The co-founder of Australian tech giant Canva, Cliff Obrecht, has expressed concerns that proposed changes to the capital gains tax (CGT) could deter entrepreneurs from launching new ventures, putting additional pressure on the Labor government to reconsider its budget reforms. Critics argue that these changes may stifle innovation and discourage the emergence of future success stories like Canva.
Government Stands Firm Amid Criticism
Prime Minister Anthony Albanese and Treasurer Jim Chalmers have stated they remain in consultation with the startup and tech sectors, but have given no indication of winding back the proposed changes or offering CGT concessions to these businesses. Shadow Treasurer Tim Wilson has claimed that the CGT changes would 'kill startups,' a sentiment echoed by several tech founders.
Canva's Perspective
Cliff Obrecht, co-founder and COO of Canva, emphasised the importance of the capital gains discount in encouraging risk-taking and innovation. 'We’ve loved building Canva here in Australia, and we want to keep seeing ambitious companies start, scale, and stay here. A big part of that is making sure Australia remains one of the best places in the world to take the risk of building something from scratch,' Obrecht said. He noted that the company is working with the government to iron out the details of the CGT changes.
Details of the Proposed Changes
The proposed CGT changes would replace the current 50% tax discount on profits with cost-base indexation, meaning tax would be applied on profits after inflation, with a minimum 30% tax rate. This has been strongly opposed by some tech founders, as early-stage startups often offer equity or stock options to employees in lieu of higher pay, and founders may be motivated by a large payday when selling their companies. The Tech Council of Australia has warned that both employees and founders could be affected.
Political Reactions
Tim Wilson described the changes as a 'war on the self-starters and small businesses,' arguing that many young Australians seek to build wealth through investing, starting businesses, or working for companies that offer equity. He called for policies that restore living standards and protect the Australian way of life. Government sources have remained tight-lipped about the consultation process, but senior sources acknowledged the concerns while noting that there is no guarantee of concessions.
Prime Minister's Defence
Prime Minister Albanese defended the changes, stating that they aim to increase housing affordability and level the playing field between young homebuyers and property investors. He clarified that the CGT changes would only apply when a business or stocks are sold, not as an ongoing annual tax, and that exemptions for small businesses would remain. 'There are campaigns being run from the right-wing parties and their allies to distort some of what’s being offered,' Albanese said.
Assistant Minister's Clarification
Andrew Charlton, the assistant minister for the digital economy, rejected claims that the government would impose a 47% tax on companies, a figure circulated in social media memes. He explained that entrepreneurs would pay tax on profits adjusted for inflation, calling it 'a fairer and a level playing field for all assets.' Frank Greef, a startup founder who created AI-generated memes on the topic, admitted in an interview that the 47% tax claim was exaggerated to gain attention.
Obrecht reiterated the sector's willingness to engage with the government: 'We don’t want to get ahead of those conversations, but we’re continuing to work constructively with government to make sure Australia remains a great place to build a global company.'
