Tax reforms aimed at attracting greater equity investment into businesses and boosting innovation and entrepreneurship should be seen as standout priorities in the first phase of the government’s tax white paper process, according to the submission lodged yesterday by the Australian Private Equity & Venture Capital Association Limited (AVCAL).
“There have been many false starts on tax reform over the last few years, so there is a broad expectation now that this tax reform 2.0 project will work,” said AVCAL Chief Executive Yasser El-Ansary.
“We can’t afford to defer the hard work of tax reform for much longer – we have to get on with the task of implementing short and long-term structural reforms which improve the competitive position of our economy into the future,” he added.
“If we take steps to improve our tax system over the next few years, we can open-up greater access to equity capital investment into Australian businesses, and boost the entrepreneurial and innovative potential of our economy,” according to Mr El-Ansary.
The need for tax certainty for domestic and offshore institutional investors backing Australian private equity and venture capital funds through the use of venture capital limited partnerships was one of the central themes in AVCAL’s submission.
Other policy issues that AVCAL recommended be addressed in the short-term include: moving to quarterly R&D tax refunds for eligible small businesses, continuing to improve the proposed new employee share scheme rules for startups, and implementing the Board of Taxation’s recent recommendations in relation to debt and equity tax rules.
AVCAL’s submission identified other policy changes that should be considered as part of a longer-term reform agenda, such as: a more globally competitive collective investment vehicle regime, and reductions to the corporate income tax rate over time.
“There are features of our existing tax system which we should safeguard for the future. The current dividend imputation system, and the capital gains tax regime and discount, play a vitally important role in supporting longterm capital investment across our economy,” said Mr El-Ansary.
“Tax reform should be about improving our tax system for the benefit of the economy – moving away from dividend imputation and watering down the CGT regime will damage our future economy, not improve it.”
A copy of AVCAL’s submission in response to the Tax Discussion Paper can be downloaded at www.avcal.com.au