Accounting & Tax
Funding & Investment
Business & Growth
Every few months, the local tech ecosystem gets pulled into another debate about whether our most promising founders are packing their bags for Singapore, the US or even, more recently, New Zealand.
Lately, changes to Australia’s CGT settings have poured fresh petrol on that fire. We’ve all seen the LinkedIn threads, the investor commentary and the quiet back-channel conversations with founders asking whether they’d be better off moving or restructuring before the new rules bite.
The broader CGT reforms are now legislated, with the new treatment applying to gains accruing from 1 July 2027. A separate Innovative Business CGT Concession has also been proposed for eligible startup founders, employees and early-stage investors. But tax is only part of the conversation.
Founders here have always had good reasons to think internationally early. Capital pools are deeper overseas, markets are much bigger and sometimes local settings do create friction. At the same time, declaring the local ecosystem dead is a massive stretch. We’re still building world-class companies from Melbourne, Sydney and Brisbane, often with impressive capital efficiency by global standards.
The truth, as usual, sits in the messy middle.
What we’re seeing is a few very different decisions getting bundled into the same conversation. There’s expanding the business overseas, relocating as a founder, and then there’s moving your parent company offshore — the classic “flip”.
They can happen at the same time, but they don’t have to. Based on our experience with flip-ups and cross-border restructures, it’s worth separating those three decisions before you start changing the structure.
1. An overseas business doesn’t need an overseas parent (yet)
For most startups, international expansion happens long before anyone needs to touch the corporate registry.
You might hire a couple of sales reps in Austin, land your first enterprise client in London and keep your engineering team in Richmond. You might set up a local subsidiary in Singapore to hire a country manager. Before long, your founders are spending half their lives living out of a suitcase.
None of this necessarily requires a flip. Depending on the market and what you’re doing there, an Australian parent with foreign subsidiaries may be enough to let you hire, invoice and operate locally.
A Delaware flip is a fundamentally different structure. You establish a US parent company, place the existing Australian entity beneath it and have shareholders exchange their equity for shares in the new Delaware corporation. Many US VCs prefer Delaware because the corporate law, governance and investment documents are familiar to their investors and lawyers.
If a flip is on the cards, the real question is when. If a US fund has a term sheet on your desk and a Delaware parent is a non-negotiable condition to close the round, you’ve got a clear reason to restructure.
If you’ve had a promising coffee with a US investor in San Francisco who mentions that their fund “mostly invests in Delaware entities”, that’s not, on its own, a reason to start a flip. Building and maintaining an offshore structure for a hypothetical future raise adds cost and complexity you may never actually need.
Ask the investor directly: Is this a nice-to-have, or acondition of investment? Those are two entirely different conversations.
2. Don’t confuse moving your life with moving your cap table
This is where the tax debate gets personal. A lot of founders are asking hard questions about where they want to live long term, especially when their wealth is tied up in illiquid startup equity.
It’s completely rational to look at your options. Just don’t assume relocating yourself magically solves the company structure, or vice versa. You can move to New York while your Australian parent remains in place. Conversely, you can flip the headco to Delaware while you stay in Australia and remain an Australian tax resident.
Putting a foreign company at the top of the chain does not make your personal Australian tax obligations vanish.
If you’re seriously considering a move, get advice well before you relocate. Ceasing Australian tax residency can trigger a deemed disposal of certain assets at market value, including shares in many circumstances, although exceptions and choices can apply. That means moving when your shares have relatively little value can be a very different financial event from relocating after several funding rounds.
The company needs to be looked at separately too. The Australian entity doesn’t stop being an Australian tax resident just because a Delaware parent now sits above it. And for a foreign-incorporated parent, Australian tax residency can also become relevant depending on whether it carries on business here and where its central management and control is actually exercised.
This is one of those areas where we’d much rather work through the legal, tax and accounting position before a founder moves than try to untangle it afterwards.
3. Cleaning the house before you invite the neighbours in
If a flip is genuinely on the horizon, one thing we see fairly consistently is that setting up the new offshore parent is the easy part. The headache almost always lives inside your existing Australian company.
By the time a startup considers a flip, it has history. There are early angel rounds, an ESOP that’s evolved over time, a couple of unconverted SAFEs and a bullet point in a side letter from three years ago that everyone forgot about. Sometimes cap tables are pristine. More often, the cap table in Excel doesn’t quite match the official share register.
Maybe an early adviser was promised equity, but the options were never formally issued. Maybe a SAFE signed a few years ago is gathering digital dust in a Google Drive folder. Or maybe an early investor holds veto rights that suddenly matter when you try to move everyone into a new entity.
These issues are all manageable, but they’re much less painful to fix before you’re halfway through a cross-border restructure.
Before touching Delaware, audit your own backyard:
- Does the official share register actually match reality?
- How will outstanding SAFEs, convertible notes and ESOP grants be treated?
- Which shareholders hold approval rights, and whose consent will you need?
There’s a tax piece here too. The share exchange involved in a flip can itself have Australian CGT consequences. Depending on the structure and circumstances, rollover relief may be available, but a flip isn’t automatically tax-neutral just because shareholders receive shares rather than cash.
Fixing three years of messy corporate hygiene while trying to close a funding round is a special kind of stress. If a flip is coming, clean this up first.
4. Stop assuming all your IP needs to pack a bag
There’s a common assumption that the moment you flip to a US parent, all valuable intellectual property has to move with it, but that isn’t necessarily the case.
The Australian company can retain ownership of core code and trade marks and license them to overseas entities where that makes sense. In other cases, transferring the IP to the parent may be the better commercial outcome. It really comes down to how the group is going to operate after the flip, because moving IP across borders can have tax, valuation and transfer-pricing consequences.
Before you get to that point, there’s a more basic question to answer: does the company actually own its IP in the first place? Early-stage startups are often built fast and messily, with founders writing code before incorporating, contractors building core features without clear IP assignment clauses, or a freelance agency designing the logo before the paperwork gets signed. A restructure has a habit of bringing those gaps to the surface.
Before deciding where the IP should live, make sure your company actually owns it today.
5. What happens the morning after the flip?
Incorporating overseas is the easy bit. Running a multi-entity business afterwards is where the real work begins. Once you have companies in Australia and abroad, the legal structure, accounting treatment and way the business actually operates need to line up.
That means working through things like:
- Which entity officially employs which staff?
- Where do customer payments actually land?
- How does money move between the US entity and the local engineering team?
- Which entity owns and pays for the IP?
- What intercompany service or licensing agreements need to be in place?
Your structure should be as lean and simple as the business allows. The more complexity you add, the more admin there is to keep on top of and the easier it is for things to drift out of sync.
Your corporate diagram might say one thing, your bank accounts another, and the team might operate differently again. Those gaps can go unnoticed for a while and tend to surface at the worst possible time, like during acquisition due diligence, another funding round or a major audit.
None of this means you shouldn’t look overseas. Given the size of our domestic market, thinking globally early often makes sense, and being closer to US customers, capital and talent can be the right move. Just don’t let market noise or tax anxiety push you into a structure before the business actually needs it.
The structure should follow the business, not the other way around. There is no award for flipping early. Look at where your founders, team, customers and capital are realistically going to be over the next two years, and if that points overseas, map the move properly before you start changing the structure.
If you’re considering an overseas raise, a flip-up or relocating as a founder, LUNA can help you work through the legal, tax and accounting implications before you start moving the pieces.