Young business leaders have united to lobby Anthony Albanese to rethink his capital gains tax revamp as reform advocate Allegra Spender urges Labor to move cautiously to avoid economic pain and the Coalition launches its campaign to draw family businesses into their tax battle.
In a letter to the prime minister, 40 Australian founders aged under 40 said that they supported the government’s decision to remove the CGT discount and negative gearing to make houses more affordable. But they warned against stripping the discount from productive asset investments.
“The changes … will do nothing to make houses more affordable; all they will achieve is to suck the ambition, drive and hope out of the hearts of young business builders,” the group writes.
“This aspiration ambush doesn’t just impact tech start-ups either: it impacts every growing business in Australia. Meaning every small business that wants to become a medium-sized business and every medium-sized business that wants to become a big business.”
“Surely that can’t be the plan?”
The group included Sarah Warmoll and Samantha Devlin, whose firm provides careers advice at many schools; Kim Teo, founder of a QR code menu provider; Damien Fitzpatrick, a former rugby player with the NSW Waratahs who created a sports nutrition company; Jack Watts, who created marketing and communications agency Bastion; and Frank Greeff, who sold his real estate business to Domain for $180 million and made the first piece of content in what became a genre of social media videos poking fun at the CGT changes.
There’s some unease within Labor’s caucus about public backlash from sections of the business community and mum-and-dad small business people. That anxiety is dampening what MPs believe has been a largely positive reaction to dropping negative gearing and CGT changes for housing.
Treasurer Jim Chalmers got on the front foot on Tuesday following scrutiny, calling out what he described as “misinformation” after days of questions about the potential 47 per cent tax rate on real capital gains for certain firms.
A burgeoning social media campaign has portrayed an AI-generated Albanese as a joint business partner in firms handing over nearly half their profit, though the new framework taxes only real gains, not nominal ones.
“The distortion that’s been introduced in the capital gains tax system has massively overcompensated investing in fixed housing … or in some instances even shares,” Chalmers told reporters in Sydney.
“By introducing this more neutral treatment, some kinds of investment will become more attractive relative to housing.”
Shadow treasurer Tim Wilson will use a National Press Club speech on Wednesday to label the budget a “dud” focused on “revenue, without reform”.
In an attempt to generate energy among Australia’s 2.7 million small business owners, Wilson will promise a new small business act to ensure small businesses get paid on time, contribute to the decision-making of bodies such as the RBA, and give them a chance to bid for government work.
The non-union based Coalition parties have traditionally relied upon self-employed people for support.
“Where the Albanese government has declared war on the self-starters and small businesses of this nation, we are going to fight for them,” he will say, according to speech notes.
“Rediscovering our fighting spirit – a nation of self-starters where we aspire, innovate, invest in our future, look to the horizon and live the spirit of the Boxing Kangaroo.”
Spender, the independent MP for the affluent Sydney electorate of Wentworth, said she supported negative gearing and CGT changes to fund income tax cuts. “But,” she added, “the government has significant work to do to get the structures and parameters right to avoid some of the problems highlighted.
“Tax reform is hard. It needs to balance prosperity and fairness and get that balance right. The government should be consulting widely – it is [doing so] with the tech sector and needs to go further with business owners, fund managers and the broader community. These measures will be judged by getting the balance right, not by being delivered quickly.”
Chalmers has acknowledged that high-risk, high-growth new firms may face higher taxes.
The government is talking to the start-up sector about a potential exemption. Yet a narrow carve-out would not address the broader concerns raised by influential figures including Labor adviser Lachlan Harris, Seek founder Paul Bassat, and activist investor John Wylie. They say the CGT changes will hurt all kinds of all kinds of businesses, from defence firms to pharmacies to plumbers, and hamper dynamism viewed as key to pushing up national incomes.
Under pressure to explain the tax changes, the government released Treasury advice on Monday afternoon which said that the average tax rate on capital gains would increase from 19.3 per cent to 21.5 per cent. Investment across the economy would not be significantly altered, it said.
Critics worry that under the inflation-adjusted model, younger investors who often take bigger risks on high-growth assets to get ahead would face a higher tax burden. On the other hand, retirees investing in lower-growth assets that pay out dividends, such as big bank shares, would benefit because the new model favours assets that grow at about the same rate of inflation.
The Treasury advice also explained why the government decided against restricting the CGT discount reforms to housing. It said that investors could “effectively access the CGT discount for an investment property – for example, by purchasing it through a company”.
Countries such as the UK and Canada have schemes that reduce tax on new start-ups, in an acknowledgement that certain investments should be taxed less to drive growth.
Albanese hinted at changes on start-ups on Tuesday. “It was not possible to have as much consultation before budget night as occurs with tax policy,” he said in Perth. “And we’re using this period of this week, next week as well, to have that consultation.”
Nationals leader Matt Canavan said Labor must also talk to the farming sector about a carve-out because, like start-ups, younger farmers were taking big risks.
“The government’s capital gains tax changes are a handbrake on anyone who wants to grow a business and hence they are a handbrake on our economy, productivity and growth,” he said.
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Paul Sakkal is Chief Political Correspondent. He previously covered Victorian politics and won a Walkley award and the 2025 Press Gallery Journalist of the Year. Contact him securely on Signal @paulsakkal.14.Connect via X or email.