Canberra listened on CGT. Now it needs to listen on R&D.
The government’s CGT concession is a welcome course correction. But it must bring the same pragmatism to R&D policy if we are to remain globally competitive.
This year’s federal budget was a tough one for investors. It also contained some particularly difficult changes for the early-stage life sciences sector.
Those changes are an awkward fit with the government’s stated goals of supporting research and development and building Australia’s manufacturing capacity. To many in the sector, the budget felt anything but supportive of the Ambitious Australia set out in the government’s industry report of the same name.
The capital gains tax reform sparked justified anxiety. For early-stage companies and the investors who put capital at risk in them, the practical impact would have been significant.
To its credit, the government has shown that it heard those concerns. The proposed Innovative Business CGT Concession would preserve the 50% discount for eligible founders, employees and early-stage investors. It restores some optimism and goes a long way towards addressing the position of the companies most exposed under the original proposal. Eligible companies would be able to choose between the discount and the new indexation-plus-minimum-tax method.
