The Abbott government has today confirmed that it will introduce a $200 million tax break for employee share schemes, invest $188.5 million into innovation centres, and amend the 457 visa programme, as part of a $400 million industry plan.
The ‘National Industry Innovation and Competitiveness Agenda‘ introduced today aims to foster the creation of more entrepreneurs in Australia, and drive economic growth and employment in five industries: food and agribusiness; mining equipment and services; oil, gas and energy; medical technology and pharmaceuticals; and advanced manufacturing. Each of the five industry-led centres will receive funding of up to A$3.5 million per year, and be required to establish a plan to become self-sustaining after four years. Grants of up to A$1 million will also be on offer for the commercialisation of ideas.
The priorities in this agenda are very closely aligned to the recommendations of the G20 Young Entrepreneurs Alliance Summit presented to G20 leaders and central bank governors, and to many local Australian federal members over the past 2 years. It is extremely encouraging to see the Australian government listen to the G20 Young Entrepreneurs Alliance and take tangible action in support of the importance of entrepreneurs and startups to the Australian economy!
The Abbott government is now revoking rules that require employees to face immediate tax costs on share options they receive from employers. Businesses that are unlisted, have been incorporated for less than 10 years, and have an annual turnover of less than $50 million will be able to provide employee share options at a small discount that will not be subject to up-front tax, as long as the employee holds the shares or options for a minimum of three years. Employees will be able to defer their tax bills from seven to 10 years under the new policy.
The government will also update the ‘safe harbour’ valuation tables, which are used by companies to value their options, so they reflect current market conditions, according to the agenda.
A science council will be introduced to provide advice on science and technology, while $12 million will be invested to improve science, technology, engineering and mathematics (STEM) subjects in primary and secondary schools.
The 457 visa programme will also also undergo amendments to make it easier for employers to hire skilled overseas workers “while improving programme integrity, to ensure that sponsored workers on 457 visas are a supplement to, and not a substitute for, the local workforce.
The government will streamline the processing of sponsorship and visa applications to reward low-risk applicants, increase the sponsorship approval period from 12 months to 18 months, and provide greater flexibility in English language testing to ensure the standards are appropriate for their industry. The government will cap the income of skilled overseas workers at $53,900, but will review this within the next two years.
The Competitiveness Agenda is just the beginning. There is a LONG way to go for Australia to have a legislative environment capable of catapulting Australia's entrepreneurship ecosystem to the top of world rankings. It is however a huge step in the right direction.
Legislation is expected to come into effect on July 1, 2015 following the Treasurer’s consultation with industry.
About the author: Jeremy Liddle is an entrepreneur and President of the G20 YEA Australia
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