Innovation statement: Key tax matters
The aim of changes in the National Science & Innovation Agenda is to provide greater flexibility for entrepreneurs and innovative start-ups.
The Government announced a number of tax-related measures in connection with its innovation statement. The aim of changes in the National Science & Innovation Agenda is to provide greater flexibility for entrepreneurs and innovative start-ups.
Key measures announced in December include:
- Relaxation of the 'same business test' to allow businesses to access prior year losses when they make minor changes to their organisations. As part of these reforms the 'same business test' will be replaced by a new and more flexible 'predominantly similar business test'.
- Amendments to the Employee Share Scheme (ESS) rules to limit the requirement for disclosure documents given to employees will be made available to the public. This will also see to make arrangements for ESS to be more user-friendly for innovative companies.
- Tax breaks for eligible companies will be introduced to entice investors. The tax breaks would provide a 20% non-refundable tax offset based on the amount of the investment capped at $200,000 per investor, per year. The incentives would also provide a 10 year CGT exemption for investments held for at least three years.
- 10% non-refundable tax offset for capital invested in the new Early Stage Venture Capital Limited Partnerships (ESVCLPs) and will increase the cap on committed capital from $100 million to $200 million for new ESVCLPs. The Government also plans to remove the requirement for ESVCLPs to divest a company when its value exceeds $250 million.
- Depreciation deductions for some intangible assets (like patents) will no longer be limited to a statutory life. Business entities will be able to choose for these assets to be depreciated over their economic life.
- The reforms will introduce a 'safe harbour' for directors from personal liability for insolvent trading if they appoint a professional restructuring adviser to develop a plan to turnaround a company in financial difficulty.
- The default bankruptcy period will be dramatically reduced from 3 years to 1 year, and a ban introduced on 'ipso facto' contractual clauses that allow an agreement to be terminated solely due to an insolvency event if a company is undertaking a restructure.
Not sure where you stand or how these issues will affect your business, please contact us on 9957 4033.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.