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Information Technology News AIIA and VC welcomes Fed Govt Budget ICT industry tax cuts
Information Technology News AIIA and VC welcomes Fed Govt Budget ICT industry tax cuts | AIIA and VC welcomes Fed Govt Budget ICT industry tax cuts |
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| by Stan Beer | |
| Thursday, 11 May 2006 | |
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Rob Durie, Chief Executive Officer, AIIA commented “The Federal Government’s budget initiatives contain some very positive drivers for the ICT industry. As the leading industry body for the ICT industry in Australia, we welcome, in particular, the tax cut for depreciation of investments which will be worth some $3.7 billion to Australian businesses over the next four years, along with the other key initiatives that we feel will assist in encouraging future growth of the ICT industry. Mr Durie's sentiments were echoed by a representative for the venture capital community. According to Vincent Sweeney, principal of Sydney Capital Partners: "The new Early Stage VCLP announced in last night’s budget will be attractive and useful in stimulating investment according to Sydney Capital Partners, which has been a regular and successful investor in early stage technology companies. Sydney Capital Partners has been approached many times to manage a fund but has declined as part of our success has been in migrating companies offshore which created complications for local funds under Australian tax. In particular the previous regimes meant it was unattractive to retain ownership of Intellectual Property in an Australian company. However this new structure will offer improvements and will be the catalyst for Sydney Capital Partners creating a new fund for early stage technology companies with global opportunities and we expect that the new fund will be able to be established once the guidelines and legislation have been effected. It will certainly give investors a better reason to invest in and to support fast growing technology companies." The key budget initiatives that will assist the Australian ICT industry are: · The 33 per cent increase in the allowable depreciation rate of assets under the uniform capital allowance (UCA), which effectively increases the incentive for Australian businesses to invest in new plant, equipment and technology. This means that businesses will be better able to keep pace with changes in technology and remain competitive in the global marketplace. · The establishment of an Early Stage Venture Capital Limited Partnership (ESVCLP) investment vehicle will assist more Australian companies to commercialise their technology in the local market before stepping up to the world stage. · Amendments to the operation of Venture Capital Limited Partnerships (VCLP) that provide strong impetus for the commercialisation of Australian research and development and will enable Australia to build economic growth through greater public and private investment in innovation and early-stage concepts. · The $200 million in further funding for the Innovation Investment Fund (IIF) program. In addition to the tax exemption for Venture Capital investments, the IIF program will further assist in the commercialisation of Australian innovation by marrying government money with private money to assist innovative ideas to get to market. · An increased commitment to Invest Australia, which will bring total funding of almost $73 million over four years to boost international efforts to further foreign investment in Australian industry. This will assist Australia to cement a place in new and emerging markets and in doing so, promote the benefits of doing business with Australia’s politically and economically stable market. Mr Durie commented, “It is pleasing for us to see how these new budget initiatives directly complement a number of the programs that AIIA is implementing to encourage the growth of the ICT market. Our CollabIT program actively encourages ICT SMEs to establish partnerships with similar small Australian companies and to forge alliances with multinational corporations that enable them to tap into resources and in doing so, access new markets both locally and internationally. Rob Durie concluded, “While we broadly support the government’s budgetary initiatives, we however, do have concerns in relation to the lack of initiatives supporting building our skills base. In particular, much more needs to be done to encourage greater participation by young people in tertiary ICT education if we are to ensure a flow of appropriately skilled people to support an industry which underpins productivity growth in the broader economy. “On the whole, however, this is a good budget that has the potential to deliver positive growth to the ICT industry.”
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