Why is the Australian Government Removing a Key Motivator Driving Business Innovation and Commercialisation in Australia
The 2026 budget seeks to penalise Australian businesses that innovate to commercially improve the Australian economy’s competitiveness by removing the 50% discount on capital gains tax benefits afforded to organisations willing and able to spend current energy and funds to create value deferred for the future release event.
Why would you discourage local and overseas investors’ support of these innovative companies? Our competitor countries do not.
Australia is 2nd last on this list, with only Denmark spending less on R&D, and we want to further punish those willing ot have a go’
These investments are often only possible because of the loss of founders’ and investors’ earnings today in pursuit of future returns. It is often the founders’ and investors’ returns and superannuation that are now being taxed at a reported rate of at least 30%. Swizer reports the proposed 30% floor exceeds the entire headline capital gains tax rate in Spain (30%), Sweden (30%), Latvia (28.5%), Austria (27.5%), Germany (26.4%), Italy (26%), Estonia (22%), Iceland (22%), the United Kingdom (20-24%) and the United States (20%). It exceeds the entire CGT rate in over 25 countries.
Where Australia’s capital gains tax now ranks against the world
Many of these small and medium-sized businesses do not have the cash resources of their overseas, less innovative competitors.
Why would a country that is trying to grow the commercialisation of Australian ingenuity penalise those willing to support such activities, thereby discouraging them from undertaking them?
The Market
As a founder with an international patent of Inzenius, with its award-winning, capable, compliant, all-in-one Rostering and Payroll system. Inzenius was built for Australia’s complex payroll rules, for the 3rd most complex in the world, in Australia, by an Australian business.
Many Australian payrolls have been acquired by international software companies, shut down, or are about to be, as needed. substantial investment to comply and move offshore. The risks and investments required to harness the opportunities AI will deliver for smart Australian entrepreneurs provide a chance to reverse the trend.
The use of foreign HR and Payroll built systems is a sovereign and business risk.
Removing the payback for our Australian entrepreneurs who retain and commercialise their innovation for Australia is such a regressive act today.
A time when we need to secure our enterprises on Australian shores.
I also remind the government of the loss of so many industries and sovereign capabilities to international jurisdiction that, with current technology, can be competed with and must be repatriated today. AI – speed to market, Robotics – labour cost reduction, Australian innovation – all can work in collaboration with our plentiful resources to be a powerful competitive advantage.
We must not proceed with such a destructive idea of driving our innovation overseas by failing to reward those who took the risks and have put in so many skills, energy, and resources to make Australia great today.
That’s Inzenius www.inzenius.com
Leave the tax benefits of the 505 and the ability to park value created in trusts for the benefit of the families that went without, as the founder deferred the dividends they would have normally earned by not innovating
The futurist Steve Sammaetion sums up the situation
Dear Jim (Charlmers Aus Treasurer), – Not all capital gains are created equal -Some have positive economic multiplier effects, and some cause speculation & asset price bubbles.
As a residential property investor, I’m a loser in yesterday’s budget, but I totally get it. It’s a hard pill to swallow, but it needed to be done. Housing should be a right for all residents, and speculating on a largely unproductive asset hasn’t helped our economy. But the gains people make in Startups and Small Businesses should not be treated the same way as investing in a residential property should.
Firstly, they take years of toil, hard work and innovation — and still more than 80% fail. At Macro3D, we currently employ 20 people and are yet to put any money in our pockets. And now, if we ever have a large exit, almost half goes to the government. Of course, we are now thinking about setting up our technology and software arm overseas before our next capital raise, even though we’d rather do it here.
Businesses have a real multiplier effect. They inject money, create jobs, increase the skill base, and provide export potential — esp. with tech like ours. Buying an existing house doesn’t do that. Startups also involve massive financial risk — unlike housing. Business risk needs to be rewarded.
This budget has had a significant negative impact on entrepreneurs and innovators. It’s soul-crushing. Yet, somehow, a new house still gets a CGT discount, but a startup doesn’t? What? Insane policy. I’m hoping wiser heads prevail and our country’s leaders have the wisdom to understand different asset classes ought to be treated differently…