Prime Minister Tony Abbott has just released the government’s National Industry Investment and Competitiveness Agenda today with changes to improve Australia’s investment environment.
Abbott confirmed changes made to the employee share options scheme by the former Labor government in 2009 around when options are taxed will be reversed at a cost of about $200 million over four years.
“We are reversing the changes that the former government made in 2009 which essentially stopped employee ownership in this country,” he said, adding the new taxation treatment of employee share schemes will be devised with startups in mind, to help them attract and retain talent as well as commercialise good ideas within Australia.
Companies with a turnover under $50 million are not listed and are less than 10 years old, namely startups, will be eligible for tax incentives under the new employee share rules.
The government said the changes will apply to all companies and will mean that discounted options are generally taxed when they are exercised (converted to shares), rather than when an employee receives the options.
Shares and options that were allocated at a discount by eligible startups will also not be subject to upfront taxation, so long as they are held by the employee for at least three years.
Startups will also be able to take advantage of a lengthened tax deferral period up from seven to 15 years.
The agenda is based around four pillars and changes will help lower costs, improve skills, deliver more infrastructure and drive entrepreneurship.
The Federal Government has also earmarked five industry growth centres including oil and gas, mining technology, medical technology, food and agribusiness and advanced manufacturing.
It will invest $188.5 million in five industry growth centres to improve the industries’ competitive strength.
To commercialise ideas in these sectors, the government will tip in $60 million of funding from 2015, made up of grants up to $1 million which must be matched by the company and developed through the Entrepreneurs Infrastructure Programme which was announced in the recent federal budget.
Abbott said policy created to fuel growth and competitiveness in these industries will be centred around science and will be directly linked to researchers.
“It’s about ensuring that we make the most of our strengths,” Abbott said.
Australia has experienced 23 years of economic growth but Abbott said with commodity prices falling and mining investment tapering now is not the time for “complacency”.
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