Fresh concerns emerge over impact of Labor's tax changes on medical tech

The sector says changes to eligibility elements of refundable research and development, among other elements, is a threat to business. (ABC News: Maren Preuss)

Australia's medical technology sector says Labor's budget changes will make it harder for local startups to commercialise new products.

Industry groups say planned changes to research and development tax incentives will specifically hurt the health sector where companies often take more than a decade to become profitable.

Labor is pressing ahead with its capital gains tax changes as it consults on details for a second tranche of laws expected to include minimal carve-outs for startups.

Cutting-edge medical technology companies say new restrictions on tax refunds for research and development will hurt health startups in Australia, which are facing a "triple threat" under Labor's budget changes.

A ten-year limit on a component of the research and development (R&D) tax incentive that allows companies to get a refund from the Australian Tax Office for losses has raised alarm among health startups, which typically take longer than other companies to get their products to market.

Nine peak health and medical technology industry bodies have signed a joint letter sent to Treasurer Jim Chalmers this week asking the federal government to adjust some of the changes in last month's budget, including the overhaul of the capital gains tax discount.

The groups, including Bio NSW, Life Sciences Queensland, BioMelbourne Network, Life Sciences WA and AusBiotech, are seeking "urgent action" from Mr Chalmers to ensure the R&D tax incentive and CGT are "appropriately calibrated" to support the "continued success" of Australian companies in the sector.

The bill passed the lower house this week. (ABC News: Adam Kennedy)

The letter, seen by the ABC, said the ten-year limit and changes to eligibility elements of the refundable R&D tax incentive as well as the switch from a flat 50 per cent CGT discount to a model tied to inflation collectively posed a "significant triple threat" to domestic medical technology companies.

Labor changes to the CGT and negative gearing, along with a $250 annual tax offset for workers and an optional $1,000 automatic tax deduction for income earners passed the House of Representatives on Thursday.

The omnibus bill will now be the subject of a short two-day inquiry, which is due to report back on June 19, with Labor hopeful of passing the changes through the Senate in the next parliamentary sitting fortnight later this month.

The Greens and Coalition have not ruled out teaming up to