Accidental Roulette: How Canberra is creating a Catastrophic Asset Bubble on an already broken Start-up Ecosystem.

Inzenius was a start-up taking on the risk of inventing, designing, and developing its best-of-breed Rostering-to-Payroll system. The system has a patent on its design and code, bringing its unique Rostering and Payroll software into an all-in-one-system.  

Inzenius  broke through the commercialisation phase with businesses between 60 and 6,000 employees across Australia and New Zealand  currently using the Australian-invented, built, supported, flexible, Fair Work-compliant, automated, award-winning interpreted rostering and payroll system

Inzenius beats the best with this reference from Incognitus, an Australian company operating worldwide, with Inzenius as the Rostering-to-Payroll function of its SAP ERP ecosystem.  “ Here we are now with, not only a better overall SAP/Inzenius system that is now delivering up to a 70% reduction in data duplication and entry across a number of systems in payroll processing time and effort; we have achieved additional improved functionality over all.” Grant Summers, CFO, Incognitus

 “We are calling on the government to look past short-term budget fixes, listen to the warnings, and work with the industry to keep Australian innovation in Australian hands!” “Talk about a bad deal! The people putting in the sweat equity get hit with a massive tax bill, while passive check-writers get off tax-free.” Simon Horne Angel Investor Ecosystem Builder Founder

Try Inzenius out with the free sample for salaried staff, the Better-Off-Overall-Tester (BOOT), on the Inzenius web landing page at www.inzenius.com.

Don’t Change the CGT discount  Regime for Aussie Inventors and Investors

If such a CGT regime had been in place when Inzenius embarked on its adventure, we would have begun our journey in another country.

Inzenius’ IP and business currently remain in Australia, but with this change in the environment, we would see the other HRM and Payroll products move to other jurisdictions with such punitive tax treatments for inventors and their initial investors.  

 

Simon’s article published on LinkedIn

 

Let’s talk about the federal government’s new plan to scrap the 50% Capital Gains

Tax (CGT) discount. On paper, it sounds like a simple way for the government to pocket some extra cash. But here is the catch: by treating fast-growing tech startups the exact same way as passive assets like real estate, this policy is going to cause some serious, accidental damage!

Instead of keeping the economy steady, this tax shake-up is set to trigger a massive wave of state-sanctioned financial speculation through the Early-stage Innovation Company (ESIC) framework. In plain English, it’s going to nudge regular, everyday investors into highly volatile bets without any safety rails. At the same time, it’s going to wreck our country’s engine for new ideas, forcing Australia’s brightest minds and best intellectual property to pack up and move overseas.

This policy is majorly screwed up. The Treasury is treating long-term, high-risk investments in new technology like they are just short-term, lazy bets on the stock or housing market. But tax discounts aren’t just sneaky loopholes; they are built-in tools designed to help offset the massive risks of backing a brand-new business. Stripping them away sends a clear message: Australia is giving up on becoming a modern, smart economy.

The Inflation Trap and the “Accidental” Rich Investor

The real, serious trouble starts where tax laws meet outdated rules. Right now, you can be labelled a “sophisticated” investor if you have $2.5 million in assets or make $250,000 a year. Sounds like a lot, right? Well, these limits haven’t changed in over twenty years! Because of inflation, a normal suburban couple with a paid-off home in Sydney or Melbourne is now legally a “sophisticated” investor.

With capital gains taxes soaring up to 47% on normal investments, people aren’t just going to sit on their cash—they are going to look for a way out. To avoid those massive tax bills, lots of “mum and dad” investors will feel forced to jump into the riskiest end of the pool: early-stage startups. Why? Because under current rules, the ESIC framework offers a sweet 20% tax offset and a 10-year tax holiday on capital gains.

But here is the scary part: startups are incredibly risky, and most of them don’t make it! Funnelling everyday retirement savings into high-risk startups just to avoid tax is a terrible idea. It’s a government-made bubble waiting to burst.

When people invest just to beat the tax man rather than to support a great product, the whole market gets messy. We’ll end up with a fragile startup scene funded by people who don’t understand that it takes years to get money back, or that they might lose every cent they put in!

Running Without Safety Rails

To make things worse, this rush of cash is happening just as our financial guardrails are failing. Back in February 2025, a parliamentary committee looked closely at this exact danger. Their big recommendation was simple: update the law so that being a “sophisticated” investor is about what you actually know and your real-world financial experience, not just how much your house is worth!

