This opinion piece was originally published in the Australian Financial Review on the 19th of May, 2026.
Dear founders, the government now wants half your start-up
Doubling the capital gains tax rate for founders and employees in Australia makes it the highest in the world, at the precise moment we say we want a globally competitive technology sector. The signal to ambitious founders is unambiguous: go build your company somewhere else.
I’ve spent the past six years helping the team at LaunchVic improve the competitiveness of the local start-up sector, and this single policy change destroys all that work.
Most of all, it’s the next wave of start-ups I worry about. Young businesses are the engine of Australian employment. Treasury and ABS analysis have consistently shown that firms less than five years old generate the majority of net new jobs in the economy.
The Tech Council of Australia now puts technology jobs at 935,000 and says the sector is on track to overtake mining as Australia’s third-largest industry. The companies creating these jobs, such as Atlassian, Canva, Airwallex, Employment Hero and Aconex weren’t founded by tax planners.
They were started by people willing to take a decade of personal financial risk for a shot at building something material that contributes to the Australian economy.
Right now, Australia’s regime is generally competitive, with founders paying 23.5 per cent if shares are held for more than 12 months. This aligns with the US and the United Kingdom, where long-term gains are taxed at about the same rate.
“Every technology hub we compete with, for capital and for talent, would tax a founder’s life’s work at less than half what Australia would.”
Remove the discount here, and our effective rate jumps to 47 per cent. Every technology hub we compete with, for capital and for talent, would tax a founder’s life’s work at less than half what Australia would. And some such as Singapore, Hong Kong and New Zealand at zero.
The defence of these proposals usually rests on the idea that founders should “pay their share”. They already do, and most are happy to. I was one of them. The assumption is that they have to pay it here. They don’t.
There is an honest objection to all of this: that founder equity is income in disguise, dressed up as capital. It is not. A PAYG worker doesn’t carry a decade of unhedged single-stock risk, and their wages aren’t eroded by inflation without indexing. The discount compensates for both. Remove it and what you’re really taxing is the willingness to take that risk in the first place.
The reality is jobs will vanish, equity wealth won’t recycle into new start-ups and ASX listings and talent pools will erode. The flywheel depends on talent staying and building locally. When restrictions tighten, talent relocates. Engineers who might have joined Canva now work for US tech giants, earning US salaries.
I’m not arguing this abstractly. I co-founded Aconex, sold it in 2018, paid the CGT, and would do it again. I reinvested most of the proceeds back into Australian start-ups and started Firmable in Melbourne. My partners at Glitch Capital, Australia’s founders fund; Sam Kroonenburg, founder of A Cloud Guru and now Cuttable; Geoff Tarrant, Payapps’ co-founder; and Aconex’s Rob Phillpot, have done the same: sold, paid tax, reinvested and started again here. Nearly all our investors have as well.
The question is whether the next generation would make the same choice. I’m not sure I would.
So what does pro-innovation and jobs policy look like?
First, peg the regime to the markets we compete with. The United States, the UK, Singapore, Israel and Canada are the reference set.
To address revenue concerns without harming the ecosystem, not all capital gains should be treated equally. Calibrated solutions – such as a lifetime cap, a holding-period uplift, extending start-up tax incentives and a carve-out for founder and employee equity – could be implemented.
Finally, to scale, venture-backed firms must hire engineers, managers and salespeople. Most funding goes into local jobs. At Firmable, we’ve hired more than 90 people in less than two years and are expanding our team. Equity enables us to hire talented staff. Remove it and hiring will drop or shift offshore.
Australia is at a crossroads. It can develop a competitive tech sector and boost productivity, or see its tax base shrink as companies move abroad. The government and founders should be aligned, but the treasurer must remember that capital and entrepreneurs are mobile, and the government taking a super-sized chunk of a founder’s work is the last thing they want.
