Before ParliamentMoney & Tax Introduced in the House of Representatives, 27 Oct 2026

Tax cut for start-up investors, less for work electric cars

This tax bill has five parts. It touches people who invest in new companies, firms that do research and funds that back young firms. It also touches some businesses and workers who get an electric car through their job.

Official name: Treasury Laws Amendment (Tax Reform No. 4) Bill 2026

Who it affects

• People who invest in young companies: You could pay tax on only half your profit from shares you bought straight from a young company with a new idea.
• Founders and staff of start-ups: Shares you get from your own young company could get the same half-off deal.
• Firms that do research: You must spend at least $50,000 to claim, the break is bigger, and firms over ten years old lose the cash refund.
• Funds that back young firms: Your fund could put money into bigger firms and still keep its tax break.
• Businesses and investors who pay tax in parts during the year: You could choose to pay each month, or be told to if you often break tax rules.
• Workers who get an electric car through their job: Leases signed before 1 April 2027 stay tax-free. Until April 2029, new leases on cars over $75,000 get a smaller break. After that, all new leases do.

Why it exists

This is a tax bill from the Treasurer, Jim Chalmers. The Treasurer is the minister in charge of the nation's money. The bill puts in place some changes from the 2026-27 Budget. The Budget is the government's plan for money for the year from July 2026 to June 2027.

The bill has five parts. Each part deals with a different tax. Most of them are about helping new firms grow. One is about electric cars that workers get through their job.

Some of it follows a report on research in Australia from March 2026. The report was called Ambitious Australia. It said the research tax break was too complex and cost too much.

The old tax on share profits

Say you buy shares for $10,000 and later sell them for $30,000. Shares are small pieces of a company. Your profit of $20,000 is called a capital gain. You pay tax on it.

Right now, people and family trusts can often pay tax on only half the gain. A family trust is a way for a family to hold money or a business. The half-off deal is called the 50 per cent discount.

A law passed in June 2026 ends that discount for people and family trusts from 1 July 2027. This applies to things like shares and property. Here is how it will work. Say you paid $10,000 and prices in the shops have risen 10 per cent since. The law treats you as having paid $11,000. You only pay tax on the profit above that. There will also be a minimum tax of 30 per cent on gains.

Start-ups worried about this. A start-up is a new, small firm that hopes to grow fast. Founders often get their first shares for almost nothing. Say you paid $1 and prices rise 10 per cent. The law treats you as having paid $1.10. So nearly the whole sale price is taxed. The government asked for views in June 2026 and got 197 written replies.

Half-off tax for start-up shares

Part 1 brings back the 50 per cent discount for shares in some start-ups. It works for gains made on or after 1 July 2027. The 30 per cent minimum tax would not apply to these gains.

Say you put $10,000 into a new tech firm. Five years later you sell your shares for $110,000. Your gain is $100,000. You would pay tax on only $50,000 of it.

Plain shares count. So does the right to buy shares later at a set price. Some deals where you pay now and get shares later count too, if they are not loans.

You must buy them straight from the company, not from another investor. You must usually keep them for at least three years. You do not need to wait three years if another buyer takes over the whole company.

Your money must be at real risk. Its value cannot be fixed or promised. It must rise or fall with the company.

People and family trusts can use the discount. Companies, super funds and people who live overseas cannot. A super fund is a savings fund for when you retire. Those groups could not use the old discount either. A person can still choose the other way, where the price paid is raised in line with prices, if it suits them better.

Which companies count

The company must be based in Australia and less than 15 years old. It cannot be run by a company 15 or more years old. Its shares must not be for sale on a stock exchange, such as the Australian share market. Its yearly sales must be under $50 million.

Its main work must be making or selling a truly new product, service or way of doing things. The company checks this itself first. The government can later look at it.

The company must sign up with the head of the national government's industry department. It must send that person a report every year. A public list of these companies will be kept on a government website.

If a report is late, the sign-up is put on hold. While it is on hold, the company's shares lose the discount. If the report is still missing at the end of that year, the sign-up is cancelled. Then the shares lose the discount forever. The only way back is if the late report was caused by something outside the company's control.

The department head can set simple tests that, if met, prove a company's ideas are new enough. The department head can also give a company a written answer on whether it counts.

Staff, families and older shares

Founders and early staff often get shares before the company has signed up. So the company can sign up with an earlier start date. That way, those early shares still count.

Some firms give staff shares through a share plan at work. Staff can use the discount on these shares. This is true even if the plan bought the shares from someone else, and not straight from the company.

If you die, your husband, wife or the person who owned the shares with you can keep your right to the discount. The same goes for shares handed over after a break-up.

Shares bought before 1 July 2027 can also count. The company must have been under 15 years old on 30 June 2027. Its sales must have been under $50 million in the year to June 2026, or in the year it started. Its shares must not have been for sale on a stock exchange when it signs up. Shares that went on sale before 11 September 2026 are allowed.

At least half its staff must work in Australia. At least half of what it owns must be in Australia. It must have been doing new-idea work in the year to June 2026, or in the year it started.

Some people run funds that invest in young firms. As pay, they get a share of the fund's profits. Some of those profits come from selling start-up shares. That part of their pay can get the discount too.

The research tax break

Part 2 changes the research tax break. Firms that do research can claim back part of what they spend on it.

Under today's rules, a firm with sales under $20 million gets the break as cash, even if it pays no tax. Larger firms get a smaller break taken off the tax they owe.

These changes apply from the tax year starting 1 July 2028. A tax year runs from July to June.

The least a firm must spend in a year to claim goes up from $20,000 to $50,000. Money paid to some approved outside research groups can still be claimed below that.

