Smarter tax reform can unlock deeper employee ownership

Guerdon Associates recently provided a submission on the Government’s proposed changes and issues raised in its Consultation Paper of 18 June 2026 “Capital gains Tax Reforms – arrangements for innovative start-ups”.

Take the opportunity to read our submission paper which provides brief background on our firm, responds to the questions posed in the Consultation paper, and provides feedback and suggestions where we see potential requirements of employee share schemes for wider and deeper participation in employee ownership.

Key points

• The start-up concession in Division 83A of the ITAA has been narrowed to only apply to employees of ‘innovative’ start-ups. This is not defined and, we argue, need not be. Founders and employees of startups that survive, defying high probabilities of failure, should be eligible. The test is survival. Innovation and productivity are likely to be present for this to happen, and survival is easier to test for than innovation. Therefore, the concession should continue to apply to all eligible start-ups as currently defined in section 83A-33 of Division 83A of the ITAA.
• Founders of all start-ups are nearly always an employee of the start-up on no, or nominal, salary to get the business growing. Such founder/employees should not be denied the CGT concession of Division 83A as currently happens to employees with a more than 10% equity interest.
• Employees and founders of start-ups are distinguishable from venture capital and other early-stage investors, and it is not appropriate to categorise them together for the purposes of the Innovative Business CGT Concession (IBCC).
• The start-up concession in Division 83A of the ITAA was introduced to enable the business to source skilled employees with non-cash remuneration provided the start-up company met factual eligibility criteria that are easily determined.
• The start-up concession in Division 83A of the ITAA should be maintained and continue to be available to employees and the founders of all start-ups that meet the defined criteria of section 83A-33.

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