Shock 47pc retrospective change wipes out private equity’s tax break

A retrospective budget change has eliminated a tax concession that had helped leading venture capital and private equity executives in Australia build substantial personal wealth. According to the original report, the tax rate on performance fees received by fund managers has doubled to 47 per cent. The increase is a consequence of capital gains tax legislation that Treasurer Jim Chalmers pushed through parliament in late June.

Industry leaders describe the change as an inadvertent outcome of the legislation rather than a deliberate policy target. They warn that the shift will undermine investment confidence in Australia and add to political pressure on the Albanese government. The retrospective application of the change is central to the criticism, as it alters the tax treatment of returns on the basis of earlier arrangements.

Fund managers and tax advisers are lobbying for the increase to be reversed. The debate is unfolding alongside a campaign by One Nation against Labor's changes to capital gains and trust taxation, which has intensified the political dimension of the issue.

The Australian Financial Review, which first reported the story, has framed the change as a shock to the sector. Further detail on the revenue implications and the specific transitional arrangements was not available in the source material reviewed.