Beyond the numbers with Grant Thornton: Listen now
These trends were apparent in roundtable discussions with over 100 leaders from the Biotechnology industry, as we welcomed them into our offices in partnership with AusBiotech.
During the series of roundtables held across the country, we heard Biotech CEOs and Managing Directors are confronted with more than rapidly changing reporting obligations in this volatile market. They seek stability and certainty in funding to ensure projects are supported and reach their full potential. This influences decision-making at all stages of the life cycle – from research and trial phases, to building capabilities, scale, remaining innovative and manufacturing in the most efficient way – all in the aim to find solutions to our greatest issues across health, agriculture, resources, and more.
In light of the upcoming Federal Budget in May, our experts have compiled a list of key supports and initiatives that we think would greatly assist the Biotechnology sector to build on its growth.
There’s no doubt the R&D Tax Incentive is fundamental to any Biotechnology business. This crucial source of funding supports domestic businesses to generate new knowledge, develop home-grown talent and create intellectual assets, with the objective to expand Australia’s research and manufacturing capabilities.
Continued Federal Government support for the R&D Tax Incentive is essential to foster certainty within the Australian Biotechnology community and to give the industry confidence to plan future clinical trials and experimentation in Australia, rather than taking activities and spending offshore. This is particularly important in the Biotechnology industry, which requires long-term support and significant capital investment to create innovative technologies and solutions that are safe for use. Government support at the R&D stage translates to the commercialisation of innovation in Australia, strengthening our sovereign manufacturing capability and driving future economic growth.
We hope to see continued Federal Government support for the R&D Tax Incentive in the upcoming May Federal Budget, with a broadening of the incentive to support businesses across all functions and stages of the Biotechnology lifecycle.
To support our domestic capabilities and emerging technologies via loans, guarantees and equities, last year the Government announced the $15bn National Reconstruction Fund (NRF) centred on diversifying and transforming our domestic manufacturing sector – which includes Biotechnology. While we await further clarification on specific fund criteria, the NRF will be a key driver of future funding for renewables and low emissions technologies, value-add in agriculture, resources, and medical sciences.
We welcome the recent news that the NRF bill has passed the Senate, and look forward to understanding more about how the Biotechnology sector can leverage the NRF for growth.
With the ATO’s upcoming next 5000 review, now’s the time for Biotechnology businesses to review the tax governance processes they have in place. We know that implementing a good tax governance process and documentation framework early will give peace of mind that you can demonstrate the robustness of processes when it comes time for an ATO review. Equally, companies accessing the R&D Tax Incentive should establish an R&D Tax Governance framework as a means of demonstrating that you have an effective and robust tax risk management processes in place.
The ATO has demonstrated that appropriate Tax Governance is high on its priority list and any tax incentives claimed will need to form part of that. In addition, with the increased investor focus on governance (including ESG frameworks), Biotechnology companies prioritising these measures for both regulatory and commercial reasons will be best placed.
There’s no doubt that many sectors are struggling to find and attract top tier talent – especially the Biotech sector, which requires specific technical expertise that can be hard to come by in Australia alone. When attracting global talent, a key differentiator can be remunerating these individuals in a way that offers tax effectiveness from both an employer and employee perspective.
These remuneration methods include salary packaging opportunities that don’t trigger fringe benefits tax implications while providing tax effectiveness for the employee, or remunerating employees by the provision of an employee share scheme. For a competitive edge in attracting key global talent, employee share schemes can be an efficient equity reward scheme that not only attracts key talent and encourages staff retention, but also helps organisations manage cash flow better. With the intense global demand for talent, these measures can serve as a crucial differentiator from your competitors.
We look forward to seeing diversification and expansion of funding opportunities as part of the Federal Budget in May and in conjunction with the NRF, to support more Biotechnology businesses across all stages and purposes.
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