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The Australian: New deal for start-ups a winner
In any country with a successful technology sector, the role of start-up companies is critical. Australia has its own start-up success stories. Atlassian was founded by Scott Farquhar and Mike Cannon-Brookes in 2001; today it employs more than 1000 people, more than half of them in Sydney.
Tim Power started 3P Learning in a small office on Sydney’s north shore in 2004; today it delivers innovative educational software to 4.8 million students around the world. The government wants to see many more such stories.
Starting a new business is not easy. But government can do a lot to make the path easier for Australians who are prepared to have a go. We will streamline business registration processes to make it quicker and simpler to set up a new business. The government will develop a single online registration site for business registration, including company registration.
Employee share schemes are vital for start-up businesses. The previous Labor government was hostile to employee share schemes; its tax settings made such schemes unattractive to offer or participate in.
The Coalition has a very different attitude. From July 1, there will be expanded tax concessions for employee share schemes to make it easier for small start-up companies to attract and retain the talent they need to grow.
We will allow start-up companies to immediately deduct professional expenses incurred when they begin a business, such as legal expenses on establishing a company, trust or partnership, rather than writing them off over five years. This will provide immediate cashflow benefits.
Start-up companies in the early stages of growth will face a lighter tax burden: for companies with an annual turnover of less than $2 million, the company tax rate will be cut by 1.5 percentage points to 28.5 per cent. Start-ups will benefit from an important stimulus measure for businesses with an annual turnover below $2m: between now and the end of 2017, any asset worth up to $20,000 purchased by a small business will be immediately deductible in full. Again, this will give cash flow a boost.
The government has also announced that we will remove obstacles to crowd-sourced equity funding: using the internet to raise equity for new projects or business ventures, often involving relatively small amounts raised from large numbers of people.
In other countries this is an increasingly important source of funding for start-up businesses, but presently there are regulatory restrictions that limit its availability in Australia.
The start-up community is larger and more active than ever. There is a palpable sense of energy and dynamism. When you visit the tech sector co-working space Fishburners in Sydney’s Pyrmont, or the University of Wollongong’s iAccelerate incubator, for example, you notice the diversity of the people there and the many start-up businesses they are working to get off the ground.
I recently met David Soutar, founder of Wattcost, which will offer an innovative product to let you monitor home power usage on your mobile phone without needing complicated installation. At iAccelerate, Matt and Leanne Connelly showed me a low-cost 3-D printer targeted at the education market.
If we can lift our level of start-up activity in Australia, the economic benefits will be profound. Entrepreneurs such as Farquhar, Cannon-Brookes and Power have generated substantial prosperity and created many jobs.
In the future, Soutar and Matt and Leanne Connelly may do the same. This budget is a start-up budget to support our growing start-up sector.
