Startups may be able to claim greater tax concessions than initially announced in the federal budget as the government grapples with blowback to its economic reforms.
Treasurer Jim Chalmers is in talks with businesses about allowing startups to keep a John Howard-era 50% discount on capital gains tax, Nine newspapers reported on Wednesday.
The carve-out would address a backlash from businesses unhappy with the government’s plan to remove the discount and replace it with an inflation-based tax rate.
But Prime Minister Anthony Albanese would not reveal whether additional carve outs were being considered to the tax changes.
“All of the existing carve outs and exemptions remain and there are four of those significant ones for small business,” he told ABC TV.
“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.”
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Mr Albanese told reporters in Melbourne later on Wednesday 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.”
Treasurer: CGT concerns ‘legitimate’
Treasurer Jim Chalmers
Dr Chalmers previously flagged “legitimate” concern from small business as something he expected to discuss in consultation.
Announcements about carve outs are expected ahead of the next sitting fortnight of parliament at the end of June, following a two-day inquiry into the bill which many business owners have deemed rushed.
The prime minister said views being brought forward from the inquiry, which begins on Monday, will be considered.
While the Greens are expected to pass the bill relatively quickly, the coalition has indicated it may hold out on approving changes to the National Disability Insurance Scheme, which is now with the Senate, in exchange for further consultation.
In a submission to the inquiry, the Australian Chamber of Commerce and Industry said it was disappointed with the proposal.
“A large part of this extra burden will fall on business investment, and the negative response of the business community naturally corresponds to this heavy new penalty,” the submission said.
“The increase in tax will have a sustained and significant impact on business investment, which will flow through to productivity growth. It runs counter to the government’s stated priority to lift productivity.”
The chair of Wilson Asset Management, Geoff Wilson, said the tax changes would make Australia a less attractive option for investment.
“The technical flaws in the legislation amplify these effects and risk causing lasting damage to productivity, entrepreneurship and long-term economic growth,” he said in a submission.
AAP
