Chalmers’ contentious CGT reforms to be scrutinised by Senate inquiry

Treasurer Jim Chalmers has tabled new legislation in the House of Representatives, advancing a suite of reforms that includes disputed changes to capital gains tax (CGT). The bill has now been referred to the Senate economics legislation committee for inquiry, with the committee due to report back on 22 June.

The announcement has intensified concerns within the biotechnology sector, which argues the unresolved CGT framework is already undermining Australia’s ability to attract global scientific talent and long-term capital. While the government maintains that discussions remain underway regarding start-up exemptions, founders warn that the lack of clarity itself is eroding investor confidence and increasing the risk of companies relocating offshore.

Under the proposed reforms, the existing 50% CGT discount on profits from the sale of assets including property, equities and businesses would be replaced with a mechanism linking tax relief to inflation.

Chalmers said the government was still consulting on the changes with start-ups where indexation is applied to a low or zero cost base. He added that any resulting exemptions would be legislated separately, describing the process as a “standard approach”.

The Coalition contends the government has grouped the CGT reforms with the Working Australians Tax Offset (WATO) and associated deductions within a single bill, alleging the move is designed to pressure the Opposition into endorsing capital gains tax changes it fundamentally opposes. It has since confirmed it will vote against the legislation.

Opposition defence spokesman James Paterson criticised the approach, calling it an “outrageous” attempt to pass “flawed” legislation.

AusBiotech CEO Rebekah Cassidy warned the CGT proposal had “potential adverse implications for investment, and attracting and retaining critical specialised talent in life sciences”.

The biotech firms typically raise multiple rounds of capital over a decade or more, meaning tax settings are embedded in every funding discussion. In the absence of a clear carve-out from the CGT changes, companies could be forced to reassess whether to remain in Australia or shift operations overseas.

Shadow Treasurer Tim Wilson was also critical of the government’s handling of the reforms, suggesting Labor had not fully grasped the implications of its own budget measures.

“We saw a footnote put in at the last minute because the government didn’t understand the impact of the CGT changes on the start-up sector and those who are seeking to grow the future of the Australian economy,” he said. “It’s consistently been revealed that the government doesn’t understand the CGT measures and how they apply to different parts of the economy.”

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