Chalmers Says Startup Tax Bill Goes to Parliament Next Week

Treasurer Jim Chalmers said on 23 October 2026 that the next tranche of legislation implementing the tax reform package will go to Parliament next week. Speaking at the Citi A50 Australian Economic Forum in Sydney, he said the bill will include capital gains tax concessions for start-ups, changes to the R&D Tax Incentive and new venture capital incentives.

The bill follows a Treasury exposure draft released on 11 September 2026, with submissions closing on 28 September. As of 23 October, the bill had not been introduced. Whether the final text keeps the September terms for the R&D changes is unknown.

Startup CGT Concession: Three-Year Holding Period, No Lifetime Cap

The Innovative Business CGT Concession (IBCC) would keep the 50 per cent discount for qualifying early-stage investments. The discount remains subject to innovation requirements and a $50 million turnover threshold. The Adviser reports that the concession is intended to preserve the discount for qualifying founders, early employees and investors.

Compared with the earlier proposal, the minimum holding period for eligible shares falls from five years to three, according to Startup Daily’s report of 23 October. Treasury’s 11 September release also sets the holding period at three years. The proposed $10 million lifetime cap on gains eligible for the concession has been dropped, and Treasury’s release lists no cap.

Company eligibility rises from 10 years to 15 years and applies across all sectors. Treasury estimates the amendments will cost $160 million in revenue over the forward estimates.

The Adviser reports that Treasury will also release a draft legislative instrument intended to allow existing businesses to self-assess against the innovation criteria. Companies must still meet the $50 million turnover threshold to qualify.

Treasury Cost Estimate
Treasury estimates the IBCC amendments will cost $160 million in revenue over the forward estimates, according to its 11 September 2026 release. Final costs will be set in the next budget update.

R&D Tax Incentive Changes Still Subject to Final Wording

The September draft set the R&D changes to start from 1 July 2028. Treasury said core R&D offsets would rise by up to about 50 per cent. The intensity threshold on the non-refundable offset would fall to 1.5 per cent, and the expenditure cap on that offset would rise to $200 million. Treasury also says each offset dollar generates about 20 per cent more business R&D.

The refundable offset would generally be limited to firms operating for less than 10 years, and the turnover threshold for it would rise to $50 million. Biotechnology and medical technology firms could claim the refundable offset for up to 15 years, at an estimated cost of $60 million over the forward estimates.

In the speech, Chalmers said better targeting of the incentive would unlock an extra $400 million in R&D by young firms each year. Startup Daily notes that this figure is an estimate of additional R&D activity, not a new grants allocation.

Startup Daily reports that the Tech Council of Australia opposed limiting refundable offsets to businesses operating for less than 10 years. The council argued that quantum, robotics and space companies face lengthy commercialisation periods. It also said removing supporting R&D activities from eligible expenditure could outweigh the higher offsets for core research, particularly for software, AI and deep tech startups.

Venture Capital Limits Rise From July 2027

Treasury’s September release says legislation to expand venture capital tax incentives would apply from 1 July 2027. The Treasurer’s speech refers to new venture capital incentives without giving a date. Business.gov.au lists the maximum ESVCLP fund size rising from $200 million to $270 million from that date.

The same page lists the investee asset cap at the time of investment rising from $50 million to $80 million. The cap for full tax exemption on returns would rise from $250 million to $420 million. Business.gov.au states these increases are subject to amendments to the Venture Capital Act 2002, and that additional details will be provided before they take effect. Treasury says most of the caps for these programs have not been updated since the 2000s.

The $200 million fund-size limit was set in 2016, and the $250 million exemption cap in 2007, according to Business.gov.au. The page also says ESVCLPs no longer have to divest an investment when the investee’s value exceeds $250 million, with the ATO allowing a proportional tax concession above that value.

Startup Daily reports that annual compliance requirements for startups that remain in the ESVCLP program are still a concern, particularly the added risk for investors.

The proposed $10 million lifetime cap has been dropped, and company eligibility would run for 15 years.

Industry Views and Open Questions Before Introduction

FinTech Australia chief executive Rehan D’Almeida told The Adviser in September that uncertainty remains the main problem for the incentive, arguing that a tax incentive surrounded by uncertainty offers little benefit. The Tech Council of Australia’s objection to the refundable-offset limit has been reported by Startup Daily.

In the speech, Chalmers said the government is rolling out $3.8 billion in lower taxes for businesses and start-ups. The next public step is the bill’s introduction, which the Treasurer has said will happen next week. Startup Daily reports that it is unknown whether the final bill includes further startup-sector changes, and that the speech did not clarify this.

The September release also lists other draft legislation, including fringe benefits tax settings for electric vehicles and monthly reporting and payment of PAYG instalments.