Founder Rort-O-Meter

Presented under the guise of 'housing affordability' but reaching far beyond, proposed changes to CGT taxation under the FY27 Budget present entrepreneurs with the highest effective tax rate on startup capital gains anywhere in the developed world. The likely outcome is fewer founders building in Australia, weaker employee incentives, more companies and talent moving offshore, and a significant reduction in long-term innovation and corresponding job loss.

This app is satire, but there is a reality behind the humour. Founders and startup employees take asymmetric risk: they often leave secure jobs, earn reduced salaries and accept outsized risks in pursuit of outsized outcomes. Making outsized gains at a discounted tax rate is not the norm, but the possibility is part of what makes the asymmetric trade worth taking, and Australia is better off with more founders willing to take it. A targeted carve-out for genuine founders and employees taking long-term risk is the right answer.

What's changing

FY27 Budget reforms would replace the long-standing 50% CGT discount with a cost-base indexation regime for gains accrued after 1 July 2027. Existing gains accrued before that date are expected to retain the current treatment. Two transitional mechanisms are currently under discussion:

Market Value Method (Mark-to-Market) - uses the asset's 1 July 2027 market value as a reference point. The pre-2027 portion of the gain (cost base → 30 June 2027 value) receives the old 50% discount; the post-2027 portion (30 June 2027 value → exit) receives the new indexation regime.
Time Apportionment Method - the simplified fallback. The 1 July 2027 value is estimated by formula (linear growth from cost base to sale price), then the total gain is split pro-rata by days held before and after 1 July 2027. Pre-portion gets the 50% discount; post-portion gets indexation.

Add your information to see if you've been rorted

Cost base (A$)

Date you received the shares/options

Company value at 30 June 2027 (A$)

% of company held at 30 June 2027

Assumed company sale price at exit (A$)

% of company held at exit

Exit date

Marginal tax rate

The Rort-O-Meter

See how much you've been rorted

You made (total gain)

Current law

Tax taken

You're left with

→

Mark-to-Market

Tax taken

You're left with

Total tax rorted

+$0 extra rorting vs current law

Assumptions

Top marginal tax rate: 47% (incl. 2% Medicare levy).
50% CGT discount applies to gains arising before 1 July 2027 on assets held more than 12 months.
From 1 July 2027 the discount is replaced by cost base indexation (per BP2 2026-27, p.21).
CPI assumed at 2.64% p.a. compounded - Australia's long-term average CPI 2010-2025. Indexation runs from 1 July 2027 to the exit date.
Under Mark-to-Market, indexation runs from the actual 30 June 2027 stake value (your input).
Under Time Apportionment, the asset is assumed to have grown at a constant linear rate over the holding period; indexation runs from the implied 30 June 2027 value derived from this assumption (cost base + total gain × pre-1 July 2027 share of days).

Tax comparison

Disclaimer

This note has been prepared for novelty and general informational purposes only and is not intended to constitute legal, taxation, accounting, financial or investment advice, nor a recommendation to invest or take any action. The measures described are based on announcements contained in the 2026-27 Federal Budget and, in many cases, remain subject to consultation, exposure draft legislation, amendment and final enactment. The ultimate form and application of the measures may differ materially from the summaries in this note.

The taxation consequences of any investment depend on each investor's particular circumstances, including their residency, legal structure and holding arrangements. Investors should obtain independent professional advice tailored to their circumstances before acting on any information contained in this note. The author makes no representation or warranty as to the accuracy, completeness or currency of the information, and accepts no liability for any loss arising from reliance on it.