While the Turnbull government’s $1.1 Billion National Innovation and Science Agenda (NISA) is geared towards change across the whole economy, its key reforms promise assistance to enterprise and investors. Below is an overview of the key changes which will affect businesses.
Incentives for start-up
NISA will incentivise investment in start-ups by providing a 20% non-refundable tax offset on investment up to $200,000 per year, and a 10 year Capital Gains Tax exemption for investments held for three year.
The incentive will be available for investments in companies that
- undertake an eligible business;
- were incorporated during the last three income years;
- are not listed on any stock exchange;
- have expenditure and income of less than $1 million and $200,000 in the previous income year respectively.
Incentives for Early Stage Venture Capital Partnerships
Changes to the treatment of Early Stage Venture Capital Limited Partnerships (ESVCLP’s) are also heralded, such as a 10% offset on investment capital for partners, and an increase to the maximum find size for new ESVCLP’s from $100 Million to $200 Million.
Relaxed equity funding rules
Proposed Crowd-Sourcing Equity Funding (CSEF) rules will enable unlisted Australian public companies to raise up to $5 Million a year from a large group of individuals. Companies seeking to take advantage of this scheme will be exempted from AGM and reporting obligations for up to five years.
Ability to claim losses from past years
Rules impeding companies from accessing past year losses will be relaxed – with the currently strict ‘same business test’ to be adjusted to cover businesses using similar assets and deriving income from similar sources.
Faster asset depreciation
Asset depreciation changes are also flagged, with the Government to provide businesses with the option to self-assess the effective life of intangible assets. This will override current statutory prescriptions – providing for faster depreciation.
Protection in the case of insolvency
Insolvency law reform is set to compliment these initiatives. Proposed measures include the reduction of the default bankruptcy period from three years to one, and the provision of a ‘safe harbour’ for directors liable for insolvent trading.
Employee Share Scheme (ESS) disclosure requirements are also set to be relaxed, while additional measures include the provision of an Incubator Support Program and the provision of new Entrepreneur Visas and residence pathways for STEM postgraduates.