really working hard to build industries in quantum, AI, robotics, and other areas. So we are working in a globally competitive landscape, and it is very important that Australia is seen as being highly competitive, and it is able to attract, retain, and grow businesses that are going to lead to future prosperity.”

CGT is charged on the profit an investor makes after selling an investment property or shares.

Previously, a 50 percent discount was available before CGT was applied, however, the government’s new scheme removes that discount in favour of a 30 percent flat tax on the entire profit of a sale plus inflation gains.

Biotech Investment Could Dive

Rebekah Cassidy, chief executive of the peak body AusBiotech, told the committee that the biotech industry is valued at more than $250 billion and has cumulatively been Australia’s largest value-added export industry outside of primary industries since 2016.

“The proposed changes to capital gains tax, and their intersection with proposed changes to the research and development tax incentive, will drive these numbers and this contribution down,” she warned.

The process to deliver new health technologies to patients is rigorous and takes more than a decade, she pointed out. Global hearing aid provider Cochlear, for example, took more than 15 years.

“Along the way, founders face extraordinary [challenges]. Most remain pre-revenue for well beyond a decade, while continuing to invest heavily in local Australian R&D (research and development),” she said.

“The current CGT framework rewards risk in this non-revenue environment, where capital is locked up for many years and success is far from guaranteed.

“The proposed changes would weaken that incentive at precisely the point when Australia needs more people willing to start fund and scale innovative life sciences companies right here.”

Many Australian tech companies could only attract employees by offering equity packages because they aren’t able to match overseas salaries, she said, and the changes would negatively affect such arrangements.

“Our members are already telling us that they are reconsidering where future investment, clinical trials, manufacturing activities, intellectual property, and headquarters will be located,” she warned.

Success Stories Decades in the Making

Biotech products go through well over a decade of research, testing, clinical trials, regulatory approvals, and market access approvals, she explained.

‘That means that the vast majority of our companies remain pre-revenue for very long. They can invest $50 to $150 million in R&D over more than a decade before generating a single dollar in revenue, [and] this is unlike other sectors in many ways.

She cited the example of Argenica Therapeutics, which is working on a product designed to prevent brain cells from dying immediately after a stroke.

“That was founded in 2019,” Cassidy said. “It is conducting phase two clinical trials today, with the first expected revenue in 2034, which is 15 years after incorporation.”

Australian Investment Council (AIC) CEO Navleen Prasad added that the tax changes didn’t just affect biotech companies, citing the example of Toll Global Express.

“This was a logistics business owned by Japan Post, [and] it was in distress under its previous ownership. There was no way to restructure that company or return it to some form of profitability. It was acquired by a strategic investor, and as a result of that, it saved 8,500 jobs around the country, and is [now] trialling hydrogen trucks.”