the aussie gov just screwed startup founders. my musings.

grumble grumble. i just got back home to australia this morning. for the last 95 days have been traveling around the world giving keynotes (a topic and tale for a future post)

i'm livid. i could be opening up https://latentpatterns.com for trading but instead, like most small businesses in australia we are now having to spend time dealing with the mess made by the australian government.

we followed the advice of financial professionals, legal, accountants and through this we structured our businesees. this cost substantial money to setup and will require substantial money to restructure. fortunately haven't started trading yet but for existing founders out there in australia who don't have the optionality that I do.

I feel you. I see you.

This is a horrid betrayal.

Folks there's been a lot of focus on 'taxation' but it's actually another reason why people used structures. It's prudent financial planning and risk management.

For example if you have an operating company with a balance sheet with 10M sitting in the bank. That's a liability that can be lost in business easily (consider topics of law).

Whereas if you are prudent, this financial cash asset (which is an operating liability) could be moved to a holding company which is not exposed to such risks. From there this holding company becomes the backbone through how one can reinvest, back themselves and create other operating companies.

This is the backbone of business.

Under the new proposals simply moving money from an operating company to a holding company (owned by another trust) to manage your liabilities and for asset protection attracts an additional 30% tax upon the 25% income tax you have paid. If the operating company is fortunate to have an exit event then the capital gains of this event increases from 23% to almost 50%.

If you move this gain to your holding company using the structures of business within Australia since circa '85 then that's circa 80% of your gain gone. Poof. I could be wrong here but will find out soon grrrrr.

this is why folks like me are livid right now.

operating a business within a country requires trust between business owners and the goverment. the current standing goverment got into power under an election promise which has been broken.

tax is not the issue at hand, even though in this post i'm expressing it through financial numbers, it's the ability to manage capital risk that concerns me and have the knowing that you made the right choice to conduct business with a governemnt and that the goverment will not interfer or make activites that involve risk, creation of capital that ultimately provides economic output for a country.

to paraphase - what business owners are thinking right now in australia is why would you build your house on a bad foundation if there's a possibility that the soil underneath could collapse.

nb. somewhat typed this up in anger, some of my numbers might be off. i'm pre-catching up with folks to make heads and tails of wtf just transpired.

just angry because I would rather be building rn and helping folks out with AI adoption.

ps. I highly recommend reading this

Australians Under 40’s Just Got Roggered!!

“And the Goverment wants a thank you note!” (Reading time 19mins)

The GoodFellas WayChristopher Fellas