Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026
Dr RYAN (Kooyong) (20:01): The Council of Small Business Organisations Australia has advocated that eligibility thresholds should increase from $2 million in aggregate annual turnover to $10 million and that businesses should be eligible if they have under $12 million in net capital assets, not the current $6 million. I support an increase in eligibility thresholds for small businesses, and I support indexation of those thresholds in line with CPI.
The tech and startup sectors have also raised legitimate concerns. Startups are job creators in Victoria. Companies with fewer than 50 employees account for about 39 per cent of private sector jobs.
Small businesses account for almost half of private sector jobs in Victoria, and Kooyong has 18,000 of them. A tech founder in my electorate wrote to me to explain that the gain from startups isn't passive; it's the result of years of risk and of reinvestment. A small-business owner wrote, 'The reward for years of risk and hard work is being diminished at the point of exit.' Founders and early employees who take equity in lieu of higher salaries are in a fundamentally different position to passive property investors.
Capital gains tax reform that makes no distinction between a person who holds an investment property for tax minimisation purposes and a founder who's built a company from nothing and employed Australians in that process is not well-designed tax reform. I welcome the government's commitment to consultation on the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, but that consultation should have occurred before we undertook this debate.
In recent days I've heard from Kooyong residents concerned about the impact of this bill's changes on foreign resident GST requirements and on investment in renewables and other infrastructure. I've heard from founders of a startup aimed at democratising access to medicine development capability who have proposed a schedule for zero capital gains tax on qualifying early stage equity in exchange for Australian jobs, Australian capability and Australian incorporated companies.
These are the sorts of concerns that the government should have been considering in recent weeks, not after the legislation is rammed through this parliament this week. The working Australians tax offset will provide up to $250 a year for Australian workers who are earning labour income, and the $1,000 instant deduction for work related expenses will benefit about 6.2 million workers.
More than a quarter of those beneficiaries will be aged under than 30, and that's real cost-of-living relief for younger workers. But peak bodies have consistently recommended that that $1,000 threshold be indexed to CPI or reviewed every three to five years to ensure that it maintains its real value over time. The treatment of testamentary trusts by the government has generated some very distressing correspondence to my office.
These trusts are, for many families, the primary mechanism for protecting vulnerable people: children with disabilities, dependants who can't manage their own financial affairs, individuals in complex or difficult circumstances. One constituent wrote to me, 'Testamentary trusts exist to protect vulnerable people, not to avoid tax'. Another said, simply, 'Why remove a key way to care for those who cannot support themselves?' The exemptions announced to date protect special disability trusts and pre-existing trusts, and they carve out some income for vulnerable minors.
But they leave vulnerable adults without clear protection. The government has to provide some assurances that appropriate extensions will be included in subsequent legislation. I support the principle and the purpose of the CGT and negative gearing reforms as they apply to housing.
I will work constructively with the government and with other colleagues, as we receive more detail of this legislation, to improve the treatment of younger investors who are trying to build modest wealth, the application of these changes to non-property assets and business gains, the protection of testamentary trusts and to work towards indexation of deductions and, ideally, of tax brackets more broadly.
A month-long legislative process for changes of this magnitude and complexity is manifestly inadequate. I and others have advocated for these bills to be referred to the House Standing Committee on Economics. I'm glad they've now been referred to the Senate Economics Legislation Committee, but submissions to that process close in five days.
Legislation of this significance deserves proper scrutiny. The committee's proper findings should be used to genuinely shape the design of the implementing legislation, particularly around the carve outs for start-ups and new businesses, the thresholds for small businesses and the treatment of non-property assets. Tax reform is hard.
It's hard because it demands distributional choices. It's hard because it will always generate fierce opposition from those who benefit from the status quo and because its costs and benefits fall on different people at different times. That difficulty is not a reason to avoid reform, but it is a reason to do reform well.
Australia's housing crisis, its productivity challenge and its intergenerational inequity are real and urgent challenges. I was elected to represent Kooyong on a platform that included addressing those issues, amongst others, and I'm committed to that. But reform which is done poorly does more than fail; it undermines the case for future reform.
The choices that governments make matter. That's why it is my hope that this legislation won't become this government's WorkChoices—their 'TaxChoices'. I hope that the government will work with the crossbench and with businesses to improve these bills, and I move amendments as circulated in my name: That all words after "the Government's" be omitted with a view to substituting the following words: "proposed reforms have been questioned by peak small business bodies; (2) the Council of Small Business Organisations Australia has called for modernising the small business capital gains tax concessions, specifically an increase in the eligibility threshold to include businesses with annual turnover under $10 million and net capital assets under $12 million; and (3) the Government should: (a) increase small business eligibility thresholds for annual turnover and net capital assets; and (b) index eligibility thresholds annually in line with the consumer price index".
The DEPUTY SPEAKER ( Mr Georganas ): Is the amendment seconded? Dr Haines: I second these amendments and reserve my right to speak.