Greg Travers, tax director at William Buck, said Australia cannot fully adopt the ‘innovation nation’ tag unless changes to the current tax system are brought to the forefront of discussion.
“Since the Prime Minister was sworn in, despite putting innovation at the top of the agenda, the national tax discussion has centred on the same old problem areas – superannuation, negative gearing and GST,” he said.
“What hasn’t been discussed is how tax policy can support businesses to become more innovative.”
Mr Travers said that if the government is campaigning for Australian businesses to become more innovative and forward-thinking, the tax system must be developed to encourage this behaviour. “Tax influences behaviour,” he added.
“Why have we got tech start-ups going to London to pursue their business? Why have we got businesses setting up in Singapore? Why aren’t they choosing to set up in Australia?”
According to Mr Travers, the current tax system focuses too heavily on discreet tax initiatives such as R&D incentives and employee share schemes for start-ups, noting that there is no overall policy setting in place to deliver incentives and remove impediments for businesses.
Any changes to tax policy, he added, need to be targeted towards mid-sized businesses, rather than those “at the small end of town”.
“The businesses that have the most potential to deliver on the innovation agenda are mid-sized businesses,” he said.
“While both small and mid-sized businesses have the ability to be more flexible and nimble than their large counterparts, it’s the mid-sized businesses that also have the capital and resources to undertake research and develop new products."