Consultation on announced but un-enacted tax measures
An announcement was made in early November by Federal Treasurer Joe Hockey regarding a number of announced but unlegislated tax measures made by previous Governments. In some cases, these measures dated as far back as March 2001.
Several issues vital to AVCAL members and the industry, such as VCLP and ESVCLP reforms, R&D quarterly tax credits, and thin capitalisation rules, were affected by the Treasurer’s announcement. Whilst some measures were confirmed to proceed in the coming months, many were open for consultation with industry, with indications that the Government would not adopt them.
In order to convey to the Government the importance of these issues to the industry and the need for certainty on tax matters generally, submissions were made by AVCAL with the support of its members, to Treasurer Joe Hockey, Assistant Treasurer Arthur Sinodinos AO, and the Minister for Industry Ian Macfarlane. These submissions focused on two key areas for Government to retain on their ‘to-do’ list – the VCLP/ESVCLP tax arrangements, and R&D quarterly tax credits. Both are important policies that AVCAL believes will go some way to strengthening investor confidence and driving future economic growth in Australia. Other reforms relating to thin capitalisation and managed investment trusts would be progressed over coming months.
AVCAL is engaging closely with Government, Treasury and the advisory panel of the Board of Taxation to reinforce the industry's position on these issues. A meeting was held on Monday 25 November with the Office of the Assistant Treasurer, where the two key components of AVCAL’s submission were extensively discussed.
The Government understands the importance of these two issues for the PE and VC industry and smaller startups investing in R&D, and in fostering innovation in Australia.
At the meeting, the Government also reiterated its commitment to providing certainty to taxpayers in light of the uncertainty surrounding the long list of un-enacted measures.
AVCAL will continue to talk to the Government, the Treasury, and the Department of Industry about these issues over the next week and it is our understanding that the Government will make a final decision about this before the Mid-Year Economic and Fiscal Outlook is released in December 2013.
We will keep you informed of any further developments.
Author: Adrian O’Shannessy, Director, Greenwoods & Herbert Smith Freehills
Author: Dr Kar Mei Tang, Head of Policy and Research, AVCAL