Key takeaways
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Large companies face a tax squeeze: The capital gains overhaul targeting business owners in Australia’s 2026/27 federal budget means you’ve to rethink how to build and scale your talent pool.
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Local equity is losing its competitive edge: Replacing the 50% capital gains tax discount with an inflation-based calculation on July 1, 2027, reduces the financial upside for workers. Attracting local talent through traditional share schemes will become harder.
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Global hiring retains your margins: Moving your hiring strategy beyond Australia’s borders allows you to hire top talent in more cost-effective regions.
The 2026/27 Australian federal budget introduces new capital gains tax updates that threaten to disrupt financial and talent strategies for large enterprises. By raising capital gains tax on equity, the government changed the rules for rewarding local employees. Read on to find out how these tax changes impact your business and how hiring globally can maintain your competitive edge.
The impact of the 2026/27 capital gains tax overhaul
Starting July 1, 2027, the government is replacing the 50% capital gains tax discount with an inflation-based calculation coupled with a 30% minimum tax floor. A new AUD 10M turnover threshold protects small businesses, but larger companies will bear the brunt of these changes.
In practice, this means local stock options will deliver less take-home wealth for your workforce when they sell. Because the financial upside is diminished, equity packages will lose their appeal, making it harder for you to win top talent with share schemes.
G-P pro tip: Australia’s new tax rules can limit the appeal of local equity compensation but your talent strategy doesn’t have to stop at the border. With G-P, you can extend your equity incentives and competitive compensation to employees worldwide. Use our Global Employment Platform to hire anywhere and structure rewards that attract and retain the best talent.
What this looks like in practice
To understand the real-world impact, let’s look at how these changes impact the retention strategy for a chief technology officer (CTO).
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Scenario A: pre-July 2027 |
Scenario B: post-July 2027 |
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A company grants their CTO stock options. Upon cashing them out, the CTO realizes a AUD 200,000 capital gain. |
The CTO faces the exact same AUD 200,000 gain under the new system. |
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Under the old rules, the CTO claims the flat 50% capital gains tax discount, meaning they’re only taxed on AUD 100,000 at this marginal tax rate. For an executive on the top marginal tax rate (45%), this slashes their tax rate on the entire gain down to 22.5%. |
The 50% discount is gone. The baseline cost is adjusted only for inflation, and a 30% minimum tax floor applies. |
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The CTO walks away with the majority of their realized gain, feeling rewarded, without the company draining its cash reserves. |
Anticipating this reduced take-home realized gain, the CTO asks for a higher base salary during negotiations to offset the lost tax advantages, placing pressure on company cash flow. |
The effect on domestic payroll and overhead
When employees ask for higher base salaries to make up for lost equity benefit, it triggers a costly financial domino effect. In Australia, a higher base rate:
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Automatically inflates your mandatory superannuation contributions
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Pushes you into higher state payroll tax brackets
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Increases your workers' compensation premiums and paid leave liabilities
Ultimately, a modest increase in a local professional’s base pay creates a multiplier effect that hikes your corporate cash outflow.
Australia’s compliance landscape is tightening
Backed by new federal funding, the ATO is expanding its automated data-matching activities, actively cross-referencing federal and state payroll data. Discrepancies can be flagged instantly, so internal teams face a heavier administrative burden to avoid penalties.
Focusing your hiring efforts purely on the Australian market leaves you exposed. Rising salary demands and heavy compliance burdens give you less value for your budget.
G-P has processed our payroll and taken care of all the human resources aspects of our team members in the U.S. I've found their attention to detail and in-depth knowledge of overseas jurisdictions to be extremely helpful. Any follow-up has been efficient and professional.
Steve Kilroe-Smith
Finance Manager at Away Digital.
Your next steps
Building a global team helps protect your business from local regulatory shocks. Keep your business agile with the following moves:
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Tap into cost-effective international talent hubs
Look to regions with strong, highly skilled talent pools and efficient operational structures. Changing your focus to competitive markets across Asia or Latin America allows you to stretch your money further.
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Structure tax-friendly global equity packages
Design global incentive packages and stock options that comply with the local tax regulations of your target international candidates.
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Use an employer of record (EOR) for instant global hiring
Avoid the months of delays, high costs, and regulatory compliance risks tied to setting up global entities. Partner with an employer of record (EOR) to onboard, pay, and manage your new international team members in minutes.
The peace of mind that came with G-P handling Japan’s intricate labor laws, payroll, and tax regulations was invaluable. It freed us from a huge administrative burden and let us focus purely on our business goals. G-P allowed us to deploy a pre-sales team in Japan in weeks, not months. That speed was critical for successfully bringing our medical devices to the Japan market.
Esther Kang
HR Business Partner and Talent Acquisition Part Lead at LivsMed.
Build your global team with G-P
The 2026/27 budget gives you a year-long window before these regulations fully take effect. Use this time to map out your international talent strategy and protect your capital.
Traditionally, expanding globally takes months. G-P removes this friction through a wholly owned global entity infrastructure. Backed by the largest team of in-country HR and legal experts, our Global Employment Platform automates international onboarding, localized payroll, and compliance for you.
Gain immediate access to global talent and build your team today, without the entity setup costs or legal blind spots. Book a demo today.
