Senior Labor MP Acknowledges CGT Changes May Not Suit Start-ups, Small Businesses

‘The point that many start-up founders, the point that many small businesses have been making is valid,’ said Labor Cabinet Secretary Andrew Charlton.

Labor Cabinet Secretary Andrew Charlton speaks at the Women in Cyber Security Summit at Parliament House in Canberra, on Feb. 6, 2025. AAP Image/Mick Tsikas

Labor Cabinet Secretary Andrew Charlton has admitted the government’s capital gains tax (CGT) reforms may have a negative impact on start-ups and small businesses with low asset bases.

The comments come as a large number  of tech business leaders urge the government to rethink the changes, which are set to come into force from July 2027.

“Start-ups and some small businesses are a real concern because what I just explained is that we’ve got this new type of capital gains discount which is based on inflation. And the point that many start-up founders, the point that many small businesses have been making is valid,” Charlton said on the Today Show.

“It’s a valid point because that new regime doesn’t interact well if you have a really low capital base, because you’ve got nothing to inflate off. So, there are real concerns out there.”

Under the existing rules, taxpayers receive a 50 percent discount on eligible capital gains with CGT calculated on the remaining 50 percent.

However, from July 1, 2027, this discount will be scrapped and replaced with a flat 30 percent minimum tax on net capital gains, plus indexation, which is expected to increase tax bills for many investors.

Growing Backlash

Labor’s CGT reforms have drawn strong reactions from the business community, with some business owners using AI-generated memes depicting Prime Minister Anthony Albanese as a silent partner sharing in their business earnings.

In addition, more than forty tech business leaders under 40 recently wrote to the prime minister, accusing the government of ambushing them with a massive tax increase.

Amid the growing backlash, reports have emerged that Labor may be open to considering changes to the controversial CGT regime.

Meanwhile, Nationals Leader Matt Canavan said the budget was in “complete chaos.”

“It’s less than a fortnight since they released the budget, and they’re desperately now trying to plug holes in a budget that proved leaky on the night itself,” he told Sky News Australia on May 22.

“They haven’t been able to justify exactly why they are making these changes. They’ve clearly done them either with an ill intent, a hidden agenda, or they just were totally ignorant of why these or how these changes would affect people’s wills and testaments.”