If Australia is serious about stimulating business innovation in our technology sector, proposed tax incentives announced by Federal Treasury earlier this week must go beyond start-up businesses.
Grant Thornton welcomes the discussion paper and will strongly advocate the proposed concessions must extend to mid-size technology businesses that have the ability to further advance commercially viable innovation initiatives.
“At the moment the legislation is targeting early stage innovators and investors which we believe is not strong enough to encourage further innovation in Australia. Mid-sized businesses are some of the biggest contributors towards the technology industry in Australia and should not be excluded from any possible tax concessions to encourage investment in the industry,” said Simon Coulton, National Head of Technology, Grant Thornton Australia.
Australian mid-size businesses across all sectors inject around $24.1 billion into the Australian economy and employ around 3.7 million people, yet they are underrepresented when it comes to growth initiatives.
Announced earlier this week, Treasury released its discussion paper considering two potential tax incentives for start-up businesses being:
1. A non-refundable 20% tax offset capped at $200,000 per annum for the amount paid for newly issued shares in an innovation company, where the amount is paid directly to the innovation company or indirectly through a qualifying innovation fund.
2. CGT exemptions for shares held in an innovation company provided they are held for more than three years and concessions where the shares are held for more than ten years.
It’s crucial these incentives extend to mid-size technology businesses that are well placed to accelerate growth and innovation initiatives for the greater productivity of the Australian economy. These technology businesses are at the fore of leading improvements to the Australian business community, creating new jobs and increased revenue along the way.
Following feedback on the discussion paper, Treasury has a view to having the proposed rules apply to shares issued in the 2016-17 income year and for new arrangements, apply from the date of Royal Assent of any amending legislation.
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