Lisa Darmanin (Victoria, Australian Labor Party) | Hansard source

On this side we are big supporters of small business and innovation. This budget was all about backing small business to invest and to grow. I want to talk a little bit, again, about the changes to the small business concession so that we can provide clarity and certainty for small businesses and others. As Senator Kovacic just said, they need certainty. Well, let's be really clear: the government is extending the eligibility of the 50 per cent active asset reduction to more businesses by increasing the turnover threshold from $2 million to $10 million. This brings the eligibility for this concession into line with the turnover threshold for the instant asset write-off. This will mean that all 2.7 million active small businesses and 98 per cent of active businesses will be eligible for a 50 per cent CGT discount on active business assets, and that's on top of the discount for inflation, where eligible, once these reforms are in place.

The government, as has been mentioned, has also released the consultation paper on the design of a 50 per cent CGT discount for early stage investors, including founders and employee share scheme participants of innovative startup businesses. Final details will be implemented in a later tranche of tax reform legislation. Importantly, this will be released following consultation.

These measures, of course, build on the existing significant measures to support small business risk taking and investment in the budget, including the two-year loss carry-back, loss refundability for startups, expanded venture capital incentives and making the $20,000 instant asset write-off permanent. The additional support for small business has an indicative cost of $300 million over the forward estimates and brings the total new tax measures to support businesses in the tax reform package to over $3.8 billion. This $3.8 billion also includes making the $20,000 instant asset write-off permanent for small businesses; a two-year loss carry-back for companies with a turnover of up to $1 billion; supporting cash flows through disruption; and incentivising sensible risk taking. Remember that, without this measure, the asset threshold would have reverted to $1,000 in just a week or so, on 1 July this year. There will be loss refundability to help startups to grow in their first two years, and we are also expanding the tax incentives for venture capital to help unlock more investment in young and expanding businesses.

Of course, running through all of these things to provide business certainty is one thing, but I think the actual perspective about what small-business owners and startup innovators think about this is best heard in their own words. Last week we heard from Mr David Turner, a small-business owner and a startup founder who advises Australian startups and small businesses as a lawyer. In the inquiry last week, evidence that he submitted said:

… I commend measures such as the proposed loss refundability scheme, the loss carry-back scheme, the R&D tax incentive, and the permanent instant asset write-off, each of which offer cash flow support to start-ups and small businesses … tax system features such as up-front supports for new ventures may be more effective incentives than relief that materialises when a business is sold.

Very quickly, I note that, on this question about whether Australian innovation will go overseas, Mr Turner also said:

… for many founders, there are natural constraints to their ability to pick up their lives and move to another jurisdiction—not only personal and family ones but also professional ones. They may be in a position to commence a business in Australia because of their professional network, because of their knowledge of the market or because of their connections to customers.

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