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Joseph Daoud, founder of It’s Simple Finance, has spent more than $17,000 on billboards throughout the capital’s airport protesting the federal government’s proposed changes to capital gains tax (CGT).
The campaign is aimed at parliamentarians flying in for sitting week, as debate continues across the small business sector about the impact the federal budget’s reforms could have on entrepreneurs, investors, and small- to medium-sized enterprises (SME).
“I knew we had a small window to get their attention before these changes become reality,” Daoud said.
“I wanted to do something impossible to ignore. That’s how the billboard campaign came about. We self-funded the campaign to put these messages directly in front of decision-makers arriving in Canberra.”
What’s in the changes?
While some measures in the federal budget have been welcomed by SMEs, including making the $20,000 instant asset write-off permanent and extending loss carry back provisions, the proposed overhaul of CGT has sparked backlash.
Under the proposed changes, the government plans to replace the current 50 per cent CGT discount with the pre-1999 inflation indexation model, alongside a 30 per cent floor on capital gains.
The changes would apply to CGT assets held by individuals, trusts, and partnerships.
For many business owners and start-up founders, particularly those with low-cost shares that later become highly valuable, the reforms could significantly increase the amount of tax paid when selling a business.
The budget also proposes a minimum 30 per cent tax on the income of discretionary trusts, a structure that around 350,000 active SMEs currently operate through.
Business owners react
Critics said these measures could reduce incentives for Australians to invest, build businesses, or take equity in growing companies.
Daoud said the proposed reforms send the wrong message to entrepreneurs and business owners already operating in a difficult environment.
He also warned the changes could make it harder for small businesses and start-ups to attract talented workers, particularly in industries where employees often accept equity or shares in place of higher salaries.
“Like many entrepreneurs, I took a risk on myself. I sacrificed stability, worked long hours, reinvested everything back into the business and focused on building something meaningful,” he said.
“What concerns me about these reforms is the message they send to people thinking about doing the same thing. What incentive do Australians have to put their neck on the line, build businesses, employ staff and contribute to the economy if success is increasingly penalised?”
The broader reaction among business owners has also been largely negative.
In a survey of more than 200 brokers conducted by SME lender RedZed, half said their small-business clients felt either somewhat or very negative about the budget, while only 36 per cent reported a somewhat or very positive reaction.
The budget has since sparked a series of viral social media posts, beginning with LoanOptions.ai founder and CEO Julian Fayad, who used AI-generated images of Prime Minister Anthony Albanese asleep at the office and celebrating with the LoanOptions.ai team.
In the posts, Fayad jokingly described the Prime Minister as a “co-founder” of the business because he would effectively be “giving him 47 per cent equity”.
The reforms have also drawn criticism over what some see as a lack of consultation with business owners.
Speaking on a live stream hosted by Broker Daily sister brand Property Buzz, Momentum Media director Phil Tarrant said the budget reflected a lack of “real world experience about running a business in Australia”.
“A lot of their decision making is built around their experience. And they’ll say they’re connected and engaged with businesses, but few of them really have ever done payroll at the end of the month. Few of them have ever paid a BAS bill, or had to do GST,” he said.
Government response
Albanese has said the first bill to implement the CGT and negative gearing reforms will be introduced to the House of Representatives this Thursday (28 May), alongside key personal tax measures.
A second tranche of legislation dealing with exemptions and consultation outcomes is expected later this year.
While the budget initially flagged potential exemptions for the tech sector, Albanese later indicated the carve-outs could extend more broadly across the economy, including small businesses.
He said adjustments to Labor’s proposed CGT changes “would not just be confined to the tech sector”.
“There’ll be a policy position paper for consultation produced as well after the first round of consultations that was all foreshadowed there on budget night,” he said.
“Treasury are going about consulting, not just in tech, but consulting with the Council of Small Business Organisations, for example, Australian Chamber of Commerce and Industry, the Tech Council.”
Daoud said the proposed carve-outs were “a step in the right direction” but noted the concerns extended well beyond the tech sector.
“The reality is these reforms impact a much broader group of Australians,” he said.
“I don’t believe increasing taxes and pressure on businesses that are already struggling is going to solve our economic issues. In fact, I think it risks making them worse.
“While tweaks may help at the margins, I think the bigger issue is making sure Australia remains a country where people are rewarded for taking risks and building something valuable.”
[Related: SMEs under pressure as arrears hit 6-year high]
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