7 December 2015

Tax and business incentives to boost economic growth & jobs

A suite of new tax and business incentive measures under the Turnbull Government’s National Innovation and Science Agenda (NISA) will help to drive economic growth and jobs for Australia, Treasurer the Hon. Scott Morrison announced today.

“The Turnbull Government is committed to building an innovative and more agile economy through strong growth policies that will boost growth and jobs,” Mr Morrison said.

“Innovation is critically important to every sector of the economy and the Government’s tax and business incentives under the NISA will encourage smart ideas to encourage innovation, risk taking and build an entrepreneurial culture in Australia.

“The new measures will:

  • provide new tax breaks for early stage investors in innovative startups. Investors will receive a 20% non-refundable tax offset based on the amount of their investment, as well as a capital gains tax exemption;
  • build on the recent momentum in venture capital investment in Australia, including by introducing a 10% non-refundable tax offset for capital invested in new Early Stage Venture Capital Limited Partnerships (ESVCLPs), and increasing the cap on committed capital from $100 million to $200 million for new ESVCLPs;
  • relax the ‘same business test’ that denies tax losses if a company changes its business activities, and introduce a more flexible ‘predominantly similar business test’. This will allow a startup to bring in an equity partner and secure new business opportunities without worrying about tax penalties; and
  • remove rules that limit depreciation deductions for some intangible assets (like patents) to a statutory life and instead allow them to be depreciated over their economic life as occurs for other assets.

“The Government will also reform insolvency laws which currently focus on penalising and stigmatising business failure. We understand that sometimes entrepreneurs will fail several times before they succeed – and will usually learn more from failure than from success.

“The reforms will:

  • reduce the default bankruptcy period of 3 years to 1 year;
  • introduce a ‘safe harbour’ for directors from personal liability for insolvent trading if they appoint a professional restructuring adviser to develop a plan to turnaround a company in financial difficulty; and
  • ban ‘ipso facto’ contractual clauses that allow an agreement to be terminated solely due to an insolvency event if a company is undertaking a restructure.

“The NISA fosters an environment that incentivises and rewards innovation, science and taking risks to succeed. These measures are the next step in building a more innovative and agile economy.

“The Turnbull Government is implementing a National Platform for Economic Growth and Jobs, of which the NISA is a central part. We are broadening and diversifying the economy through economic policies to build growth and increase the productive capacity of Australia.

“The NISA builds on the Government’s responses to the Harper Competition Policy Review and the Murray Financial System Inquiry and is the next step in building a more innovative and agile economy.

“Whether it is the NISA, our reform of Australia’s financial system, a better tax system, national infrastructure plan, a stronger budget or competition policy, our focus is on giving Australians confidence that they can continue to work through the transition of our economy and ensure their families will be better off. The Turnbull Government is backing Australians in that task,” Mr Morrison said.

More information is available on the NISA website.