The recent release of the Federal Government's National Innovation
and Science Agenda outlines key measures to promote and support
the growth of innovation and entrepreneurial ventures in
The 'Innovation Statement' includes the following
proposed tax incentives:
Early investors in startup companies will be able to receive a
20% non-refundable tax offset on investment, capped at $200,000 per
investor per year. Startup companies are defined as unlisted
companies incorporated for less than 3 years that operate an
"eligible business" (yet to be determined) and have
expenditure of less than $1 million and income of less than
$200,000 in the previous income years.
Investors may also be able to access a 10 year capital gains
tax exemption for investments held for more than 3 years and less
than 10 years. This incentive is aimed at encouraging early stage
investment in Australian innovation.
The 'predominantly similar business test' is proposed
to replace the 'same business test' to provide companies
with more flexibility when attempting to access tax losses. A
company can access tax losses where their business, while not the
same, uses similar assets and generates income from similar
sources. This will encourage companies to seek out profitability by
'pivoting' their product or business model.
Intangible assets will be eligible for depreciation deductions
for their economic life as opposed to a statutory life by allowing
self-assessment of intangible assets (such as patents or
trademarks) and faster depreciation of such assets.
The Agenda also proposed the following insolvency law reform to
avoid punishing early business failure:
reduction of the default bankruptcy period from three years to
introduction of a 'safe harbour' for directors from
personal liability for insolvent trading to be available if they
appoint a professional restructuring adviser; and
removal of 'ipso facto' contractual clauses if a
company is undertaking a restructure, preventing termination of a
contract due to an insolvency event.
Watch this space for more updates in the coming months.
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