Here's what Australia's startups think of the stimulus plans in the federal budget

The federal budget has a bunch of changes aimed at helping startups.

From July, the employee share scheme comes into play, which means the default taxing point for share options will be changed so employees will not generally have to pay income tax until they realise a benefit from their options.

The government is also abolishing the Fringe Benefits Tax on all portable electronic devices used for work, such as mobile phones, laptops and tablets.

Small businesses will be able to write off up to $20,000 upfront and professional fees when establishing companies, which frees up capital. Crowd-sourcing equity will also become simpler some time in the near future.

Here’s what some of Australia’s startups thought of the measures.

Bridget Loudon, co-founder, Expert360

Small businesses are the heartbeat of the nation. One fifth of our entire population works in a small business and thats why it’s vital the Government does everything possible to help this important sector where possible.

I support the Government’s tax breaks for small business.

Small businesses want certainty, especially around cash flow and how they’re going to grow and hire.

Extra money in the pockets of our small business owners might be the spark they need to hire in specialist expertise to assist with business growth.

Matt Bullock, Founder and CEO, eWAY

Helping business startup is a great thing for everyone. It's a win for entrepreneurs, employees, consumers, and the entire community. It's a tough decision to start a business, and it's great to see a renewed focus on those who are willing to take a risk.

These changes by the government can encourage business to increase productivity and focus on growth. Too often small business is ignored, so seeing a strong focus is very exciting. There is still a lot of room for growth in the online sector, so anything that government and private companies can do to help small businesses and startups increase cashflow in the early days is a big win. Through innovation in online payments, as well as some of this budget's proposals, early stage small businesses can increase likelihood of success in those very difficult early days by getting money in the door faster.

Chris Noone, CEO, Collaborate

We welcome the cut in the tax rate for small businesses and the drive to make multi-nationals pay a fairer rate of tax. Both initiatives will promote innovation and level the playing field for Australian companies. The tax breaks for employee share schemes will enable local start ups to secure the best talent and devote more of their funds to innovation and growth.

Chris Ridd, Australia MD, Xero

It’s great to see the federal government is not only following through with its promised tax cut to small businesses, but it’s providing a cut to all small businesses, not just incorporated ones. That means that the roughly 1.7 million sole traders, unit trusts and other entities will also benefit from this.

The increase in the deductible assets threshold to $20,000 will also be a massive boost to many small businesses.

The budget overall is a great sign that the government is focusing more on what small businesses contribute to the Australian economy, not just sweeteners for larger companies. Given we’re facing the end of the mining boom, it’s important now more than ever that we provide incentives for everyone from entrepreneurs and innovators to tradies to invest in their businesses.

Jeremy Colless, CEO, VentureCrowd

It’s great to see the federal government allowing all Australians to invest in high-growth innovative Australian companies with the announcement of equity-based crowdfunding. We will wait to see the details before VentureCrowd opens the platform to these investors but, provided government policy isn’t too restrictive or prescriptive, we support the move.

Allowing retail investors to gain equity in start-ups through crowdfunding has the potential to massively boost private sector funding for Australian innovation. VentureCrowd has already proved the model works, with investments in ingogo, Fame & Partners, and Crowd Mobile. We’re currently raising the largest ever Australian equity-based crowdfunding round for ingogo.

As a successful equity-based crowdfunding platform, we are continuing to educate investors on the potential of high-growth technology companies for investment, as well as the importance of building an investment portfolio. We look forward to seeing how the inclusion of new investors can help grow this important investment method.

Kyri Theos, Country Manager Australia at Upwork

I was surprised to see just how much this budget supports small business and startups.

The government acted on calls to reduce red tape, remove obstacles to crowd-sourced equity funding and incentivise employee share schemes.

These changes have great potential for local startups and SMEs and will help encourage innovative tech founders and entrepreneurs to stay in Australia, rather than leaving for the US.

However the budget does not appear to emphasise building our technology skills base. This is concerning given that we are ranked 73rd in science and engineering graduates, behind Uzbekistan and Myanmar.

Australian businesses are demanding these new types of skills, and without them we are disadvantaged when competing internationally.

We'd like to see more funding towards skill development, making technology and engineering courses more affordable, and equipping Australians with the skills that will take us to the next phase of economic development.

Levi Aron, General Manager, Yumtable

It's great to see positive changes being made to the amount of support startup businesses will receive. This will only open more doors to those looking to venture out on their own and make their dreams a reality.

It can be extremely stressful as an entrepreneur to fill out form after form when starting a company so to hear they will be changing the registration process is a great start to reducing stress for all newbies. Start-ups always need a helping hand and we can assume that streamlining the registration process will encourage more people to become a part of the community of 2.1 million Australian small business owners.

Niklas Olsson, Marketing Director, HotelQuickly

It is absolutely a move in the right direction and the focus on small businesses in general is encouraging. The 20,000 write off is a great start and I'd like to see continuous support on the investment side. Australia needs a thriving job-creating environment and that requires further investment support as supposed to small tax benefits to put in our pockets.

A majority of my relatives and friends are small business operators and the biggest concern is about growth and what the implications are financially and legally. Less red tape to give confidence in the decision to grow our economy and a focus on spending to support investment is what they would want and we have now seen the first important steps.

John Dyson Founder and Investment Principle at Starfish Ventures

It’s great that the government recognises the importance of fostering Australian entrepreneurs and small businesses.

However, the major issue for startups remands unaddressed and that’s the support they need when they are ready to scale. Specifically, there’s a gap when it comes to VC funding around $5 to $15 million which is essential for Australian companies that want grow, creating those all important new jobs and boosting the economy.

The Government needs to look beyond the early-stage startup and small business space. Starting a company is the easy part, helping them grow to be successful and scale is the real challenge. It’s these larger companies which will really help drive the economy in the future.

This federal budget is 'safe'. But we need a vision, we need to be inspired, we need to aspire to take risks and accept that sometimes we will fail.

Mark Randall, Director of Sales and Marketing, Bulletproof

While there are some good individual initiatives such as the $254 million investment in Digital Transformation, there seems to be a lack of joined up thinking in the budget this year.

For example, the Department of Finance is assigned with squeezing savings from IT, but they’re spending $17.6 million on a new AFP Data Centre (instead of using Cloud with proven cost savings).

On the other hand it is great to see that Employee share options will no longer be taxable upfront, bringing Australia in line with other OECD nations. Startups often rely on share options to attract staff. Establishing a crowdsourced equity funding framework will also be a great help to them. Together these initiatives will be a significant boost for the next generation of market disruptors and Digital leaders. While there could arguably be some negativity around the cuts to the Entrepreneurs Infrastructure Program, the effect of the other measures in stimulating private sector activity will significantly offset this reduction.

When the other tax changes for SMEs are considered this budget is definitely a positive one for supporting startups, entrepreneurs, and the small business sector.

Gen George, founder, Oneshift

More than 2.1 million small businesses employ over 4.8 million Australians (nearly 50% of private sector industry employment), and contribute 34% of gross domestic product.

I’m glad to see that the government has introduced the immediate tax write off for business purchases costing less than $20,000. This new policy will allow businesses to invest more in hiring staff to grow their businesses.

As a result I believe we’ll be making some inroads into reducing our unemployment rate. The aim needs to be to continually reduce the cost of doing business whether this is payroll taxes or penalty rates. The more people we have at work means the less dependence we’ll have on welfare as a country.

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