Australia bill adds start-up CGT concession and reworks R&D incentive

Australia bill adds start-up CGT concession and reworks R&D incentive

27 October 2026: Australia's Treasurer, Jim Chalmers, has introduced a bill that creates a capital gains tax concession for early investors in innovative start-ups, rebuilds the Research and Development Tax Incentive from 1 July 2028 and raises the thresholds for existing venture capital incentives from 1 July 2027. The Treasury Laws Amendment (Tax Reform No. 4) Bill 2026 also lets business taxpayers report and pay PAYG instalments monthly and adjusts the electric car discount.

Not yet independently verified. This is a bill, not law: it still has to pass both houses, and the Treasurer's release does not give the concession's discount rate, eligibility thresholds or the new R&D rates. We will add them from the bill and its explanatory memorandum. We will update this when it can be confirmed, and remove this note.

"The Bill builds on the $3.8 billion in tax relief we are rolling out for businesses and start-ups," the Treasurer said in his release.

A capital gains concession for early backers

The new Innovative Business CGT Concession is aimed at investors who come in when a company is worth little. Early investors in innovative start-ups that begin with a low or zero cost base will still receive what the Treasurer calls a significant discount on a later capital gain. Venture capital investors qualify too when they invest in eligible companies, including where their returns come as carried interest.

Eligibility turns on the company's main activities relating to innovation, and the government says the legislation leaves room for firms to stay eligible as they grow. The Department of Industry, Science and Resources is still finalising safe harbour arrangements that will tell investors when a company meets the innovation test. Until those are published, founders raising money cannot say for certain whether a new investor would qualify.

R&D support narrows to core work from July 2028

The R&D Tax Incentive will focus on core R&D: experimental activities that contribute new knowledge. Support for those will be more generous. In return, the requirement to document each supporting activity separately is replaced by the higher rate for core work, which the government presents as making the incentive easier to claim.

A new power lets activities integral to core R&D be designated by legislative instrument, so the definition can change without a new act. The department will consult in early 2027, and the release names clinical manufacturing and other forms of specialised technology development as areas raised by industry. Software companies whose claims lean on supporting activities, such as building test environments around an experiment, should follow that consultation closely, since the release does not say how such work will be treated after 2028.

Venture capital and cash flow changes come sooner

The higher thresholds for existing venture capital incentives apply from 1 July 2027, a year before the R&D changes. The monthly PAYG instalment option is meant to let a business match its tax payments to current trading; the release gives no start date.

The government says further tranches of legislation and legislative instruments will follow as it finalises the package. For now the measures depend on the bill passing the House of Representatives and the Senate.

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• Pakistan's FBR moves the 2026 tax return deadline to 31 October
• India's GST Council proposes automatic refunds and an end to tax arrests

Sources

• Treasury Ministers: Tax reforms to support innovation and investment (media release, the Hon Dr Jim Chalmers MP), 27 October 2026