The treasurer has admitted that Labor has lost some "political paint" from its contentious overhaul of capital gains tax, as startup founders are split over carve-outs from the changes.
"Innovative businesses" will continue being allowed to access the existing 50 per cent capital gains tax discount, while eligibility for the existing 50 per cent active asset reduction for small businesses will be expanded.
The government has faced significant blowback for what many businesses see as a tax hike, replacing the 50 per cent discount with an inflation indexation model and a minimum 30 per cent tax rate.
