Thousands of jobs in jeopardy under Labor’s tax changes, expert warns

Thousands of potential Australian jobs are in jeopardy under Labor’s tax changes, an expert has warned as entrepreneurs look to set up shop overseas.

Labor’s plan to scrap the capital gains tax discount and replace it with an inflation-adjusted model with a minimum 30 per cent rate has sparked concern from the startup sector.

While early-stage investors, founders and employee share scheme participants are exempted, some warn the larger environment for investment will suffer.

Prolific Australian entrepreneur Leigh Jasper said many Australian founders stationed in the US were not considering bringing their operations back to Australia.

“I was in San Francisco a month or so back. There's half a dozen startups that I met with that we're looking to potentially invest into that are not coming back to Australia. They've moved over there,” Mr Jasper told Sky News Business Weekend.

“They are going to stay in the US. But I'm hearing of dozens of companies now that are just moving to the US, dozens of startups that we will lose.

“That's not just one or two founders. That's the hundreds of jobs that go with those startups.

“Should one of them become the next Canva or the next Atlassian or an A-Connect? That's hundreds, if not thousands of jobs that we lose when those startups choose to domicile somewhere else.”

Leading fund manager Geoff Wilson warned Australian investment would be hindered as the carve outs were restricted to certain types of companies.

“(Labor’s) proposed concession excludes many businesses (that) do exactly what public policy should encourage: list on the ASX, raise growth capital, employ more Australians and give everyday investors the opportunity to participate,” he said.

“A start-up should not be punished for succeeding. A company should not lose support because it grows, lists or raises capital in Australia’s public markets.”

Mr Jasper also labelled the CGT change a “complete disaster” for the startup sector as it made the nation “uncompetitive” compared to global peers.

“In the last 10 years, we've seen enormous strides in Australia being able to build local startups to build a great innovation economy,” he said.

“But unfortunately, I think that that progress has now been completely stalled and risks going backwards as startups pick up and move to the US.”

Gilmour Space CEO Adam Gilmour said the tax changes weighed on his preference to list on the Nasdaq rather than the ASX in Australia.

“We think there's a lot more space-focused and space-educated investors in the US,” Mr Gilmour told Business Weekend.

“We are looking at a US listing and we're also very concerned about the recent capital gains tax changes in Australia that we think will sap a lot of the retail investor interest into stocks in Australia.

“We think it's going to be very nervous to be able to list on the ASX and it's better for us to list on an American stock exchange.”