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A raft of diverse measures aims to boost business innovation in the wake of the pandemic.
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Budget: Best of the rest
01 April 2022
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Businesses have welcomed budget measures designed to encourage growth and cut red tape, from wider application of the patent box regime to expanded employee share schemes.
Deloitte chief executive Adam Powick said the continued focus on innovation and digital transformation was a further step in the right direction.
“A more nuanced strategy of stimulus has been pursued, in which infrastructure remains a key tool,” he said.
“Climate action and management is being elevated, but there is still much more to be done.”
The main measures:
Greater access to employee share schemes
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The government will expand the reach of employer share schemes (ESS) so more workers can participate in the growth of a business. The objective of the measure is to reduce red tape.
BDO tax partner James Trainor said the changes to ESS rules would help start-ups attract talent.
“Start-up organisations will be able to share more of their growth with employees following a major change to the employee share scheme rules,” he said.
“This makes it easier for employees to profit from IPOs and the sale of a business, helping start-up organisations attract talent in a highly competitive global market.
“In addition, there will be a welcome relaxation of the onerous company disclosure obligations for shares and options offered to workers.”
RSM Australia’s tax services director Rami Brass said the government had shown that it was committed to providing impetus to ESS by unlisted companies.
“This encourages employees to have ‘skin in the game’ for businesses that they help grow, enabling smaller businesses to attract and retain in-demand talent,” he said.
Starts: 1 July 2022
Extension of patent box regime
The government will expand the patent box regime announced in last year’s budget to cover more patents in a broader range of sectors.
Patents granted after 11 May 2021 become eligible for the scheme and it will now recognise patents granted under the US and European regimes as well as those granted by IP Australia.
The patent box regime provides a competitive tax rate for certain amounts generated from Australian-owned and developed patents.
PwC chief economist Jeremy Thorpe said the scheme had the potential to deliver long-term transformational outcomes for the economy by boosting investment in innovation.
“It also encourages successful innovation to remain in Australia by reducing the incentive to transfer valuable intellectual property offshore,” he said.
“Many comparable jurisdictions such as the United Kingdom, France, Spain and the Netherlands currently have a broad ‘patent box’ or ‘innovation box’ regime that is designed to encourage the development and ownership of certain intellectual property in their home jurisdiction.
“Enacting a similar ‘patent box’ regime should help Australia to remain competitive and support a local growth agenda in the broader specific industries now also targeted.”
EY’s Oceania chief economist Cherelle Murphy said despite broadening the patent box to low-emissions tech, Australia needed to act now to futureproof our economy.
“The policies fall short of those needed to drive investment in developing and implementing new technologies, commercialising research and development and maximising Australia’s advantages in clean and new energy sources which could be a significant boost to our GDP as well as carbon proofing our economy,” she said.
Starts: 1 July 2023
Carbon abatement and biodiversity stewardship income
The government proposes to allow the proceeds from the sale of Australian carbon credit units (ACCUs) and biodiversity certificates generated from on-farm activities to be treated as primary production income for the purposes of the Farm Management Deposits scheme and tax averaging from 1 July 2022.
Nexia Australia’s national tax director David Montani said this change would enhance primary producers’ ability to manage their tax liabilities, and align income tax liabilities on ACCUs with when they are actually sold.
KPMG’s national sector lead, food and agribusiness, Georgie Aley said carbon farming and biodiversity opportunities had generated significant focus across the agricultural sector but they had been hindered by complexity.
“Several changes are being made to simplify the processes for primary producers to participate in carbon and biodiversity opportunities with significant Budget commitments to drive further sustainability and environmental outcomes,” she said.
Starts: 1 July 2022
Changes to paid parental leave
The government’s $346 million Paid Parental Leave scheme will allow families to have the choice of whether the mother or father takes paid leave after they have a child.
The federal government merged the two-week Dad and Partner Pay scheme with the 18 weeks of Paid Parental Leave (PPL) scheme to create an “enhanced” 20-week scheme, paid at the minimum wage. Single parents also get an extra two weeks of government-funded paid parental leave.
Tax Institute president Jerome Tse said changes to the paid parental leave system would give greater flexibility to working parents.
“This will hopefully encourage greater workforce participation by women and also encourage male and other partners to spend valuable time at home with their children,” he said.
KPMG’s director, Australia geopolitics hub, Merriden Varrall welcomed the enhanced scheme.
“This will help support women’s workforce participation, critically important in not only shifting the dial on gender equality but also for increasing Australia’s productivity and addressing some of the workforce and skills shortages being faced by businesses,” Ms Varrall said.
“We hope to see the government continue to build on this approach.”
Starts: 1 March 2023
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