1. Amend the R&D Tax Incentive to more clearly support software claims
Shifts in the way the R&D Tax Incentive operates have increasingly made it unreliable for software companies, undermining a bedrock platform of government support for the sector. A significant number of companies are facing serious financial challenges as a result, breeding uncertainty about the future of the program for startups. To resolve the issue, clear language supporting software development claims needs to be added to the R&D Tax Incentive legislation, or a new program developed to support software R&D specifically.
2. Broaden the early stage innovation company tax incentive
Australia’s angel investor tax incentives, which are applied to Early Stage Innovation Companies (ESICs), were introduced in 2016 with an initially narrow scope of qualifying companies. With more than three years in operation and no sign of an unforeseen explosion in uptake, there is now room to expand this program to allow a broader range of genuine startups to qualify. Access to early stage capital remains an area for improvement across the Australian system as a whole, and a high-quality, easy to access ESIC scheme would boost performance in this area.
3. Make targeted amendments to legislation affecting employee share schemes
Offering options to employees is a central element of remuneration policy for most successful technology companies. In Australia, this is covered by Employee Share Scheme (ESS) legislation. While the situation for startups has improved since 2015, updating the scheme based on usage patterns and demand would help make it world-class. This is increasingly critical as more successful Australian tech companies reach maturity and start to fall out of the ‘startup exemption’. Specific amendments should be made to the regime which extend exemptions to a broader array of tech companies, and employees should not be counted as ‘investors’ for relevant corporations legislation governing private firms.
4. Amend the assistance and access legislation (TOLA) to reduce scope and increase safeguards
The Telecommunications and Other Legislation Amendment (Assistance and Access) Act (‘TOLA’), introduced in December 2018, compels companies to provide information and assistance to law enforcement and security agencies. The Act’s unprecedented powers, broad scope, and limited oversight provisions generated concern among local technology firms over their obligations and made it harder for Australian tech companies to operate internationally. The law should be amended to limit its scope, clarify that individuals cannot be compelled to cooperate without the knowledge of their employer, and improve oversight systems. This would restore industry’s certainty and confidence, and help wind back some of the negative international perception that Australia’s tech firms may be operating with compromised systems.
5. Introduce copyright safe harbour protections for technology companies
Australia’s copyright laws are outdated, and it is costing Australian tech companies. Unlike in most other developed countries, an Australia-based online content host is liable to be sued for copyright infringements occurring on its platform by its users. This has led to multiple damaging lawsuits against tech firms based in Australia, and is a barrier to the development of a whole industry of cloud-hosted content which is growing rapidly elsewhere. Copyright safe harbour protection would be a cheap, effective, and fair way to help make Australian technology businesses more competitive with international counterparts.
More information at www.startupaus.org/policy/copyright
6. Improve speed and certainty for startups under the export market development grant
One of the most important parts of Australia’s export support architecture is the Export Market Development Grant (EMDG), which provides reimbursement for certain export- related costs. The scheme is structured in such a way that it is, by startup standards, slow to receive reimbursement and impossible to forecast exactly how much the reimbursement will be when it arrives. An EMDG stream that allowed young high-growth businesses to access a certain pool of funds earlier in the process would substantially increase its utility for startups.
7. Increase access to public data sets and fund strategically-coordinated, large-scale data collection efforts
While data collection efforts have proliferated over the last few years, high-quality comprehensive data on Australia’s startups remains elusive. A funding injection for large-scale data collection efforts, with a coordinated, standardised approach, would help overcome this. Increased access to relevant public data sets would significantly boost the quality of these efforts.
8. Reduce payroll tax for fast-growing young companies
Payroll taxes imposed by state governments are a significant financial burden on businesses looking to hire large large numbers of employees. For a startup, that burden often comes early in the firm’s life, as it looks to deploy growth capital to expand quickly. Payroll tax acts as a perverse incentive, effectively encouraging young, high-growth companies to keep local workforces small, driving highly mobile tech jobs offshore. Introducing exemptions based on age for fast-growing companies would encourage more on- shore hiring and help young businesses establish themselves. This could in turn lead to more local jobs, faster business growth, and higher net payroll tax receipts in the medium and long term.
More information at www.startupaus.org/policy/payroll
9. Improve Australia's entrepreneur visa to make it competitive
Australia’s entrepreneur visa needs significant work if it is to yield any genuine economic results. The current visa is internationally uncompetitive, and meeting the qualification criteria is extremely difficult. We need to rethink this visa to make it simple, well-advertised, easy to qualify for, easy to apply for, and quick to process. So far, it is none of these things.
More information at www.startupaus.org/policy/entrepreneurvisa
10. Invest in innovation ambassadors tasked with attracting cutting-edge R&D projects from global tech firms
Global tech firms tend to have significant commercial footprints in Australia, but few do any research and development (R&D) here. Attracting more high-value tech R&D would boost talent levels, attract firms in adjacent fields, drive collaboration, and increase commercialisation opportunities. As a first step, state governments should appoint well-resourced R&D ambassadors, tasked with attracting projects from high value global tech firms. Linking these projects to tech precincts would also help further activate those investments.