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As SMEs’ concerns grow over proposed federal budget tax changes, legal tech start-up JurisTechne’s founder and the shadow treasurer have stepped into the debate over what it could mean for start-ups and Australia’s innovation ecosystem.
The Australian government’s proposed federal budget tax changes are triggering growing concern among business owners and SMEs, with fears they could fundamentally reshape investment decisions, ownership structures, and long-term growth strategies.
On 12 May, the 2026–27 federal budget outlined a sweeping package of tax reforms, including the removal of the capital gains tax (CGT) discount, tighter negative gearing rules limited to new builds, and changes to discretionary trust structures – measures that could have significant implications for SMEs across Australia.
The impact of these changes is expected to be felt rapidly across the legal sector, from firm owners to legal tech start-ups, as businesses reassess and recalibrate their strategies in response to the reforms.
Following the federal budget announcement, shadow treasurer Tim Wilson and the founder of legal tech start-up JurisTechne, Mona Chiha, discussed the emerging tensions and the potential impact of the proposed tax changes on start-ups and Australia’s broader innovation ecosystem.
Chiha explained that her business gives every employee a stake in the company through shareholding arrangements – an approach designed to set the start-up apart from larger firms by attracting and retaining top-tier talent that would otherwise be drawn to higher salaries.
“I am a small-business owner, and we are developing Australia’s first sovereign AI. In order for me to be able to hire the people that I need to work with to build this great innovation, I need to be able to offer more than just money,” Chiha said.
“So what we do is we offer a shareholding in the business. Everybody who works in my business is an owner of my business. That’s one way that I’m able to employ these amazing people without having the financial capacity that the really big businesses can afford to do.”
However, Chiha warned that under the proposed tax reforms, up to 47 per cent of the business’s eventual payout could be absorbed through taxation, an outcome she said could significantly undermine the start-up’s ability to continue scaling and expanding sustainably.
“But now having a sneaky shareholder join the cap table, taking 47 per cent of what we could potentially know, grow this successful business to be,” Chiha said.
While many legal tech start-ups may feel the impact of the proposed reforms mainly at the founder level, Chiha said the effects in her business would be felt across every employee with equity.
She warned that the changes could weaken the company’s ability to attract and retain top talent, a concern she said is critical for any business competing for skilled workers.
“It doesn’t just affect every small-business owner, but it affects every person who’s working in the business that has a shareholding,” Chiha said.
“You’ve taken away the capabilities for us to attract and employ really great talent, and that’s what I’m upset about.”
Despite this, she said she feels fortunate to have a team that believes in the company’s vision and in one another, adding that while they remain committed to building the strongest possible innovation, the uncertainty still feels “scary”.
“I’m really blessed because the people that I work with believe in what we’re building, believe in me, believe in themselves. So we’re still going to carry on. We’re still going to build the best damn innovation that we can do. But it’s scary,” Chiha said.
