Labor's unrealised capital gains tax in 'bizarre contradiction' with tax breaks for VC deals
Experts are warning the proposed tax on unrealised gains in some super funds counteracts existing ESVCLP and ESIC exemptions, creating a "bizarre" situation for early-stage investors.
Startup and VC industry experts are warning that the Albanese government's plan to tax unrealised gains on superannuation funds will create a "bizarre contradiction" with existing tax incentives designed to boost investment in Australian startups.
The proposed changes, known as Division 296 in the draft legislation, would impose a 15% tax on unrealised capital gains in superannuation funds with balances over $3 million, directly conflicting with current tax exemptions for early-stage investments.
Early Stage Venture Capital Limited Partnerships (ESVCLPs) and Early Stage Innovation Companies (ESICs), introduced as part of Australia's innovation policies in 2007 and 2016 respectively, currently receive special tax treatment, with gains generally tax-exempt when investments are sold.
However, under the proposed super tax changes, these same investments would face annual taxation on paper gains before any actual profit is realised.
