# Tax reforms to support innovation and investment

Date: 27 Oct 2026
Released by: Jim Chalmers, Treasurer

## MediaRelease.co Summary

Treasurer Jim Chalmers has introduced the Treasury Laws Amendment (Tax Reform No. 4) Bill 2026, which establishes an Innovative Business CGT Concession so early investors in innovative start-ups receive a significant discount on future capital gains. The Bill retargets the Research and Development Tax Incentive from 1 July 2028 towards core R&D, especially by young firms, and expands venture capital tax incentives from 1 July 2027. It builds on $3.8 billion in tax relief for businesses and start-ups.

## Original release

The Albanese Government is today introducing legislation to better incentivise innovation and investment and grow our economy. This Bill is all about supporting businesses and start‑ups, backing more research and making the tax system more sustainable. Our reforms will mean that for Australians looking to invest and grow their wealth, the concessions in the tax system are targeted at starting a new innovative business or investing in a new build. They will encourage more entrepreneurship and deliver more certainty for investors. The Bill builds on the $3.8 billion in tax relief we are rolling out for businesses and start‑ups through our ambitious tax reform package. The Treasury Laws Amendment (Tax Reform No. 4) Bill 2026: - Establishes the Innovative Business CGT Concession (IBCC), which will mean early investors in innovative start‑ups that begin with a low or zero cost base still receive a significant discount on a future capital gain. - Better targets the Research and Development Tax Incentive (R&DTI) from 1 July 2028 to better incentivise additional business R&D, especially by young firms. - Expands tax incentives for venture capital from 1 July 2027 to help unlock patient capital for young, expanding firms. - Provides business taxpayers with flexibility to report and pay their Pay As You Go (PAYG) instalments monthly to better reflect real‑time business activity. - Adjusts the settings for the electric car discount to ensure it remains fiscally sustainable and provides more targeted support for the shift to more affordable electric vehicles. Businesses will remain eligible for the IBCC provided their main activities relate to innovation, with additional flexibility in the legislation to support firms as they grow and scale. The Department of Industry, Science and Resources is continuing to finalise safe harbour arrangements to provide investors with certainty about the innovation requirements. The reforms to the R&D Tax Incentive better focus the program on core R&D activities that are experimental and contribute to the development of new knowledge, with more generous support for these activities. We are making the R&D Tax Incentive easier to claim, with the previous requirement to separately document each supporting activity replaced with an increase to the incentive for core R&D. We are also providing flexibility to modernise the R&D definition over time to keep pace with technological and market progress, by allowing activities that are integral to conducting core R&D to be designated for the R&DTI by legislative instrument. The Department of Industry, Science and Resources will do further consultation on this in early 2027, responding to industry feedback on areas like clinical manufacturing and other forms of specialised technology development. The legislation also increases the thresholds for existing venture capital incentives from 1 July 2027 to help unlock patient capital for young, expanding firms. Venture capital investors will also benefit from the IBCC where they invest in eligible companies, including where returns are paid as carried interest. The Government thanks the many start‑ups, small businesses, researchers, investors and other stakeholders who have contributed to the development of these reforms. We will continue to consult with stakeholders on further tranches of legislation and legislative instruments as we finalise the implementation of our tax reform package. The Albanese Labor Government’s tax reform agenda is making it easier for Australians to buy their first home, cutting taxes for workers, and rebalancing the tax system and delivering a better tax system for business is a central part of that.

## Key details

- Issued by: Jim Chalmers, Treasurer
- Published: 27 Oct 2026
- Publisher country: Australia
- Subject country/region: Australia

Original source: https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/tax-reforms-support-innovation-and-investment
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