Fintech Australia Says the Tax Plan Misses the Sector
FinTech Australia is pushing back against Treasury’s proposed Innovative Business Capital Gains Tax Concession, warning that the plan could shut out the very startups it is supposed to help.
The industry group said the current design does not properly fit financial technology companies. That matters because fintech startups are not simple software businesses operating in a clean, low-cost environment. Many deal with licensing, compliance, banking partnerships, capital-heavy product development, long sales cycles and strict regulation before they can scale properly.
In its submission to Treasury, FinTech Australia made 10 recommendations to reshape the proposed concession. The group argued that fintech should be treated more like biotech, where businesses often face high upfront costs, long development periods and serious regulatory pressure before returns arrive.
The Big Concern: Most Fintech Startups May Not Qualify
The warning from FinTech Australia is fairly blunt. If the concession goes ahead as currently drafted, the group believes most fintech startups could be left ineligible.
That would be a strange outcome for a policy designed to support innovation.
The issue is not only whether a company qualifies today. It is whether founders, employees and investors can know with confidence at the time they make decisions. Startups raise capital, issue shares, hire people and offer employee equity long before tax outcomes are tested years later.
FinTech Australia wants eligibility to be clearer from the start, not something companies discover after the fact.
Founders Want Certainty, Not Guesswork
One of the group’s key requests is for more objective eligibility tests. In simple terms, fintech companies want rules they can actually use.
A vague or subjective innovation test may sound flexible, but for startups it can create the opposite effect. Investors do not like uncertainty. Employees weighing up equity packages do not like uncertainty either. Founders certainly do not want to build around a concession that might disappear once the company is reviewed later.
FinTech Australia has also asked Treasury to introduce a binding eligibility determination before shares are issued. That would allow companies and investors to confirm whether a share issue qualifies instead of waiting years to find out.
It is a practical request. Not glamorous, but important.
Regulated Fintechs Could Be Penalised
Another concern is how the proposed concession interacts with Venture Capital Limited Partnership and Early Stage Venture Capital Limited Partnership exclusions.
FinTech Australia said those exclusions should be reviewed so fintech businesses are not blocked simply because they operate in regulated financial markets. That point matters because regulation is not a side issue in fintech. It is often part of the product itself.
Payments, lending, wealth, digital assets, open banking, insurance technology and embedded finance all operate in environments where rules, licences and oversight shape how products are built. Penalising startups for that reality could push capital away from the sector.
Employee Shares Are Also Part of the Problem
Fintech startups are competing for talent against banks, insurers, consultancies, big tech and well-funded financial services companies. They cannot always win on salary.
That is why employee share schemes matter.
FinTech Australia said the tax concession should be designed around normal commercial practice, including employee equity, acquisitions, restructures and holding company arrangements. The group warned that ordinary business activity should not accidentally remove access to tax relief.
This is one of those policy details that sounds technical until it hits hiring. A fintech that cannot offer attractive long-term incentives may struggle to pull people out of better-paid corporate roles.
The AUD $10 Million Cap Is Under Scrutiny
FinTech Australia also raised concerns about the proposed AUD $10 million lifetime cap.
The group urged Treasury to consider a reinvestment-based deferral model, similar to the approach used in the United Kingdom. If the cap remains, FinTech Australia said it should be linked to the amount of capital invested or another investment-based measure, rather than total lifetime realised gains.
The difference matters. A lifetime gains cap can punish founders or investors in businesses that take many years and multiple funding rounds to mature. A reinvestment model may do more to keep capital moving inside the startup ecosystem.
FinTech Australia Wants the Turnover Threshold Raised
The submission also called for the turnover threshold to be lifted to AUD $75 million.
FinTech Australia said the current threshold does not reflect how regulated growth companies actually scale. A fintech may process large volumes, build complex infrastructure or hold major enterprise partnerships while still facing high costs and delayed profitability.
The group also wants monetary thresholds indexed over time. Without indexation, inflation slowly weakens the value of the concession and forces governments to revisit the rules later.
The 10-Year Age Test May Be Too Tight
Another sticking point is the proposed 10-year incorporation limit.
FinTech Australia said this could be too restrictive for companies that take longer to reach commercial maturity. In fintech, that is not unusual. Regulatory approval, enterprise sales, bank integrations and market trust can all take years.
The group wants Treasury to either extend the age limit or replace it with another objective measure of business maturity.
That would give slower-building but still innovative companies a better chance of qualifying.
Why This Matters for Australia’s Fintech Sector
This is not just a tax argument between an industry association and Treasury.
Australia’s fintech sector already plays a meaningful role in the economy. Deloitte analysis cited in the submission found fintechs contribute AUD $13.6 billion in direct value to Australia.
Rehan D’Almeida, Chief Executive Officer of FinTech Australia, warned that the current proposal could put local fintech companies at a unique disadvantage. He said the rules could damage innovation by making it harder for startups to attract capital and talent.
His argument is straightforward. Fintech is expensive to build, difficult to regulate, and slow to scale. If policy settings make funding and employee equity less attractive, the sector becomes harder to grow.
A Tax Concession That Needs More Work
FinTech Australia is not rejecting the idea of startup tax relief. It is asking Treasury to make the rules usable for the companies they are meant to support.
The group wants clearer tests, pre-issue eligibility certainty, better treatment of regulated businesses, fairer thresholds, and transitional rules that do not scare off future investment.
That is the heart of the dispute. A startup concession that excludes most fintech startups would not just be a missed opportunity. It could send a message that Australia wants innovation, but only when it fits neatly inside old policy boxes.
Fintech rarely does.