Startup organizations in Australia have joined forces to propose recommendations to the federal government that would see its R&D Tax Incentive scheme to facilitate greater investment in innovative and high-growth startup businesses.
StartupAUS, Fintech Australia, Startup WA, StartupTas, TechSydney, Startup Adelaide and Startup Victoria have called on the government to bring in “startup friendly” enhancements to the tax scheme, which they say is most effective when directed at startups.
The Australian government invests about $10 billion each year in programs for research, science and innovation that are vital to the economy and the country’s future prosperity. The R&D Tax Incentive accounts for roughly 30 percent of the total allocations, which in turn is over 90 percent of government support for business R&D.
In support of their proposal, Chief executive of StartupAUS Alex McCauley, says,
When the R&D Tax Incentive is spent on startups, three critical goals are achieved. Startups are supported when they are at their most vulnerable, R&D output gets a big direct boost, and our fastest growing tech companies are encouraged to stay and create jobs in Australia.
McCauley cites the Department of Industry, Innovation and Science figures released earlier this year that show net job creation that come from early-stage and startup businesses, with young companies creating nearly all of the 1.6 million net new jobs in Australia from 2003 to 2014. Access to capital is the single biggest challenge facing early-stage businesses and the R&D Tax Incentive is one of the biggest levers available to the government to provide support. He said,
Our research shows that 89 percent of startups say R&D Tax Incentive is either critical or very important to their business, while 87.8 percent of startups say that receiving the R&D tax incentive quarterly, rather than annually would make a huge or a very large difference.
Other recommendations include better cash flow rates, alongside simplifying the application process for the R&D tax incentive, while extending collaboration incentives to larger enterprises. The consortium of organizations has pitched its ideas to the government in the submission it made to the R&D Tax Incentive Scheme review. The Federal Government’s public submission process is open until October 28.