Australia to Introduce New Startup Tax Legislation

The federal government plans to table tax reforms to support early-stage investments and boost national research spending.

Updated on Oct. 23, 2026 in Startups

Isometric editorial illustration featuring stacked geometric blocks and structural conduits, representing business capital investment into the research and development sector. — The Australian federal government will introduce new tax legislation in late October 2026 to increase startup research and development investment by $400 million annually. AI Illustration. Upload story photo >

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The Australian Treasurer will introduce new startup tax legislation to parliament during the week of 26 October 2026. This package includes capital gains concessions and venture capital incentives designed to increase R&D investment by $400 million annually.

Why it matters

These reforms aim to redirect domestic investment toward productive businesses and capture greater value within the nation's artificial intelligence supply chain. By adjusting investment thresholds, the government intends to foster growth among young, research-intensive firms.

The revised Investment Benefit Capital Concession (IBCC) removes the previous $10 million lifetime cap and extends company eligibility from 10 to 15 years. Qualifying early-stage investments will now receive a 50% discount, while the minimum share holding period is reduced to 3 years.

The players

Australian Treasurer

The Treasurer is the federal government official responsible for the management of the economy and the development of national fiscal policy.

The details

The proposed changes include modifications to the Research and Development Tax Incentive and an expansion of Early Stage Venture Capital Limited Partnership (ESVCLP) fund size limits from $200 million to $270 million. These adjustments follow a consultation period that concluded in September 2026, with the government also planning to utilise the National Reconstruction Fund for AI industry development.

Exposure drafts for the tax legislation were released in September 2026.
The Treasurer delivered a speech at the A50 Forum on 23 October 2026.
Legislation is scheduled for introduction to parliament during the week of 26 October 2026.
Proposed ESVCLP fund size limit increases take effect in July 2027.
Proposed Research and Development tax changes are set for introduction in July 2028.

Market Landscape

This legislation builds upon the framework established by the National Reconstruction Fund to strengthen the national AI industry. By aligning tax incentives with these broader capital programmes, the government seeks to shift market dynamics in favour of long-term technological competitiveness.

Early-stage investors may benefit from significant capital gains concessions and a 50% discount on qualifying investments under the new framework. These tax changes aim to lower the barriers for startup growth, potentially increasing the availability of venture capital for emerging local firms.

The takeaway

These tax reforms represent a significant shift in how Australia supports its innovation ecosystem by targeting longer-term investment horizons. Entrepreneurs and investors should review their current share holding structures to ensure they meet the new three-year minimum eligibility criteria.