😈 Devil’s detail

The government’s new startup CGT concession comes with a catch that could trip up the very people it was designed to help most: founders.

Under the proposed Innovative Business CGT Concession, the innovation test that determines whether a company qualifies is assessed when shares are issued. For most founders, that point is incorporation — when the company has literally done nothing.

Thomas Linnane, a senior tax lawyer at LegalVision who advises startups and founders, tells Capital Brief that this creates a real problem.

“If the company hasn’t done anything at that stage, how can it really demonstrate all of that?” he said, referring to the principles-based criteria companies must satisfy — high growth potential, scalability, addressable global markets and competitive advantages.