Innovation is critical to Australia’s growth and standard of living. Supporting innovative firms to seize new opportunities will create competition, access to new markets and employment growth.
2016-2017 Australian Federal Budget
The 2016 Budget is out, and it’s good news for innovators and small business.
Strong support for innovation
As promised in his leadership campaign, Turnbull’s first Budget is standing squarely behind the $1.1bn National Innovation and Science Agenda (the ‘ideas boom’).
Through the ideas boom initiative, and a raft of other Budget measures, the Federal Government plans to to “encourage commercialisation, reward enterprise and facilitate investment” by “making it easier to obtain capital, collaborate with researchers and attract talent from overseas.”’
One of the cornerstones of the ideas boom, the Global Innovation Strategy is of particular interest to our clients – with the Government pledging an investment of $36 million over five years to encourage collaboration between businesses and research organisations, aimed at improving both research outcomes and business performance.
Other innovation-supporting measures include changes to insolvency laws, crowd-sourced funding laws and tax laws, as well as tax concessions for early stage investors and venture capital to encourage investment in innovative start-up firms – for more info check out this article by the Australian Financial Review.
Educating the innovators of tomorrow
It’s not just today’s innovators that are getting a boost from this Budget – with an additional $12 million being committed to the STEM in schools initiative, the Government hopes to “increase student uptake of, science, technology, engineering and mathematics subjects in primary and secondary schools across the country” – educating the next generation of innovators, and “ensuring Australia’s young adults are equipped with the necessary skills for the economy of the future.”
Focus on small business
Recognising that Australia’s high corporate tax rate makes us unattractive to international investors – and that small businesses in particular have a vital part to play in stimulating strong economic growth – the Budget has introduced new tax measures to support SMEs.
The headline change here is a reduction in the tax rate for businesses with turnovers up to $10m – to 27.5% from 1 July, and down to 25% by 2026 (assuming this Government is still in office!)
While we welcome this change, and agree with the rhetoric behind it – “If Australia is going to be competitive in the 21st century, we need a competitive tax system” – we doubt that this relatively minor decrease will be a strong enough incentive to stop companies relocating to lower-rate tax jurisdictions, such as Singapore (17%), HK (16.55%), UK (20%) or Ireland (12.5%).
The Budget also extends concessions that already in place to support small businesses – such as the scheme allowing write-offs of capital purchases up to $20,000 in any given financial year – for another year.