A collection of young Australian business founders have written an open letter to Prime Minister Anthony Albanese, asking him to reconsider a proposed change in capital gains tax in the 2026 federal budget that will penalize any entrepreneur who wants to start a business in Australia.
The letter, penned by me&u chief executive Kim Teo, Bastion founder Jack Watts, Cyber Revolution co founder Adam Hewitt, and Linktree co founder Alex Zaccaria, challenges Labor’s proposal to abolish the 50% CGT discount on assets.
They called it an “aspiration ambush” and stressed that the consequences will go beyond just the tech industry.
“As a result of abolishing the CGT discount on shares, and introducing the cost base indexation scheme, you have clocked us with a huge tax bill and then followed it with an even greater one,” the letter says.
According to the signatories, all the small businesses that want to grow into medium sized companies and medium sized businesses that wish to expand further have been caught off guard.
Founders warn of offshore flight
The campaign has crystallised a broader backlash from investors, startup bodies and business groups since budget night.
The new settings will kill off employee share schemes, discourage early stage investment and give rivals in Singapore, London and Silicon Valley a competitive advantage, critics say.
In a LinkedIn post backing the letter, Teo said she had no issue with the current effective CGT rate of 23.5%, but a leap to 47% would be a warning sign to the people the government says it wishes to support.
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It would feel like a signal for founders to pack up and leave, she said.
The Federal Government admits that there is room for improvement in terms of its design.
The Australian Treasury in the budget paper noted that it would seek consultations to consider how the proposed reforms relate to incentives for early stage and start up investments, given the unique nature of the industry.
Treasurer Jim Chalmers has also indicated that carve outs might be made for fast growing businesses.
“Look, we see you as an incredibly important sector of the economy, indeed in many ways the hope of the side when it comes to dynamism and productivity, and we will recognise that in our policy,” Chalmers said in Parliament during question time.
The Coalition is trying to make use of the controversy.
Shadow Treasurer Tim Wilson has promised to repeal both the CGT changes and Labor’s negative gearing policy in case his party comes to power.
Meanwhile, NSW Shadow Minister for Science and Technology Jacqui Munro and federal Shadow Minister for Innovation Aaron Violi have started a #StopTheTechTax petition, contending that the new policies would drive talent and capital out of Australia.
