I am not sure how excited Howard’s battlers would be, the ubiquitous ‘mums and dads’ that get dragged out occasionally but are usually forgotten in Coalition policy, about Malcolm Turnbull’s Innovation Statement, but one person who would be very happy is Lucy Turnbull.
ZDNet describes the significant tax breaks for investors in startups, proposals for bankruptcy law reform, intangible asset depreciation, reforms to employee share schemes, and rules which make it easier for businesses to carry over losses, as a venture capitalist’s wishlist.
Laura Tingle pointed out that ad hoc tax breaks like this carry a political risk: they might open an avenue for what might most politely be called tax minimisation, and voters might well see it as the government covering businesses’ losses in their gamble on high-risk investments.
It would also be reasonable to ask why you would announce tax changes for speculative investors when you are in the process of putting together a tax reform package.
Perhaps the biggest announcement in the Innovation Statement was using $250 million of the fledgling Medical Research Future Fund to create a new Biomedical Translation Fund to commercialise medical research discoveries.
Which brings me to Lucy Turnbull.
Lucy and Malcolm have invested in several venture capital funds, but Lucy is also chair of Prima Biomed Limited, a biotechnology company in which she owns 20 million shares, or at least did when she was interviewed on The Business a year ago.
At the time, Lucy’s company had just taken a big risk by paying out $28 million to buy French biotech company Immutep. When asked what government policies she would like to see, she said tax credits for research and development and better taxation treatment of employee share options.
On November 26, 2015, Prima Biomed published a media release announcing approximately $420,000 in cash rebates from the Australian federal government’s R&D tax incentives program. Tick one.
In Turnbull’s Innovation Statement there is a section titled “Reforms to employee share schemes” which seems all about removing disclosure requirements. Tick two.
That’s interesting considering previous senate inquiries have concluded that, whilst ESS may be desirable in aligning employer/employee aspirations and rewards, they were susceptible to abuse as a tax avoidance scheme. But hey, there aren’t enough people left at the ATO to worry about that.
In May this year, Motley Fool published an article titled 7 reasons Prima BioMed Limited is too risky after shares went “down 45%, after an incredible 604% increase in its value earlier this week.”
According to Lucy Turnbull’s “Message from the Chair” in the November Investor Update, “Prima BioMed today is a company that is in very good shape; commercially, clinically and financially.”
Of course, that was published after Lucy and Malcolm, despite a very busy schedule, did a stopover in Germany to promote closer research and trade collaboration at the same time as, coincidentally, Prima BioMed were giving a presentation at a meeting of pharma companies in Germany.
Malcolm has said that we should cover risks for startups and entrepreneurs. I wonder how excited wage earners are about that considering the Coalition has been actively attacking the safety net that protects most of us from the risks that come with unemployment, sickness, disability, old age and poverty.
“There’s never been a more exciting time to be Australian” should read “There’s never been a more exciting time to be a wealthy Australian investor/company with an aversion to paying tax who is willing to take risks with other people’s money when subsidised and protected by the government.”
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