Tax Incentives for Early Stage Investors: Submission to Treasury in Response to the Policy Discussion Paper

This submission to Treasury responds to the policy discussion paper on Tax Incentives for Early Stage Investors, a measure in the Australian Government’s National Innovation and Science Agenda. Research Australia supports the incentive as a way to address the shortage of capital for commercialising health and medical research, a sector identified as a national science and research priority, and confines its comments to a few consultation questions. It proposes an additional gateway criterion under which registration of activities with AusIndustry for the Research and Development (R&D) Tax Incentive, in the investment year or the year before, would on its own qualify a company as an eligible innovation company. It maintains that other qualifying conditions, such as entry to an approved accelerator program or Accelerating Commercialisation, should only need to be met by the end of the financial year in which the investment is made, not at the time of investment. It opposes limiting the tax offset to sophisticated investors, arguing that existing disclosure and investor protection rules for retail investors are adequate and should be enforced, and that the offset should extend to investments made through crowd-sourced equity funding (CSEF) platforms and innovation funds. It also opposes requiring investors to provide technical or commercial support as a condition of eligibility, and asks Treasury to consider how innovation funds could operate within the CSEF regime without adding red tape.