The tech sector is a pillar of the Australian economy, and a significant source of growth and jobs.

Our goal is to encourage growth, investment, exports and jobs in the Australian tech ecosystem. To do that, we work with governments and the broader business community to

• Create and grow more new businesses by addressing early-stage company funding gaps and creating more ‘shots on goal’ for high-growth companies
• Incentivise investment and business growth, e.g. through Research and Development Incentives, defining sophisticated investor and broadening ESIC
• Support tech take-up by Australian businesses across the economy to lift productivity”

Research and Development incentives

We value the existing R&D tax incentive, as many tech sector companies are active in research and development.

We welcome efforts to clarify the application of the R&D tax incentive to the development of software, including by producing more guidance material for the industry, and by working closely with government agencies administering the scheme to ensure its intent and approach are clearly understood and applied by industry and administrators.

Support for early stage companies by addressing gaps in early stage funding

Support for early stage companies by addressing gaps in early stage funding. There are important ways in which Australia’s policy framework recognises and encourages support for early stage companies. To further enhance these:

• Definition of ‘sophisticated investor’. The current rules for early stage investment restrict participation in investment syndicates to ‘sophisticated investors’ who qualify on an income ($250k) or asset ($1m) test. Without sophisticated investor status standard syndicates, including both angel investment syndicates and limited partnerships in ESVCLP structures are not available. This excludes a range of informed and experienced individuals who would otherwise be willing to invest – specifically early stage startup employees and senior leaders across the startup ecosystem. This is because startup employees’ salaries are often lower in real terms due to equity being a significant component of compensation.
• Broadening ESIC. Australia’s angel investor tax incentives, which apply to Early Stage Innovation Companies (ESICs), were introduced in 2016 with an initially narrow scope of qualifying companies. With more than three years in operation and no sign of an unforeseen explosion in uptake, there is now room to expand this program to allow a broader range of genuine startups to qualify. Access to early stage capital remains an area for improvement across the Australian system as a whole, and a high-quality, easy to access ESIC scheme would boost performance in this area.