AusBiotech recommends changes to tax incentives


AusBiotech has used its submission to the Treasury’s Discussion Paper on tax incentives for early stage investors to back policy changes that provide incentives but expressed concern over the parameters that exclude most biotechnology companies.

The Government announced new tax incentives for investors in early stage companies as part of the National Innovation and Science Agenda (NISA).

The new tax incentive will provide concessional tax treatment for investors through a non-refundable tax offset and a capital gains tax exemption on investments that meet certain eligibility criteria.

According to AusBiotech, the proposed qualifying parameters for the incentive - incorporated in the last three years, expenditure of ≤ $1,000,000 and not a listed entity - discriminate against companies in the life sciences sector and will exclude the majority of the biotechnology start-up community.

"In effect it provides capital for 'capital light' companies rather than providing general access, and will exclude biotechnology companies," says AusBiotech.

The organisation says the shortage of venture capital in Australia forces many life sciences companies to list on the ASX or similar exchange early in their life cycle.

"This creates challenges and costs of its own and while it ought to continue to be an option, Australia’s life sciences sector would benefit from the broader options to attract capital – and an investor incentive for which this group would be eligible would provide an important component," it says.

AusBiotech recommends the Government amend the parameters to include pre-revenue companies regardless of their listed status - a listed company should qualify if they meet the other criteria.

It also recommends a number of other changes, including ensuring that R&D-intensive companies qualify for the incentive if they have been incorporated in the last six years and currently qualify for the R&D Tax Incentive.

It concludes, "In summary, AusBiotech fully supports the policy intent of the proposed investor incentive, which will be significant for the private technology sectors. However, if the inclusion criteria were able to moved up the value chain to encompass pre-revenue listed companies, it could make a material difference to early stage biotechnology development in this country. "

View the full submission here.