#Budget2018 was announced recently and, as usual, has resulted in an avalanche of feedback. Some of it has been positive. Some of it has been negative.
Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, even described it simply as “boring”!
But we thought that instead of jumping on the ‘boring’ or the ‘bad news’ bandwagons, the most helpful approach might be to take a look at the positives for startups and innovation.
Below are some of the reasons for startups to love, not loathe, #Budget2018.
All start-ups and SMEs
A key reason startups should celebrate is the 12-month extension of the instant asset-write off scheme.
Under this newly-extended scheme, businesses can enjoy better cash flow to support small business activity and investment, thanks to immediate tax refunds for asset purchases up to $20,000 in value.
For some startups, this cash flow injection could mean the difference between being able to pay staff that month or not. We are thrilled to see the scheme extended.
Another notable victory for SMEs is the continued 10-Year Enterprise Tax Plan to provide greater tax discounts (from 5% to 8%) for small unincorporated businesses, as well as an increased eligibility threshold. Businesses with an annual turnover of up to $10 million may now benefit from the scheme, compared to up to just $2 million last financial year.
Startups who are innovating
Any startups with the word “innovation” anywhere in their “About Us” page are probably keenly familiar with three emerging trends in innovation: artificial intelligence (AI), machine learning, and blockchain.
These startups should welcome the proposed $29.9 million funding allocated to improving capability in artificial intelligence and machine learning over four years. This will include increasing funds to the Cooperative Research Centres Program, and for AI and machine learning-focused PhD scholarships, providing startups with greater access to local talent.
For the first time, the Treasurer has also allocated a dedicated budget for blockchain research and while only modest (at $700,000), the investment is a positive first step.
With blockchain impacting all manner of industries – finance, loyalty programs, employee engagement, real estate, legal – it’s not just fintechs using cryptocurrencies that will benefit.
Scale-ups and jobs of the future
Larger startups, or those transitioning into scale-ups, are being encouraged to increase the intensity of their innovation efforts through a revision of the R&D Tax Incentive.
The scheme was originally criticized for capping R&D incentives at $4 million for smaller firms. However, in doing so, the Treasurer was able to free up greater funds for larger companies with more intense R&D activities. The $100 million R&D expenditure threshold will now be increased to $150 million, and companies with an aggregated annual turnover of $20 million or more will also now be eligible for the scheme. This is a positive for startups who truly have innovation at their core.
And with $4.5 million to be spent on channeling women into STEM careers also, Australia is becoming well-equipped to create the local talent needed to drive innovation for years to come.