Labor calls on government to fast-track innovation statement changes to end the “investor strike”

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Labor has called on the government to implement its startup tax incentives within a week in order to bring an end to the so-called “investor strike”.

Announced in December’s $1 billion innovation statement, the tax incentives are aimed at encouraging investment in early-stage, innovative startups and include a 20% tax offset on these investments and a 10 year exemption from the capital gains tax.

But with the changes not coming into effect until July, there are some concerns among the Australian startup community that the six month limbo period might see an “investor strike”, with angel investors waiting for the incentives to be in place before chipping into startups.

These concerns were voiced by Pollenizer co-founder Mick Liubinskas last month.

“They did it for PR but it may make life hard for startups raising in the meantime,” Liubinskas told StartupSmart.

“Why did the government announce a program in December that gives investors incentives to wait until July? It would’ve been better to announce it and say ‘here it is’.”

In a joint statement, shadow treasurer Chris Bowen and shadow parliamentary secretary for digital innovation and startups Ed Husic say the opposition is willing to cooperate with the government in order to ensure the tax incentives can be implemented by April 1st.

“Labor believes this is a serious issue and we believe the Turnbull government needs to take practical steps to remedy a problem of its own making,” the statement says.

“Bringing forward this start date will give investors confidence that they can direct funds to capital hungry startups now – and will allow startups to avoid suspending work due to a lack of support.”

The tax incentives legislation was introduced to parliament by the government last week.

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Denham Sadler is the editor of StartupSmart. He was previously a journalist at the publication and has worked as a freelancer for the Guardian, the Saturday Paper and the ABC. In his spare time he likes puns and jaffles.
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  • Paul Towers

    Definitely agree that the start date needs to be as soon as the legislation is passed. No point delaying the inevitable. All it causes is a funding gap in the meantime. The tax break is significant and no doubt the preference from investors is to wait. Unless your startup is that hot that everyone wants in now, delaying the start date just makes the next 3 months harder for fundraising in my opinion.

  • Toby Eggleston

    As far as the legal process of enacting new legislation goes, according to the Senate’s website, all un-enacted Bills currently before the Senate lapsed when the Parliament was prorogued by the G-G on 21 March, but they can be revived in the Senate if the House requests it:

    Bills received from the House of Representatives may be revived if the House of Representatives requests the Senate, by message, to resume its consideration of the bills, provided that a periodical election for the Senate or a general election for either House has not taken place between the sessions.

    The drama will be if the Parliament is dissolved (rather than prorogued). In that case, all Bills before the Parliament lapse and they all have be re-introduced by the House. So the thing to watch out for is if the ABCC Bills come up first from 18 April, they get rejected by the Senate and Malcolm pulls the trigger to dissolve the Parliament before the Innovation Bills get restored.