Small businesses and startups go viral with AI Albo but tax experts 'rubbish' CGT claims

Viral memes taking aim at the budget's proposed capital gains tax (CGT) reforms have flooded social media feeds, despite the claims made by businesses in the posts oversimplifying the debate.

One tax expert has branded the campaign "rubbish" and "misleading".

The posts feature AI-generated images of business owners posing with the prime minister, or of Anthony Albanese himself doing everything from cooking pizzas to laying concrete to working at a check-out.

The meme format involves business owners welcoming Mr Albanese as a "47 per cent silent partner". 

One retailer's post says the prime minister "has never done a stocktake and somehow still gets 47 per cent of the business and takes zero risk."

Trying to 'catch fire on the internet'

Startup founder Frank Greeff, who helped propel the social posts that have spread from the tech startup sector to small businesses, has admitted it prioritised attention over accuracy.

Mr Greeff, who sold his real estate marketing company RealBase for $180 million in 2022, made multiple posts, including one that said: "Every Australian founder just got [a] new founder with 47 per cent equity."

The photo included an AI image of Anthony Albanese, insinuating the government would be taxing every business owner at the highest marginal tax rate, plus the Medicare levy, as part of a sweep of reforms in last week's federal budget.

In fact, the changes to CGT will mean that from July 1, 2027, Australia's 50 per cent CGT concession will be scrapped and capital gains will be taxed at a minimum of 30 per cent after indexation for inflation has been applied.

The changes will be applied to all assets except new buildings, including existing property and shares.

For business owners earning in the top tax bracket, that does mean they could be taxed up to 47 per cent on capital gains from the sale of their business, after indexation.

In an interview with ABC News, Frank Greeff conceded that was not everyone, and the posts online were deliberately provocative to draw attention to the budget changes.

"Not all businesses are going to be taxed at 47 per cent, that's correct, but it said up to 47 per cent," he said.

"That's just kind of like the truth of social media and attention is like, unfortunately, the more nuance you have, the quicker someone will scroll past and not really care about what you're saying."

Mr Greeff said changing CGT tax for property was needed, but not for businesses.

"The worry I have is the kind of the building and thriving business ecosystem that's in Australia is going to immediately fall flat on its face because the big thing about building a business is there is a number of years [of work involved], there's a huge amount of risk and there's no guarantee," he said.

"And so if you kind of take away the reward on the other end, it kind of makes it like, well, what's the point?"

He attended a round table on the weekend with Shadow Treasurer Tim Wilson, who has come out in stark opposition to the proposed reforms.

"You end up paying a fair and a lot of tax, but that is fine, and I think that's fair."

The Albanese government has said further consultation is needed with early-stage and startup businesses, "given the unique features of the tech and startup sector".

Rich losing some 'free kicks'

The owner of fintech company Modano, Michael Hutchens, was not surprised that these claims had gone viral online, given the nature of social media, despite not agreeing with the sentiment.

"The way the world works right now is that the moment everyone discusses any form of increase in taxes or a removal of a concession, there are a lot of very, very wealthy people that have benefited from these things that immediately get on the social media offensive."

He argues that for most business owners, the changes to tax would not be drastic.

"I mean, it's only if you're trading shares, raising money, or you're flipping properties, which most small businesses probably can't afford to do.

"It's the rich arguing about losing some of their free kicks."

During a press conference in Perth, Anthony Albanese thanked the business owners for choosing "flattering" photos of him in the campaign, but made it clear the campaign message was wrong.

He said that there was no change to company tax rates or the normal course of doing business, as some of the posts insinuated, and that CGT was only payable if businesses were sold for a profit.

"Our policies are very clear. When it comes to capital gains tax, what we are simply doing is returning the system to what was there before 1999," he said.

"When those changes were introduced, what we've seen since then is a massive distortion of investment towards housing, away from other forms of investment because of the changes that were made. What we're doing is simply moving to a real gains system."

He confirmed that before any change was made to startup reform, businesses would be consulted.

"It was not possible to have as much consultation before budget night as occurs with tax policy, and we're using this period of this week, next week as well, to have that consultation with startups. We're big supporters of startups and venture capital."

Tax far more complex than a blanket 47 per cent

Roman Lanis, associate professor at the UTS Business School, argued the social media meme campaign was "rubbish" because it failed to mention the marginal tax rates, which underpinned Australia's tax system.

"You'll have different employees with potentially different marginal tax rates, the business owners themselves as well," Dr Lanis said.

For example, income between $18,201 and $45,000 is taxed at a rate of 16 per cent.

The next tax bracket sees a 30 per cent tax on every dollar earned between $45,001 and $135,000. Income between $135,001 and $190,000 is taxed at 37 per cent.

The highest marginal tax rate, of 45 per cent, applies to every dollar earned above $190,000. With the Medicare levy of 2 per cent, that could see the highest income earners pay 47 per cent on a portion of their wages.

Kristen Sobeck, research fellow at the Tax and Transfer Policy Institute at ANU, said it was important to remember that small businesses have had access to a lower company income tax rate of 25 per cent.

"That's actually quite low relative to labour income," Dr Sobeck said.

"They will continue to have access to that, the only difference now is that the distribution of those profits will be taxed at this 30 per cent rate, if it's kind of in the form of a capital gain to individuals."

Dr Sobeck said there would still be a number of tax concessions for small businesses, including the instant asset reduction, but ultimately, this change evened the equity playing field between business owners and employees.

"Small business owners have had it pretty good for quite a number of years, and when you think about the access to the lower rate and the personal income tax system and the ability to distribute … yes, there's this kind of tax arbitrage," she said.

"For some of these families with small businesses, they've been paying less tax than wage earners for sometimes decades, and that's just another way for them to accumulate wealth, which is all good and well, but we're just evening the playing field a bit."