ONE RULE FOR THEM, ANOTHER FOR EVERYONE ELSE? — AUSTRALIANS FURIOUS OVER ALLEGED TAX LOOPHOLE THAT COULD BENEFIT A SELECT FEW
Technology start-ups and small businesses could keep access to the 50 per cent capital gains tax (CGT) discount, as Treasurer Jim Chalmers considers a targeted carve-out in response to mounting backlash over Labor’s budget.
The Albanese government is negotiating with business groups and investors – many of whom have condemned the Federal Budget property tax changes as unfair – with the start-up sector set to benefit.
The Sydney Morning Herald reports that such a carve-out would be paired with a broader expansion of CGT concessions, especially those currently granted to businesses with annual turnovers of up to $2million.
Labor is expected to raise those thresholds, opening up eligibility to larger companies.
Meanwhile, the government is preparing to soften its stance on testamentary discretionary trusts, signalling a partial retreat from the previous blanket tax rate of 30 per cent, proposed in the budget.
Changes to trusts have been one of the most controversial, with concerns it would impact deceased estates and trusts set up for those with serious disabilities.
The Coalition has labelled the change a ‘death tax’, something the government fervently denies.
Prime Minister Anthony Albanese would not reveal whether additional carve-outs were being considered during an interview with the ABC on Wednesday.
Jim Chalmers (pictured) is considering possible CGT carve-outs for businesses and start-ups
Chalmers, pictured with wife Laura, and the Albanese government is negotiating with business groups and investors – many of whom have condemned Budget property tax changes as unfair
‘All of the existing carve-outs and exemptions remain and there are four of those significant ones for small business,’ he said.
‘The taxation being based upon real gains is a sensible way forward. It’s also a sensible thing to do to treat more equally income from work.’
Later on Wednesday, Albanese told reporters that changes were necessary to the tax system despite backlash from some sectors of the community.
‘Everyone knows that young people are not getting a fair crack at a roof over their head, which is why we’re pursuing reform,’ he said.
‘Reform is always hard when it comes to tax reform – it’s the right thing to do.’
The bill hands Chalmers sweeping discretionary powers over key elements of the reforms – without needing further parliamentary approval.
Those powers mean the Treasurer can decide which assets and taxpayers fall under the new regime.
Notably, Chalmers can define what counts as ‘new residential dwellings’ and how the apportionment method applies – flexibility that enables him to refine rules even after the bill becomes law.
Speaking to the Today show last week, Chalmers rejected host Sarah Abo’s suggestion he was ‘playing god’ with the tax changes.
Anthony Albanese (pictured) would not detail what carve outs were being considered
‘This is another beat-up… It’s not unusual in tax legislation for the definitions to be settled in what are called legislative instruments,’ he said.
Chalmers also stressed Parliament retains the power to override these decisions.
Labor now faces a tough Senate fight when Parliament returns later this month and is scrambling for support by finalising concessions before it does.
The Greens are expected to demand more aggressive tax changes, while the Coalition has vowed to use ‘maximum leverage’ to delay or block reforms to both CGT and negative gearing.
Under the May budget, the government plans to scrap the current 50 per cent CGT discount and introduce indexation on most assets.
From July 2027, Australians who sell shares, businesses or farmland would pay CGT on the indexed gain at either a minimum rate of 30 per cent or their marginal tax rate, which could be as high as 47 per cent.