A firm gets the better rates on its first $150 million of research spending each year. That goes up to $200 million. Above that, the break is smaller.

The break is set as a number of cents on top of the firm's company tax rate. Say a small firm pays 25 cents tax on each dollar of profit. Today it gets back 25 cents plus 18.5 cents, or 43.5 cents, for each research dollar. The bill adds 4.5 cents, making it 48 cents.

Who gets cash back for research

The sales limit for getting the break as cash goes up from $20 million to $50 million. But only younger firms can get the cash.

A firm can get cash in its first ten years. The ten years count from when it started in business or first claimed the break, whichever was earlier.

Firms doing research on new medicines or medical goods get 15 years. They must have started that kind of research within their first ten years.

Older firms with sales under $50 million lose the cash. They still get the same 48-cent rate. But it can only cut the tax they owe.

A government board called Industry Innovation and Science Australia can decide if a firm's research is mainly about new medicines. Firms can ask for that choice to be looked at again.

Firms with sales of $50 million or more get a better rate if they spend a lot on research. Today they must spend at least 2 per cent of their total costs on research. That drops to 1.5 per cent.

Only real research counts

Right now, firms can also claim for work that supports their research. This might be work that only helps the main research along. It is not research itself.

The bill ends that. Only the research itself can be claimed.

A minister can name kinds of work that are truly needed for the research. That work would count. That minister must talk to the industry minister first.

Bigger limits for venture funds

Venture capital funds pool money from many investors. They use it to buy shares in young firms. Two kinds of these funds get tax breaks under the Venture Capital Act 2002. One kind backs firms at the very start. The other backs firms that are growing.

Part 3 lifts the money limits from 1 July 2027. The government says the limits are out of date, as firms are now worth more.

Funds that back growing firms could invest in a firm with assets up to $480 million. Assets are everything a firm owns. The limit is now $250 million.

Funds that back firms at the start could put money into a firm with assets up to $80 million, up from $50 million.

The firm may keep growing after the fund buys in. The fund's profits from it stay fully tax-free until the firm has assets of $420 million, up from $250 million. Above that, only part of the profit is tax-free.

Each fund that backs firms at the start could also take in up to $270 million from its investors in total. The limit is now $200 million.

Part 3 also closes a third scheme to new sign-ups. It gave a tax break to some investors who bought into young firms. On Budget night, 12 May 2026, the government said it closed at 7.30pm that night. This bill writes that closing time into the law. Nobody was signed up to it when it closed.

Paying business tax each month

Many businesses and investors pay their income tax in parts during the year. This is called pay-as-you-go tax. This stops a big tax bill at the end of the year.

Most pay every three months. Those with yearly income of $20 million or more must pay each month. Some small ones can pay once a year.

Part 4 lets any of them choose to pay each month. Say you run a cafe and your sales go up and down. Paying monthly lets your payments follow your sales more closely.

You must tell the Tax Office before your tax year starts. For most, the tax year starts on 1 July. Say your tax year starts on 1 July. If you tell them on that same day, it is too late for that year. Monthly payments start the following July.

The Tax Office could also make a business pay each month if it has a history of breaking tax rules. That could mean paying late, not sending forms, or getting reports wrong. The bill does not set a number of times.

A business can ask the Tax Office to rethink the order within 60 days. If it is still unhappy, it can go to the Administrative Review Tribunal, which reviews government choices, and then to the Federal Court.

A business can also ask the Tax Office to drop the order later. The Tax Office must drop it, unless it still thinks the business has a history of breaking the rules.

This applies from tax years that start on or after 1 July 2027.

Electric cars from work

Fringe benefits tax is a tax a boss pays on perks they give staff, like a car. This tax is paid by the boss. Many people get a car through a lease, which is a deal to use a car for a set time. The boss sets it up, and the car is paid for out of the worker's pay before income tax.

Since 1 July 2022, electric cars under a price cap have been free of this tax. That includes battery cars and cars that run on hydrogen. The price cap is a top car value set each year. It was $91,661 for cars a boss first got in 2026-27. Other cars, such as hybrids, are not covered by this deal.

A review found the deal helped more people buy electric cars and cut pollution. It also found the cost to the budget was rising. It raised worries about how the gains were shared.

Part 5 changes the deal in steps. Car deals signed before 1 April 2027 stay tax-free until that deal ends.

For deals signed from 1 April 2027 to 31 March 2029, it depends on the car's value. A car worth $75,000 or less still has no tax to pay. A car worth more than $75,000, up to the price cap, has the boss's tax on it cut by a quarter.

For deals signed from 1 April 2029, all cars under the cap get only the quarter cut. So bosses would pay more tax on the car perk.

Say your lease ends and you sign a new one on the same car. That counts as a new deal, so the new rules apply. A minister can name cases where the old rules still apply. One example is when a deal ends for reasons outside your control.

Start date and where it is up to

Most of the bill switches on at the start of the first three-month quarter after it becomes law. But the changes only bite from the dates below.

The start-up, venture fund and monthly tax changes apply from 1 July 2027. The research changes apply from 1 July 2028. The car changes start on 1 April 2027 at the earliest, with a second step on 1 April 2029.

Laws are made by Parliament, which has two parts. They are the House of Representatives and the Senate.

The bill was brought into the House of Representatives on 27 October 2026. The House passed it on 29 October 2026. Before that vote, four members of the House put forward their own changes. They were Monique Ryan, Allegra Spender, Kate Chaney and Barnaby Joyce.

The Senate must now pass the bill. Then the Governor-General, who signs laws for the King, must sign it.

How they voted

Its journey through Parliament

Official sources

• Bill page on aph.gov.au
• Text of the bill
• Explanatory memorandum

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