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ARTICLE · 04 JUNE 2026

Startup, Stand Down? The Impact Of CGT Changes On Defence Innovation

Corrs Chambers Westgarth
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Australia's proposed capital gains tax reforms may inadvertently undermine government efforts to strengthen sovereign defence capability and innovation. As the nation faces increasing global instability and supply chain vulnerabilities, changes to the CGT regime could discourage investment in defence-focused startups precisely when such investment is most critical to national security objectives.

AustraliaTax
Jonathan Farrer
Jonathan Farrer
Simon Mifsud
Simon Mifsud
Anton Bobenko
Anton Bobenko
Jessica Fossati
Jessica Fossati
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In an environment of increasing global instability, heightened by the recent conflict in Iran and governments globally rearming in response to the growing risk, Australia’s need for sovereign capacity and defence capability has been brought into sharper focus. Following the supply chain disruptions exposed during COVID-19, Australia continues to face challenges in local production, manufacturing capability and innovation in critical sectors. Against this backdrop, the Australian government is increasing its investment in defence. Notably, the Minister for Defence recently described funding under the 2026 National Defence Strategy (and the earlier 2024 Strategy) as representing 'the largest peacetime increase in defence spending in our nation’s history.' These efforts extend to initiatives aimed at accelerating defence innovation and supporting the domestic startup ecosystem.

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