Highlights

  • Treasurer Jim Chalmers introduced the five-schedule Tax Reform No. 4 Bill on 27 October; it has not passed.
  • Schedule 1 creates a 50% CGT discount for eligible start-up equity, keeping a halving of gains after 1 July 2027.
  • Schedule 2 overhauls the R&D Tax Incentive from 1 July 2028, lifting the refundable offset turnover ceiling to $50 million.
  • Schedule 4 lets quarterly PAYG instalment payers elect monthly payments, while the Commissioner could force monthly payments on repeat non-compliers.

"The Bill provides more certainty for investors and more incentives for innovation." That was Treasurer Jim Chalmers on Tuesday 27 October, introducing the Treasury Laws Amendment (Tax Reform No. 4) Bill 2026. Founders, research-heavy companies, venture capital funds, PAYG instalment payers and electric car buyers all have something at stake. What the bill is not, yet, is law: it still needs both Houses, and the Senate numbers are unsettled.

The five schedules at a glance

Schedule 1 is a new Innovative Business CGT Concession (IBCC), Schedule 2 the R&D rewrite, Schedule 3 venture capital, Schedule 4 monthly PAYG instalments and Schedule 5 the electric car fringe benefits tax (FBT) discount.

Holding periods, fund-size thresholds and the PAYG start date are not in the Treasurer's release or speech. The "$3.8 billion" tax relief figure the government cites covers its wider package, not this bill separately.

The start-up CGT break

The IBCC would give eligible founders, employees and investors a 50% CGT discount on equity in innovative start-ups, including early investors with a low or zero cost base. Enacted law replaces the general 50% discount with indexation plus a 30% minimum tax for individuals from 1 July 2027, so the IBCC preserves a halving for qualifying equity. On the draft's terms it applies to CGT events from that date.

Several tests were eased from the September draft. The predominant-activity test drops from more than 75% to more than 50%, the intention test from five years to three, and a public register is added. The 15-year company window, three-year holding period and $50 million turnover ceiling are unchanged, with no lifetime cap.

Hypothetical example: a $400,000 gain on qualifying shares would see $200,000 enter assessable income, with tax depending on the founder's other income.

The R&D overhaul

From 1 July 2028, core R&D offset rates would rise by "up to 50%". The refundable offset would be limited to firms up to 10 years old, or 15 years for eligible biotech, medtech and therapeutic-goods research, while older firms keep higher rates through a non-refundable offset.

Claims under $50,000 would need a partnership with a Research Service Provider or Cooperative Research Centre. The government estimates young firms' R&D investment will rise by $400 million a year, and industry department consultation on the R&D definition comes in early 2027.

Venture capital, EVs and monthly instalments

From 1 July 2027, the VCLP asset threshold would rise from $250 million to $480 million, and the ESVCLP threshold from $50 million to $80 million. ESVCLP committed capital would climb from $200 million to $270 million. These are exposure-draft figures reported as unchanged.

For electric cars, full FBT exemption continues for vehicles valued up to $75,000 from 1 April 2027 to 31 March 2029. From 1 April 2029, eligible EVs get a 25% discount on the 20% statutory formula rate, and existing arrangements keep their original treatment.

The monthly PAYG option has no start date in the bill materials, though the exposure draft proposed 1 July 2027.

The Senate fight ahead

Labor controls the House but needs the Greens or the crossbench in the Senate. The Greens have threatened to withhold support for the R&D changes unless oil and gas companies are excluded from about $350 million a year in R&D tax credits. Independents Monique Ryan and Kate Chaney say the changes would "restrict access to refundable tax offsets for medical research and biotechnology companies less than 15 years old". Allegra Spender opposes the start-up incentive and CGT changes.

What to watch

No committee referral or reporting date had been confirmed at the time of writing. Proposed starts: 1 April 2027 for EV settings, 1 July 2027 for the IBCC and venture capital, 1 July 2028 for R&D, all subject to passage.