Australian Prime Minister Malcolm Turnbull said on Tuesday that the government will introduce a new law to make sure greater investments are made to startups.
According to Channel News Asia, the new legislation will allow investors to enjoy tax incentives if they make a greater investment into a startup business venture. After the significant boom in the mining sector, the government aims at strengthening the startup sector. The Australian government has proposed an amendment to tax laws, making sure that people who invest in startup ventures gain a 20 percent rebate on income tax every year. In addition, a 10 percent tax rebate for venture capital investors will be allowed if they wish to contribute to the expansion of already existing startups.
Turnbull will introduce the legislation on Wednesday. Earlier reports by The Conversation have however revealed that the proposal made by the coalition government would include only investments from “sophisticated” investors. These investors will include those who earn over AU$250,000 annually or have a net income of over $2.5 million. This confinement might affect the seed funding that investors offer to startups.
Australia aims at transitioning the national economy by taking a risk with tax law amendments to cover up the losses incurred because of the declining mining sector profits and deteriorating demands for minerals. “We have been from an economy that was fired up by the mining construction boom … but inevitably it was going to tail off so what comes next? What comes next is innovation,” Turnbull told reporters in Canberra.
The Australian government has come up with such a proposal seeing the challenges faced by startups in different phases. Seed funding and investment are what Australian startups struggle for from the beginning to its developing phase.
The data revealed by the Organisation for Economic Cooperation and Development has indicated that Australia remains either on the last or second to the last spot as far as business research collaboration is concerned. This is because the country is less willing to take risks that ultimately lead to little attraction among people towards startups and investments.