Australian tax changes push startups to move offshore early
Tax changes push some startup founders to move overseas before seeking capital.
Several Australian startups are moving their corporate base offshore earlier than before. Tax law changes are a key driver.
Once a startup raises capital and builds value, moving overseas becomes complicated. Restructures can trigger capital gains tax bills.
These bills go to founders and employees who haven't actually been paid yet. Phantom tax is the term for this problem.
Lawyers say founders now have a reason to move early. A common tactic is the Delaware flip.
This puts a US parent company above the Australian business. Around a quarter of startup clients taking US investment end up moving.
The government has proposed an Innovative Business CGT Concession to help. But lawyers say it does not fully solve the phantom tax problem.
- around a quarter
- Clients who relocate after US investment
- Delaware
- Common relocation destination
- Richard Pringle, Viridian Lawyers
- Lawyer source
Why it mattersThe tax structure pushes homegrown startups to give up Australian residency. They move their talent and tax payments offshore before they scale.
AustraliaAustralia risks losing startup founders and the jobs and innovation they create, as tax settings make staying local more costly than moving to the US early.
✓ Claims checked against the source and corrected before publish. checked 3 h ago
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