Earlier this week, the Federal Government unveiled its much-anticipated Innovation Statement. The announcement follows weeks of discussions about the Government’s rejuvenated and rejuvenating approach on innovation, as foreshadowed by Prime Minister Malcolm Turnbull’s disruption-friendly views in his leadership spill victory speech.
The science and innovation package consists of 24 measures that require a spend of almost $1.1 billion in the next 4 years, in addition to the $10 billion a year spend on research funding.
Below is a summary of the key measures:
- a 20% tax offset for early stage - angel investors who come in right at the beginning, as well as a capital gains tax exemption;
- a 10% non-refundable tax offset on capital invested start-up companies for partners in a new Early Stage Venture Capital Limited Partnership;
- replacing the ‘same business test’ - which denies tax losses if a company changes its business activities – with a more flexible ‘predominantly similar business test’;
- changes to insolvency laws: reducing the default bankruptcy period from three years to one, introducing a ‘safe harbour’ for directors from personal liability for insolvent trading if they appoint a professional restructuring adviser;
- establishing a $200 million CSIRO innovation fund to co-invest in new spin-off companies and a Biomedical Transition Fund to co-invest $250m with the private sector;
- funding for national research infrastructure and education: $520 million for the Australian Synchrotron, $294 million for the Square Kilometre Array, more than $50 million for online computing literacy at school and more than $13 million to support women and girls in STEM and the research sector;
- other measures include a $36 million ‘Global Innovation Strategy’, helping Australians establish their presence in places such as the Silicon Valley and Tel Aviv, a new entrepreneurs visa, changes to Employee Share Schemes and establishing new innovation bodies.
The Government’s innovation policy follows the crowd-sourced equity funding measures introduced to Parliament last week. These provide for unlisted public companies with less than $5 million in assets and turnover to raise up to $5 million in funds over a year, with a cap of $10,000 per issuer per 12-month period for retail investors, and limited relief from reporting and governance requirements.
While the draft legislation on equity crowd-funding has been criticised for its limited benefits for start-ups, the innovation policy present some great opportunities for many (including start-ups), particularly in the HealthTech sector.