Welcome to the Ideas Boom – the Innovation Agenda hits Australia

Strong governments can have a significant impact on driving innovation and economic growth. In a market economy their role is to create the environment where entrepreneurs, corporates and educational establishments can take the baton and run.

Prime Minister Malcolm Turnbull, Christopher Pyne the Minister for Industry Innovation & Science and Wyatt Roy the Assistant Minister for Innovation, have played their parts – they have listened, actively engaged and consulted with leading Australian entrepreneurs and looked to see what was happening around the world before considering what was needed for Australia.thumb_ind_fs_glb_ho_1863_resize_1024_0 (1)

As a result, on 3 December 2015 the Government announced its Crowd-sourced equity funding (CSEF) framework enabling the Australian public to make contributions in exchange for an equity stake in start-ups and small businesses and on 7 December 2015 the National Innovation & Science Agenda was released, suitably titled “Welcome to the Ideas Boom”.

Tax Incentives for early stage investors

As part of the Innovation Agenda the Turnbull Government announced new initiatives to align the tax system to nurture entrepreneurship and innovation. Individual investors will receive a 20% income tax offset on the amount of their investment along with a capital gains tax exemption. Relief is capped at investment of $200,000 per investor per annum.

In order to qualify, the company must have incorporated in the last three income tax years, not be listed on any stock exchange, have expenditure of less than $1 million and income of less than $200,000 in the previous income tax year.

The scheme is based upon the successful Seed Enterprise Investment Scheme in the United Kingdom. Although the income tax relief in the UK is more generous than its Australian counterpart, it still represents an important incentive and is extremely timely given the announcement of the CSEF four days earlier.

These arrangements are expected to commence from 1 July 2016.

Crowd-sourced Equity Funding arrives

The new CSEF proposals announced on 3 December 2015 enable non-listed public companies that meet specific asset and turnover tests ($5 million) to raise up to $5 million in a 12 month period with reduced disclosure and administrative requirements through crowd-sourced funding platforms.

The Government have set the stage. Now it is time for Australians to unleash their creative talents, dedicate themselves to the cause and claim their place at the table on the world innovation stage.

If you are an innovator, an entrepreneur or investor, it is hard to disagree that – “There has never been a more exciting time to be an Australian”.

The information contained in this article is purely factual and is based on or derived from underlying data that is generally available. None of the information provided takes into account the objectives, financial situation or needs of any person. The information is objectively ascertainable and therefore does not constitute financial product advice.

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