A coalition of Australian startup founders under 40 has launched an open letter to Prime Minister Anthony Albanese, calling for a rethink of the government’s planned capital gains tax reforms outlined in the 2026 budget, which they claim threaten the future of homegrown businesses.
- Founders say CGT changes risk stifling startup investment and innovation
- The planned reforms replace the 50% CGT discount with a cost-base indexation model
- Campaign highlights unique pressures on young entrepreneurs competing globally
What happened
In response to Labor’s 2026 federal budget proposal to modify capital gains tax rules, a group of Australian founders and business leaders under 40 has issued an open letter to Prime Minister Anthony Albanese. The letter specifically calls out the abolition of the longstanding 50% CGT discount on assets held for more than a year, to be replaced by a cost-base indexation system, as a harmful change to the startup ecosystem.
The signatories include notable tech entrepreneurs from companies such as me&u, Bastion, Cyber Revolution, and Linktree. They argue that while they support reforms aimed at improving housing affordability, the extension of CGT changes to shares and business ownership will disproportionately penalize young founders who are building companies, investing in ventures, and generating employment across the economy.
Why it matters
The founders emphasize that startups and small businesses are already challenged by Australia’s geographic isolation and global competition. The proposed tax changes could increase capital gains tax rates from the current effective 23.5% to near 47%, dampening incentives for founders and investors to take risks or reinvest in local ventures. This may signal to ambitious entrepreneurs that Australia is not supportive of their growth ambitions.
Beyond the tech sector, the letter frames the potential economic impact across all industries reliant on growth and investment capital. Many startup advocates and political opponents warn that these reforms might result in a talent and investment exodus, with equity schemes and employee ownership arrangements becoming substantially less attractive, thereby weakening the country’s startup ecosystem.
What to watch next
The open letter fuels ongoing backlash against the Labor government’s CGT proposals, which has also sparked political counter-moves. NSW shadow ministers and federal opposition figures have mobilized campaigns and petitions under hashtags like #StopTheTechTax, pledging to repeal the reforms if elected. Monitoring government consultations and possible policy adjustments will be critical as stakeholders push for exemptions or tailored treatments for startups.
Observers should also track responses from venture capitalists, startup advocacy groups, and international competitors, as well as any shifts in investment patterns. How the government balances housing affordability targets with sustaining a vibrant startup ecosystem will shape the landscape for Australian entrepreneurs in the coming years.