Capital gains tax reforms—arrangements for innovative start-ups
Submission Date: 17 July 2026
The Law Council of Australia provided a submission to Treasury in response to the consultation paper, Capital gains tax reforms—arrangements for innovative start-ups, released on 18 June 2026 (Consultation Paper).
The Consultation Paper concerns the proposed Innovative Business CGT Concession (IBCC), which is intended to preserve, in targeted circumstances, access to a 50 per cent capital gains tax (CGT) discount for certain equity interests in innovative start-ups.
The Law Council commends the policy objective of ensuring that the Australian tax system continues to support innovation, entrepreneurship, employee ownership and long-term productive investment.
However, the Law Council considers that the proposed IBCC, as presently framed, is too narrow and insufficiently integrated with the existing employee share scheme, venture capital and CGT regimes. It is also overly complex, reliant on subjective eligibility criteria and insufficiently responsive to the practical realities faced by founders, employee shareholders and growing Australian businesses.
This submission should be read together with the submission of 9 June 2026 by the Taxation Committee of the Law Council’s Business Law Section to the Senate Economics Legislation Committee in relation to the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and related measures.1
That earlier submission raised broader concerns about the design, completeness and implementation of the proposed CGT reforms. Those concerns remain directly relevant to the IBCC because the concession is not a standalone measure. It is a targeted exception to a broader reform, which would replace the existing 50 per cent CGT discount with cost base indexation and a 30 per cent minimum tax.
The Law Council’s principal concern is that the IBCC seeks to mitigate, for a limited class of interests, adverse consequences that arise from the broader reform. It does not yet provide a coherent or comprehensive framework for the taxation of eligible shares attributed to founders, employees, early investors, venture capital funds, employee share trusts, scale-up investors or growth-stage investment.
The Law Council recognises the significant contribution of the Taxation Committee of its Business Law Section to this submission, as well as input provided by the Law Institute of Victoria.
1 Law Council of Australia Business Law Section, Submission to the Senate Standing Committees on Economics, Parliament of Australia, Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 (9 June 2026).
Last Updated on 21/07/2026
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