But the government didn’t listen, and the gates are still wide open.

Instead of fixing these basic rules, Canberra is leaning into top-down, bureaucratic control. It is the signature move of a government who failed to realise that The Communist Manifesto failed because its core predictions about capitalism’s collapse and the rise of a classless society did not align with actual historical and economic development. They forget that Australia’s classless society was designed by its people and not imposed on them by their government. Canberra has fatally confused this organic, cultural egalitarianism with a mandate for centralized control, treating a shared belief in a “fair go” as if it were an open invitation for state-planned social engineering.

They love to set up hand-picked advisory boards stuffed with corporate executives, academics, and career bureaucrats who have never actually written a personal check to support an early-stage startup. These detached, “expert” advisory panels are the ones whispering in the Treasury’s ear, suggesting we micromanage innovation through rigid councils and strict short-term revenue targets—like we saw in the flashy new “Ambitious Australia” report.

But true breakthroughs are messy and non-linear. You can’t run deep-tech or medical research by a bureaucrat’s spreadsheet, and you certainly can’t expect realistic policy when the government’s chief advisors have absolutely no “skin in the game”!

Because we don’t have the right leadership, educational, and legal guardrails in place, the market is filling up with investors who have the money on paper but absolutely no clue how to price risk or research a startup. That is a recipe for trouble.

This lack of knowledge doesn’t just hurt the investors; it hurts the startups too. Unlike seasoned professionals, retail investors who are just trying to dodge taxes often get stressed out. They want quick payouts, they panic when things change, and they can’t help the business grow. Instead of helping a young company soar, they end up holding it back.

The Kiwi Escape Route

Here is the ultimate irony: while this new tax setup pushes plenty of cash into startups, it also scares away the actual builders!

By getting rid of the general CGT discount, the government is penalizing hard work. While passive investors get to enjoy tax-free status, the active creators—the founders, co-founders, and tech wizards working hard for company shares—face full tax rates of up to 47% when they finally sell.

Talk about a bad deal! The people putting in the sweat equity get hit with a massive tax bill, while passive check-writers get off tax-free.

But guess what? Builders are smart, and they can work from anywhere. When faced with a massive tax penalty at home, they will just pack up and move to New Zealand, where there is no general capital gains tax on company shares!

Moving a business across the ditch is incredibly easy. A promising Aussie startup can simply set up a parent company in New Zealand, move its intellectual property over, and do all its future hiring and growing over there.

Australia is left with nothing but empty paperwork, while New Zealand gets the intellectual property, the high-paying tech jobs, and all the global profits. We are basically paying for the early research with Aussie tax credits, only to hand the profitable final stages to another country on a silver platter!

Real Business vs. Playing the Pokies

This policy failure points to a bigger issue in Aussie culture: the idea that a good investment shouldn’t have any risk, and that trying something new is just “gambling.”

In Australia, we happily subsidize passive wealth, like buying residential investment properties. But we treat people trying to build life-saving medical gear or cool new software with massive suspicion!

Startups don’t work like blue-chip stocks. In the startup world, risk isn’t a mistake—it is the whole point! If we punish the wins but leave founders to carry all the losses on their own, no one is going to start a business anymore.

Instead of building high tax walls, we need to teach people how to invest safely. Programs like the Angel Loop Early-Stage Investment Course do exactly that. They teach everyday investors how to join forces in syndicates, spread their risks, and learn from experienced lead investors. That is how we turn speculative cash into smart, patient support for Aussie business.

Standing Up for Aussie Tech

At Angel Loop, we aren’t just sitting back and watching this happen. As a public-benefit trust, our network manages a $10 million portfolio of active tech assets across 12 regional hubs, and we are already seeing things grind to a halt. Deals are freezing, and top talent is getting ready to leave the country.

The impact on regional Australia is going to be brutal. Outside of Sydney and Melbourne, regional startups rely almost entirely on local angel networks to get off the ground. Scrapping the CGT discount could wipe out over a decade of hard work building up regional tech, pushing all the best opportunities back into the big cities.

The tax code needs to work together as a coherent system. Making rules that drive our brightest minds overseas is a terrible deal for the public and a massive blow to our economic future.

We are calling on the government to look past short-term budget fixes, listen to the warnings, and work with the industry to keep Australian innovation in Australian hands!

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