In the Media: The Tech Sector Could Get A Boost Today From The Federal Government's New Industry Investment And Competitiveness Agenda
From Business Insider, 15/10/14 by Alex Heber http://www.businessinsider.com.au/the-tech-sector-could-get-a-boost-today-from-the-federal-governments-new-industry-investment-and-competitiveness-agenda-2014-10
The Federal Government will release its National Industry Investment and Competitiveness Agenda today and it’s expected to include changes to employee share schemes, something Australia’s tech sector has been calling for since the Labor government killed off the program in 2009.
The Australian Financial Review this week reported the agenda will reintroduce tax breaks for employee share schemes, switching it from the current system which taxed benefits upfront.
The tweaks were originally made to stop executives minimising tax, but startups which used share options to attract talent and retain key staff also got caught in the loop.
Labor has since conceded that was an unintended consequence.
The scheme has cost companies millions of dollars, including Atlassian which issued a number of staff shares in its early days, costing the company $5.4 million in tax.
“We made it a priority and were lucky that we could afford it, but many other companies are not in the same fortunate situation we were in,” Atlassian founder Scott Farquhar said on Tuesday.
“It is another disincentive to stay in Australia if you have a tech sector start-up.”
The new changes are expected to ensure that options can be taxed when they are converted to shares, not when they are allocated.
It is also expected to scrap up-front taxation, or options or shares which are allocated at a discount by startups, the AFR reported.
The other big change expected to be flagged in the agenda is changes to Australia’s significant foreign investor visa rules.
Previously foreigners with $5 million to invest over a four-year period could be allocated a visa, however the government is expected to begin stipulating which industries this will apply to. More on that here.
The agenda’s focus is to improve Australia’s investment environment and make industries like agribusiness, energy, technology and advanced manufacturing more competitive.