Any reforms to the Australian taxation system need to place entrepreneurship and innovation front and centre, according to the peak body for the venture capital industry.
The Australian Private Equity and Venture Capital Association Limited has called on Treasury to encourage domestic and offshore investment in Australian startups in a submission responding to the federal government’s tax discussion paper.
The submission calls on policymakers to improve the taxation framework in order to promote innovation across all areas of the economy.
In particular, AVCAL is asking the government to reform the Venture Capital Limited Partnerships regime in order for more Australian businesses to benefit from private equity.
A streamlining of the debt and equity tax rules is also on the private and venture capital industry wish list, as well as an increase in the capital gains tax discount in order to kickstart long-term investment.
Chief executive of AVCAL, Yasser El-Ansary, says these reforms are critical in order steer Australia away from relying on the resources and mining sectors which are not going to last forever.
“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 said in a statement.
“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.”
El-Ansary says as well as overhauling parts of the tax framework, he would also like to see several areas stay as they are – particularly the current dividend imputation system and the capital gains tax regime.
“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,” he says.
The government is due to release a tax options green paper in the second half of this year, followed by concrete policies in 2016.